I have almost done zero trades in a month now. Most unusual of me, but I havent seen anything really interesting to buy. (for the record, I did add some TEVA at 49, and probably will buy some AAPL around 325 if it gets there next week). I am glad I passed on Japan though, EWJ is down as the yen continues to weaken. So much of investing is just going along with what central banks are doing. That is, if the Fed is easing, then own stocks. If G7 countries are coordinating efforts to weaken the yen to help exporters there, then don't own yen-denominated assets. Fighting the tape is a game I play sometimes, but generally it is just a bad idea. And the biggest influencer in the equity markets are central banks, pure and simple.
When QE2 ends in June, I really wonder what will happen to rates. Ironically, when QE1 ended in 2010, the economy immediatley begain to weaken, stocks fell, and treasuries rallied in a flight to lower risk assets. When QE2 was announced at the end of last August, rates spiked, and hence treasuries fell. Because the reality is that pumping money into an economy is effectively stimulus, leading to inflation, an overheating economy, and in those environments rates and equities tend to move up.
So what is an investor to do? I don't know. I don't have the playbook because really we are just at the mercy of the Fed. "Bubble's" Ben Bernanke will likely push through QE3, but with real inflation showing up all over the world, there is probably enough pressure here to keep him from going there. For now. Eventually he will implement QE3, but with inflationary pressure building, I think monetary policy and QE will pause. As will the market.
Last year the Fed paused for 5 months between QE programs, from March to August's announcement of QE2. And the market fell 15%. This time we might get the same pause and a similar, perhaps larger correction. Which won't be good for risk assets, and why most market watchers are calling for caution right now.
So, on an off topic, I thought I would talk about my favorite wines since I am not buying stocks. I have always had people ask me to recommend bottles, and so here goes. Enjoy. If you are looking for white wine ideas, you can just skip this!
Wine I am Buying
First of all, I don't ever buy wine as an investment. I drink em. That said, I have found many times that the $50 bottles I have picked up, are auctioning for $100-120 three to five years later. That is, when I drink 'em I sometimes check to see what I could get elsewhere for them. I figure its partly a devalued dollar, and partly the peaking of the wine. Who knows. Once I read that one wine afficionado would buy a case of wine for $50-100 a bottle or whatever it cost. And in 5 years, sell half of them, hopefully at double the price to mean he was drinking his remaining wine for "free." More work than I want to deal with, but worth considering. The right wines do go up in value.
So, here is my list of recent buys, by price range.
First of all, I rarely buy wine below $15, and never below $10. There is massive inefficiency in the wine world, but not so much that you'll find great wines for $10 or $12. Good, enjoyable wines, yes. Great, age-worthly lip-smacking wines. No. But I have found these to be quite good, some worth cellaring for 2-5 years:
Gotham 2008 McLaren Vale Shiraz - about $15. drink now, great stuff, nice full bodied and fruity shiraz.
Story Winery Picnic Hill Zinfandel 2007 - about $25 or so for a bottle, you can find these at the winery's website. I owe my wine-snob of a brother Chuck (I mean that in a good way!) kudos for introducing this one to us. Buy it by the case, the best Zin I have ever had. It becomes velvety like an aged Pinot at about 5 years of age, when it peaks.
Craggy Range Te Muna Pinot Noir 2008 - 93 points, Wine Spectator calls this a top 100 wine of 2010. We downed a few bottles of the 2003 version recently, and it was fantastic. I have a case of this one, its around $30. Year in and year out it gets 93-95 points by the wine critics. It ages extremely well from what we saw in the 2003 bottle that we just recently drank. I actually expect to start cracking these 2008s in 2013-2014.
I am going to veer into the Shiraz category here, because you just can't find so many top flight, rich full-bodied amazing wines for the price than you can out of Australia right now. We have been blown away literally by these wines in the last few months:
Mollydooker the Blue Eyed Boy, 2007 or 2009 - Shiraz, Australia. We have both the 07 and 09 versions. They only make these bottles in top quality vintages, and 2008 didn't pass the test. So, check out the other years. This stuff is a meal in a glass, you can literally chew on the wine as you drink it. Inky dark purple, very very serious not for the feint of heart. Around $45. Great value.
Glaetzer Amon-Ra 2004 Shiraz - 95 points, around $65. Rich, Barossa Valley classic from a top wine maker in Australian. This stuff is truly awesome. The finish goes on and on, and you just need the smallest sip of the wine to get huge body and fullness and flavor in your mouth. Take this to a steakhouse. We did a week ago, and the 2004 was still too young. Find a couple of these, put them away for 2-4 years and then drink them. I am not sure I have ever had a better bottle than this, anywhere.
Mitolo GAM shiraz 2005. Another wine rated 95 points, its around $40-45 a bottle, and spectacular. I find this more elegant than the 2 shirazes above, which are incredibly rich and full bodied. But still so good with a gourmet meal.
Yes, I am a value investor and value wine buyer. I see people throw names about like they are the best. But the reality is that wine doesn't have to be a cult California cab or a first growth Bordeaux wine to be in that "best" category. Why pay $400 or $1400 for a bottle of Screaming Eagle or Le Pin when you can find wines that are also 98 points, for $100-200 bucks. That's a lot too, but I will throw out what I like, and my opinion is that a smart value wine buyer will recognize these as the best wine can get, but for less dough. Note that almost all of these are Cabs.
Phelps Insignia 2004 Cab - there is a reason this winery has had a bottle ranked as a #1 wine of the year by the Wine Spectator. Sh-t its amazing, truly. We have killed a couple of the 2004s, and they seem almost timeless. Great now, but still possessing huge (subdued) tannins avaliable for aging for many many more years. This one sets you back $125 or so.
Cos D Estournel 2005 Cab - $200 or so a bottle. Yea its pricey, but compared to a Haut Lafite, or a Latour, which are First Growths, this one is half the price at the same rating. I have yet to try any of these, we have a case in our cellar. But at 98 points by both Robert Parker, and WS, I am willing to go out on a limb and say this is a great value, a near perfect rated wine, rated by BOTH the major wine critics.
Chateau Leoville Las Cases - another cab, as all my top category wines seem to be. I didn't put a year on here, because it depends on what you want. If you want the 100 point 2000 or 2005 vintage "perfect" bottles, then it will set you back $250-350. That is really a bargain. This is some of the best wine in the world. I have the 2002 and 2004 vintages, some for me, some to give my kids because those were the years that they were born. They will age long enough for them to be amazing bottles when my kids are old enough to drink em. Normally you can find them for $100-150. The 2007 is around $150 and rates around 95 points. Be prepared to wait til they are 10 years old to try.
My Favorite Winery
Clarendon Hills, ANY of their wines - I saved my favorite winery in the world for last. I have had many bottles and tastings of a variety of Clarendon Hills wine. The 1999 merlots were amazing, we drank 3 just a few months ago. How many merlots last 11 years and stay in top shape? The Brookman estate cabs from 2002 were astonishingly good. The 1999 Liandra Syrah's were so good, I couldn't believe they only cost $40 bucks or so a bottle.
We went to a wine tasting of the 2005 bottles last year, and I have to say that they are so powerful right now, that they were too young to drink. These are always very very long dated, tight, age-worthy wines. The owner of Clarendon Hills is the only guy in Australia that titles his wines as Syrahs instead of the Aussie norm of calling them Shiraz! He is a Bordeax trained owner/wine-maker, and he makes wine to last. His goal is to simply make the best wine in the world, period. He eschews quick drinking fruit bombs that you see a lot in the new world, instead opting for wines that don't show their stuff for a decade. Robert Parker puts Clarendon Hills among the top wine makers in the world, and the best in Australia. I am very happy that this winery is almost unheard of. Not only that but you can find bottles starting at 40-50 bucks, and on up to $160 or so for their flagship Astralis. The Astralis is probably is as good as any wine anywhere, scoring consistently between 95 and 99 points. We have some 2005s, but I wont be able to enjoy them til at least 2015. At that point I'll write another blog to gloat about how good they are. I hope!