Warren Buffett and John Bogle are two of my favorite financial gurus.
The two are opposites in many ways. Buffett is a shrewd investor (I don’t own any of his Berkshire Hathaway shares) and more a risk-taker than Bogle, the founder and former CEO of Vanguard (where I do have some investments). Bogle represents a more basic, common-sense approach to investing and is best known for his philosophy on indexing.
I’ve been thinking about them plenty of late as the global markets wrestle with the recession. One of the lessons I learned between the two of them is this: from Buffett, if you’re going to invest in something, make sure you know what you’re investing in. Bogle says don’t guess and speculate, just take what the market gives you.
In my last magazine column I wrote about some of the pros and cons of investing, and for most wine drinkers, you should consider your wine cellar as an investment in yourself and wine education rather than as a means to financial gain.
But clearly many people have made tidy sums of money investing in blue chips and cult wines. Maybe not lately. But there have been some handsome wine price run-ups in recent years. If you know fine wine, and follow the markets and prices and are willing to stomach the risks, then investing in wine might make sense.
Few people take into consideration some of the issues involved with buying and holding wine, such as proper storage, insurance and taxes (though few people tell the IRS they profited selling wines).
If you’re an expert on a type of wine and know the ins and outs of the market and are able to buy low and sell high, then it’s no riskier than buying stocks or any other investment. We’ve seen what can happen to stocks, and many wines people thought had great value don’t anymore. Many people, in fact, are selling off their collections at huge discounts. Those wines may come back to achieve greater value. But that could take years.
Matthew Lo — Zurich, Switzerland — March 4, 2009 6:51am ET
Don Rauba — Schaumburg, IL — March 15, 2009 8:14pm ET
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