The equity rally over the last 18 months has tempted many investors but should the canny be looking to invest profits gained into assets currently undervalued to position for the next market cycle?
Moneyweek (the UK’s best-selling financial magazine) suggests we prepare our portfolios for the next market crash and we ask the question is the equity bubble waiting to burst, click here to read the article. The adage of buy low and sell high could certainly be put into action with taking profit from some extraordinary equity values and buying into the undervalued First Growths.
FTSE v Liv-ex 50 over the last 5 years
The charts further illustrate the performance of fine wine versus the FTSE, the impact of the market dynamic over the last three years and the potential value of current prices available in the finest wines in the world.
FTSE v Liv-ex 50 since 2000
The opportunity may be right now as the latest Liv-ex market up date points out that despite Bordeaux’s overall market share having dropped to a historic low of 74% last month, its actual share of trade by value also increased in the same period by over 13% to 85% of the total. This fact added to the Liv-ex 50 being at a 3 year low indicates that whilst prices are great value demand is still high and there is still a thirst for Bordeaux. The real value lies with the Blue Chip 1st Growths where it can truly be said “…form is temporary but class is permanent”. These top chateaux always produce the best wine on a consistent basis and the demand will return. Bordeaux Index’s recent comments in a Drinks Business article merely confirms our suspicions.