In the first of a three-episode series for Real Vision Finance, the founders analyze the success of alternative investments during times of economic uncertainty, specifically exploring how certain assets have performed during Covid-19.
During the talk, Pal highlights the uncertainty that now hounds even the most traditional portfolios, which necessitates exploration into less obvious asset classes.
“We’re in one of the most extraordinary economic times that any of us have ever lived through, wherein uncertainty is intense and people are searching for answers. We don’t really know how it’s going to affect us, our portfolios, or our businesses. The equity markets are all-time high valuation; bond markets give you low, low yields, the lowest in all recorded history. And credit markets have the same issue, and they’re being supported by central banks.”
As the global economy languishes in recession, Pal and Horner highlight a handful of rare and unique goods that are always in-demand. Pal highlights the growing popularity of rare art, classic luxury vehicles, wine, whiskey and rum.
“We can see that people move into not only gold and crypto, but art markets, classic car markets. We’ve seen the rise of whiskey as an investment, too. We’ve seen it in rare brandies and fine wines. We see it across the world as people look for these incredibly rare assets, where there is always a demand, where people perceive that to be valued globally.”
Pal goes on to specifically spotlight rum as a good that could currently be severely undervalued.
“You’re looking for things also that are maybe undervalued versus other areas. Every day you see record prices for fine wines or high art, but there are pockets of value and I think rum is one of those areas. Rum is, I think as fine as whiskey. I live in the Caribbean. I live in a rum culture and I’ve seen rum spread around the world. I’ve seen it when I used to live in Spain.
Rum is a really unique spirit that has those kinds of flavor structures that whiskey has, but is not yet known by everybody. And I think its place and its time is coming as this globalized culture looks for new sources of value. And I think rum is one of those. It’s also incredibly nice to drink.”
Real Vision co-founder Damian Horner, also hypothesizes that because owning classic cars can involve high maintenance costs and the fine art market is undergoing some uncertainty itself, wines, whiskey, and perhaps most superiorly, rum, could be the best bets.
“We know that alternative investments traditionally perform well in times of volatility but with some of the traditional markets like art looking uncertain of their direction or classic cars bringing with them additional responsibilities, are the best propositions in wines and dark spirits?
The meteoric rise of whiskey as an alternative investment is intriguing, but I do wonder if there is greater potential for profit in rum. Just as silver is a supercharged follower of the trends in gold, will rum follow in the footsteps of whiskey? Is that where the less obvious, but the more exciting opportunities lie?”
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