More than half of Americans are invested in the stock market. About 62 percdent of Americans buy wine. About 24.6 percent of households with an income of $ 100,000+ have a wine refrigerator or cellar.
Are you included? Then you likely understand investing and have a wine storage unit in your kitchen with a capacity of 24 to 36 bottles. Suppose you applied those investing smarts to having the right wines on hand at the right time?
Originally posted on Bizjournals
We are talking wine enjoyment, not wine investing. From your point of view, wine should be a beverage to be enjoyed.
Portfolio theory applied to wineFor purposes of our wine analogy, portfolio theory simply means owning a diversified portfolio of non-correlated assets. Assume the asset classes of investment portfolios are stocks, bonds, cash and alternative investments. The similar categories in the wine drinker’s portfolio will be reds, whites, rose wines and everything else.
Here’s how the analogy works:
1. The markets are cyclical. Stocks rise in bull markets and decline in bear markets. Interest rates rise and fall. Growth and value investing take turns being in favor.
Wine: Weather is cyclical too. Winter, spring, summer and fall are the four seasons.
2. Buy American -- Most U.S. investors prefer to own American stocks. According to Investment Company Institute, in June 2016, there was $6.1 trillion invested in U.S. stock mutual funds vs. $2.1 trillion in global stock funds.
Wine: Most Americans are more comfortable buying domestic wines. One glance at a steakhouse wine list is all the proof you need.
3. International makes sense -- The stock market capitalization of the entire world is $65.6 trillion. The U.S. accounts for $23.8 trillion or 36 percent. Investors who don’t look beyond our shores are similar to golfers who play an 18-hole course but stop after the 6 th hole. (That isn’t mine, I heard it in the 1980s)
Wine: Several really great styles are attributed to other countries. Think Bordeaux, Burgundy and New Zealand Sauvignon Blanc.
Drinking with the seasonsNow let’s consider matching wines with different times of the year:
Summer -- Summertime, and the living is easy. This is similar to a bull market in investing terms. The weather is warm. You are grilling chicken and eating salads on your deck.
Your wine portfolio -- 20 percent red wines, 60 percent white wines, 20 percent rose wines.
Whites: American: Chardonnay. Overseas: New Zealand Sauvignon Blanc, German Riesling, French Chablis, Portuguese Vinho Verde, Italian Pinot Grigio.
Reds: American: Pinot Noir. Overseas: French Beaujolais.
Rose: Overseas: French Rose from Cotes du Provence
Rationale: It’s hot. The subtle complexities of many full-bodied wines will be lost in casual outdoor entertaining. People tend to drink more in the summer. German Riesling and Portuguese Vinho Verde often register 7 to 9 percent alcohol content vs. 12 to 14 percent on conventional wines. Rose wines have been growing in popularity. In 2012, America drank 13 percent of the world’s rose wine. Twenty percent of U.S. consumption was in NYC and 15 percent in Miami. It’s on a roll.
Fall— The leaves are turning, but the weather is still comfortable. The days are getting shorter. You are still entertaining outside, but parties move inside as the days get shorter. Salads have given way to steaks and lobster.
Your Wine Portfolio: 50 percent red wine, 50 percent white wine, 0 percent rose wine.
Whites: American: Chardonnay. Overseas: French white Burgundy, Chablis. Australian Chardonnay.
Reds: American: Cabernet, Merlot and Meritage. Overseas: French red Bordeaux, red Burgundy, Italian Chianti.
Rationale: As the weather gets colder, your wines are becoming fuller bodied. You are indoors now, where enjoying complex flavors is easier. Your summer Chardonnay supply carries you into the fall. Chardonnay is the most popular white wine in America. You are probably moving from lighter fish and salad dishes to heavier beef, lamb and chicken dishes. Fuller-bodied reds are a good match. Who doesn’t love a good cabernet with a steak?
Winter— The holidays are the positive. The colder weather is the negative. It’s the bear market of weather. No outdoor dining. Plenty of holiday entertaining. Think Thanksgiving, Christmas and New Year’s. Stews and roasts are more popular.
Your wine portfolio: 80 percent red wine, 20 percent white wine, 0 percent rose.
Whites: American: Chardonnay
Reds: American: Cabernet, Zinfandel. Overseas: Spanish Rioja, Australian Shiraz, French red Bordeaux and Red Burgundy. Beaujolais too.
Rationale: You are getting into the holidays. Turkey, Thanksgiving and Zinfandel go together. Beaujolais goes well too. A traditional Christmas dinner often involves roast beef, a natural match for fuller bodied reds. You are entertaining more and want less expensive, uncomplicated wines for parties.
Spring— It’s the season of rebirth. Leaves start to appear on trees. Daffodils are followed by tulips. The weather gets warmer. You venture outside again.
Your Wine Portfolio: 45 percent red wines, 45 percent white wines, 10 percent rose wines
Whites: American Chardonnay, Sauvignon Blanc.
Reds: American: Cabernet, Merlot, Pinot Noir. Overseas: French red Bordeaux, Spanish Rioja, New Zealand Pinot Noir
Rose: Overseas: French Rose from Cotes du Provence
Rationale: The weather is getting warmer, but Mother Nature still has surprises. Easter celebrations often involve lamb or ham, matched with red Bordeaux or NZ Pinot Noir respectively. Your red wines shift to the lighter side. Rose has been making inroads beyond summertime. Memorial Day is getting close.
Alternative investments — what about champagne?Your everyday wine selection doesn’t include everything you own. There’s probably some champagne tucked away for New Years, Valentine’s Day along with June weddings and graduations. You might have a bottle of port for those long winter nights in front of the fire. These are wines that don’t fit neatly into a category. Your wine refrigeration unit holds high-turnover wines that get opened and replaced very frequently.