Or, How a Lifetime Free supply of First Growth Bordeaux Requires Shorting the Dollar
Leg #1: A Bear Market in Wine
Fine wine as a category has been in a nearly 3-year bear market. Prices have tumbled roughly 25–30% on the Liv-ex indicesfrom the October 2022 peak. Below, the Liv-ex 100 index, which tracks the price movement of 100 of the most sought-after wines.
For certain types of fine wine, such as here with the Liv-ex Bordeaux 500, the fall in prices has been more dramatic, and still has not bounced.
This is the deepest broad correction in the modern era, and a serious break from the rising prices of the last many decades. Wine pricing is in fact now below trend.
French Burgundy wines stumbled too. Burgundy, the Queen of Wines, is produced in smaller batches than Bordeaux, the King, but that was of little benefit as both lost their heads.
Kings and Queens and guillotines, sang Aerosmith
Aerosmith - Kings And Queens (Audio) https://youtu.be/b7jGGBxA3Yg?si=dBQUTXmuIEI9eBSf via @YouTube
The 2025-2026 recovery is still testing its legs. Broader wine price indices such as the Liv-ex 1000, which tracks 1,000 wines from across the world, are up only fractionally on the year, with Italian wines, perhaps overly slighted next to French wines over the last decade, leading the way.
Masseto, a Super Tuscan stalwart made entirely from Merlot, has seen its 2022 vintage move up about 10–15% year to date. However, more broadly, historically popular wines such as Burgundy and especially Bordeaux have barely moved.
The Price of Wine
An academic article published by the Journal of Financial Economics in November 2015, The Price of Wine, by Elroy Dimson, Peter Rousseau, and Christophe Spaenjers, is the current reference article on historical wine prices. The trio assembled 36,271 auction and dealer prices for the five First Growths from 1900 through 2012. They found a 5.3% annual real return before carrying costs and 4.1% net of estimated storage and insurance.
They also found, from 1900 to 2012, British equities produced a real return (after inflation) of 5.2%, which compares with 2.8% for British stamps, 2.4% for British art, 1.5% for British government bonds, and 0.9% for British Treasury bills.
The nominal return - after inflation - of course was much higher, but less interesting, except to those who market wine as an investment.
Now, fine wine beat the other collectibles and fixed-income assets in the study, and beat them all quite handily. Transaction costs and holding costs do vary across assets, but over 113 years, there is a lot of power in that study.
Still, fine wine is not an equities substitute, nor does it need to be. This is especially true of the First Growth Bordeaux, the top Burgundies, and the great Super Tuscan vintages.
One last chart drives home the timelines we are dealing with here while also putting to rest there is any reason to look at anything but fine wines.
Fig 1 from the paper also demonstrates the longevity of fine wine. Per their model, wine continues to rise, beating storage costs, for 30-40 years. I say 20, but 30-40 works even better, for one’s kids and grandkids. More on that later.
Why Wine? Why not Bourbon?
What do a bottle of 25-year Pappy Van Winkle bourbon and a McDonald’s hamburger have in common? Both are functionally identical to the next one of its kind.
Moreover, the Pappy evolves neither in its bottle nor in its glass; it never passes a drinking window and vintage years are not really a thing. This Pappy is 25 years old forever.
The fine bourbon primary market is concentrated among a handful of bourbon deities. It is deep, efficient, and nearly impossible to buy at discounts to market levels because there is no significant formal, novatable secondary market.
Wines are differentiated horizontally by region, producer, style. This is Pauillac against Pomerol against Vosne-Romanée against Bolgheri. Hundreds of estates, each with growing conditions, soil, irrigation, and wind that make its wines genuinely non-substitutable.
Wines are also differentiated vertically, within the château. This is by vintage, as the year’s weather writes a different wine’s storybook under the same label every year. Margaux 2015 and Margaux 2018 are distinct assets with distinct prices, scores, and maturity curves despite being the exact same vineyard and subject to the same winemaking techniques.
Plot the vertical against the horizontal to find thousands of points, each one a sparsely-traded market of its own. This is why a long spreadsheet of prices of the finest wines yields a mispriced Vega Sicilia or a magnum priced, atypically, lower per centiliter than standard sizes.
Furthermore, wine is on the clock. Unlike spirits, wine does change in the bottle. Each wine therefore tracks toward a drinking window that opens and closes, and every bottle of wine consumed anywhere on earth shrinks the inventory of that exact asset forever.
Supply destruction is both continuous and a bullish supply dynamic that spirits, watches, and art can never match.
Wines are consumption luxuries at their most expensive. Names like Lafite Rothschild, Latour, Margaux, Haut-Brion and Mouton Rothschild on the left bank, with Pétrus and Cheval Blanc as their right-bank peers. Romanée-Conti, Leroy, Roumier, and Rousseau in Burgundy. Sassicaia, Ornellaia, Masseto, and Solaia comprising the finest Super Tuscans, out of Tuscany.
In the restaurant, the prices of any of these will appear untouchable next to multitudes of more affordable wine.
Fine wines do not reside on your wrist for the next decades. They do not adorn ears or necks. They do not stand proud for years among the Joneses.
No, they are enjoyed very personally, with good friends and family, in the moment and then gone forever, after many years of patience and expense, save for the memories.
All three things make for something of a certainty in terms of fine wine appreciation, if bought well.
Right Now? Why Now?
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Sipping Singularity
Yes, my method is admittedly more Boy Scout than Army Ranger, but the gist is significant negative correlation between the dollar index and bonded fine wine exists today and over the last 25 years.
However, what is clear is that in none of those years did the dollar face serious risk of debasement. The debt, AI and quantum-computing issues are relatively new in terms of both the severity and the proximity of the threat.
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To keep tariffs in the face of a weakening dollar would be too hard on American consumers. Politically there would be repercussions, and the tariffs would go away.
However, with a weaker currency, American consumers will face higher prices anyway.
Looming is the possibility that if the U.S. loses its ability to finance its deficits on the strength of privilege, it will have to
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The 2010 Lafite Rothschild Autopsy: A Lesson in Price
I have done autopsies, so I feel qualified to do this. Recently, a dealer offered me Lafite Rothschild 2010. Parker rating 100, one of the legendary vintages, at a price below its 2011 release price. The pitch presented this as a bargain. It is actually a most instructive corpse, for those willing to do the dissection.
Fifteen years of holding a perfect-score First Growth Bordeaux returned less than nothing. But the wine never disappointed, as critics who retasted it have reconfirmed the perfect score. All the price appreciation happened at the front end, at the winery itself. Fifteen years of appreciation, within that original 2011 price.
How? It is not such a scary tale. No grim warning. Nothing from left field.
It's all about catching fireflies...
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Read thefull postat Michael Burry's Substack, Cassandra Unchained
Or, How a Lifetime Free supply of First Growth Bordeaux Requires Shorting the Dollar
