Surfing around the net, I came across this now-oldish story about Charles Koch, the billionaire, who is an avid collector of fine wines. He may – I have to be careful here – have been scammed by a seller of fake wine. Instead of buying what he thought was red stuff once owned by Thomas Jefferson, the wine may be er, a bit younger. Oh dear. Given the enormous – and to my mind barking mad – sums of cash that people spend on wine, this is almost inevitable. The same thing can happen with antiques. There have been infamous forgers of paintings. The movie re-make of the Thomas Crown Affair, which I thought was an excellent film, is about art forgery (amongst other things). But I had not come across the idea of someone faking wine itself.
The investment market in wine is now a big business; this seems almost immoral, but then I tell myself, as a student of Adam Smith, Ludwig von Mises and Milton Friedman, that if investors want to punt on the future price of Margaux, Talbot or Mouton-Rothschild, then go ahead. There is even a London-based electronic exchange (Liv-ex) for trading in wines, most of which are French. Trading in New World wines is also large but not done out of a central exchange yet. I am not quite sure the God Bacchus would approve of this: the idea of wine, even if you lay it down for years, is eventually to get out the corkscrew and drink it. But the forgery story is a great one: there has to be a movie in this somewhere.
Wasn’t there talk on this very blog a while back about investment markets in things like predicting which despot was going to start a war next, the idea being the market would feed information to intelligence people.
For a while now I’ve been meaning to write a post for about the connection between this thought and Betfair, which can be viewed as a type of investment market (it’s fun to watch the prices go up and down as the sporting event develops).
The great thing about forging bottles of snidey wine is that the dingbats who buy it don’t drink it, so they never know it’s a fake. It’s like the old joke about the rotten tins of salmon, they are for trading, not eating.
I first became aware of the same thing going on in vintage guitars several years ago. With the top end of the Gibsons now pretty solidly spiked around a half-million dollars, the level of expertise at identifying them from frauds is almost mind-boggling. One of the big-kids in that market recently said that it feels like “being involved in drug deals”.
I agree with John K. There are somethings I can see worth collecting and some not.
Even if a painting is proved to be a fake, it is still an enjoyable visual experience (well apart from the rancour that the purchaser might feel at spending a lot more money than he needed.
But an ancient bottle of Wine? Yes the collector is never going to drink it. So what is the point of it?
Thomas Jefferson owned that, thinks the purchaser!
Sympathetic Magic.
Nope, he probably never even laid eyes on it. It’s unopened as you can see…
Even if it was the real thing and you decided to pull the cork, how would Jilly Goolden describe it?
This is a Cheeky little Napoleon Merlot, 1812
MMmm I’m getting an interesting gunpowder and shot tang, coupled with a hint of Gangrene and that inescapable thrill of frostbite and the iron hard nose of blood…
But apart from that it tastes like mud.
We shouldn’t prevent people from investing in odd things.
The free-market succeeds largely due to darwinian experimentation. We found the things that work today by tolerating many failures in the past.
I personally will not invest in projects that serve no other purpose than to provide mere status items. I prefer my surplus resources go into creating the necessary tools for creating yet more real wealth.
That doesn’t mean that I am arrogant enough to decide how other people should experiment with their surplus resources.
Nobody has suggested preventing the gullible parting with their pile, Shannon, my dear
“Everybody gets to go to hell in their own go-cart.”
(Beck’s Axiom of Pedagogic Reality)
“No do-gooders allowed.”
(Cautionary Corollary)
That’s what I always say.
Oh, I dunno. Respecting a person’s rights doesn’t mean having no opinion about what they do. People have the right to do all kinds of ridiculous sh*t that I have the right to make fun of. I wouldn’t stop them for the world.
That’s exactly right, Joshua, and a serious point that I only really hinted at (although it should be implicit).
I think Lester Maddox was a fucking idiot, but he had a right to stand in the doorway of his restaurant and deny entrance to black people.
“Freedom” doesn’t mean that anyone has to like you. Conversely, an expression of distaste certainly does not carry necessary political implications.
I should think this would be obvious.
Yes, Shannon, I did not say we should prevent folk from investing in silly things; I merely pointed out that it is daft what many people do with their money.
There was a BBC series a few years ago (about 2003-4 I think) called something like the “The Most Expensive” (sorry if this is a bit vague) but the Thomas Jefferson wine was on there (as the worlds most expensive wine) and the experts on that pretty much disregarded it as a semi-fake, i.e it was certainly old, but massively unlikely to have ever been owned by the man himself. There were about 6 episodes, but the only other 2 I can remember, was Painting (V Goghs Irises) and Car (I’m pretty sure it was some variety of Hispano Suiza) though something about Guitars also dings a bell.
Johnathan Pearce,
I did not say we should prevent folk from investing in silly things;
Sorry, I didn’t intend to imply that you did. In my mind, I was addressing critics of the free-market who point to apparently foolish or luxury investments as evidence of the inefficiency and irrationality of markets.
I apologize for not making myself clear.