Wine: The magic potion of the European saver?

Who has never dreamed of owning an exceptional bottle, some of which are sometimes sold at stratospheric prices, such as this bottle of Romanée Conti 1945 sold in 2018 for €482,000?

If these examples only represent a tiny minority of investments in “red gold”, it must be acknowledged that the market has been rather dynamic in recent years. The Sotheby’s Wine index has consistently outperformed the S&P 500 since 2005, and shows that wine is a diversification investment to be considered carefully.

Like any market, it is preferable to know the subtleties and mechanisms before taking on exposure. If you are just starting out, choosing a trusted partner with expertise in wine is often a good idea.
For a commission, companies like CultWine or Patriwine offer investment cellars with interesting returns (between 7 and 10% / year depending on the track record), in a 100% off-the-shelf product.
You don’t store anything, you don’t do anything to yourself, they take care of everything.

Be careful though: this type of investment exposes you to a possible loss of capital.
Second disadvantage: the entry ticket is often prohibitively high (often around €200,000) in order to get the best conditions.

On this last point, the market has evolved a lot with the arrival of new players who promise to buy cellars “in common” thanks to very low entry tickets. The Diversified platform offers you the opportunity to become a co-owner of a cellar from €10 and will soon set up a secondary market to resell your stake. The ideal choice for a beginner to get their feet wet. Especially since cellar visits will be organised in the near future to enable you to quickly improve your knowledge of the subject.

Another approach is to lend money to wineries looking for investment. Although the returns are often less attractive and the commitment periods are quite long (several years), some systems allow for the payment of dividends in kind. It is always interesting to receive a bottle and combine investment and pleasure!

Finally, if you have the expertise (and could afford!), there is still direct ownership in your cellar. With a little patience you will have the choice in a few years to resell your bottles… or to enjoy them!

“In vino veritas” as the ancients used to say.
But beyond the timeless pleasure of enjoying a good bottle with friends, wine shows us another facet of its complex personality: it can be an excellent investment.

Preserving value over time: The art of Swiss watchmaking

Vacheron Constantin, Audemars Piguet, and Patek Philippe are considered the holy trinity of watch brands that have always captured the attention of enthusiasts. However, these watches come with a hefty price tag that not everyone can afford.

In recent years, the prices of these luxury watches have seen a significant increase. The flagship models of these brands such as the Royal Oak, Nautilus, and Patrimony have more than tripled in price over the last five years.

The reasons for this market surge are complex and multi-faceted. Factors such as inflation, which drives investment in alternative assets, and increased demand from emerging markets, play an important role. However, it is important to note that supply remains limited, which contributes to the high prices.

This high demand and limited supply have created a thriving secondary market for these luxury watches. Second-hand retailers have a significant advantage as they can offer these luxury watches at a premium, often higher than the price of a new watch. Additionally, watch brands traditionally do not participate in the secondary market, unlike other industries such as Tesla and Apple.

Recently, Rolex made a major move in the market by launching its own secondary market at the end of 2022. This allows customers to have confidence in the authenticity and condition of the watch they are buying, but at a premium price. Experts estimate that the prices on this secondary market can be as much as 30% higher than market prices. A few years ago, Vacheron Constantin launched "Les Collectionneurs", an offer of perfectly restored antique timepieces presented at events held around the world.

Despite this, the market has experienced a correction since April 2022. Iconic models such as the Royal Oak have lost 25% of their value in recent months. This market correction may present an opportunity for buyers, as long as they seek advice and focus on iconic models that have proven their resilience over the years.

Overall, the market fundamentals, the imbalance between supply and demand, and the emergence of new platforms for accessing the market such as Diversified.fi, point to a bright future for the luxury watch market in the coming years. However, it’s important to be cautious and informed when making investments in this market.

Rolex, Audemars Piguet, and Patek Philippe are considered the holy trinity of watch brands that have always captured the attention of enthusiasts. However, these watches come with a hefty price tag that not everyone can afford.

Why is it important to diversify your assets?

"Don't put all your eggs in one basket". This is certainly the financial advice you have heard the most! Diversifying your investments is essential to building your wealth properly. Find out why in this article.

Let's start with a little bit of theory. Even if wealth diversification is not the main topic of economists, there are theoretical bases on the subject.

Harry Markowitz is an economist who developed a theory in 1952 that portfolio diversification can help reduce risk and improve the profitability of an investment. 

To make it simple, Markowitz's modern portfolio theory is based on two main principles: 

The expected return, which is the expected gain or loss.

Variance, and especially covariance, which consists of investing in assets whose fluctuation in return is not correlated. 

You must pay attention to these two principles to build an optimal portfolio. 

Portfolio diversification is one thing! But in concrete terms, how do you allocate your different assets in your wealth? Unfortunately, there is no ready-made answer to this question, but you can orient your allocation according to the following criteria.

Your risk profile: if your risk aversion is low and the return you expect is high, you can devote a large part of your assets (at least 50%) to riskier investments. 

Your age: the younger you are, the more risk you can afford to take. Why? Because you have a better chance of recovering potential losses. Your financial safety net is less important than if you are retired, for example. Of course, this also depends on your financial means.

Your need for liquidity: Finally, liquidity is also important in the allocation of your assets. If you only invest in illiquid assets (which cannot be quickly converted into cash), you expose yourself to risks in case of urgent need. 

To build your wealth, it is therefore important to diversify the assets you invest in. Think of it as a house of cards: the more cards you have to build your base, the stronger your house is. 

The advantages of diversifying your assets

In the current inflationary context, diversifying your assets will allow you to reduce your risks while improving your profitability. 

The first advantage of diversifying your assets is obviously to reduce your risk of loss. Let's go back to our covariance principle with a very simple example. 

Let's say you have invested in two asset classes that are directly dependent on the financial markets. If the financial markets fall, all of your investments will be impacted.

Now, if you have invested in two asset classes that are not correlated (corporate stocks and real estate, for example). If the financial markets fall, only the value of your stock portfolio will fall. 

Each asset type has unique return characteristics and different economic cycles. By diversifying your portfolio, you can take advantage of the benefits of each of your investments as economic conditions change, thereby maximizing your overall return.

Consumer prices in March 2023 are up 5.6% from March 2022. In a context of strong price increases, diversifying your assets and investing in alternative assets allows you to protect yourself against inflation. 

Here are a few alternative investments to minimize your risks and boost your returns. 

Alternative assets to diversify your assets

Beyond the various types of traditional investments such as financial investments or real estate, there are assets on which you can invest and hope for an interesting return. 

Here are some types of alternative assets to invest in, with some figures:

Watches: in the 1980s, a Rolex Daytona was worth about €1,500. Today, it can be sold for around €150,000!

Works of art: a well-chosen work of art worth more than €100,000 could earn about 10% per year. For works between 50 and €100,000, the return would be 5% to 7% per year.

Wine: the most expensive bottle in the world is a 2000 vintage Petrus sent into space. It is estimated at €830,000! 

Bags: on average, the value of a luxury bag increases by 14.2% every year.

However, investing in alternative assets requires a precise knowledge of their market. Each asset has a history, a quality, a rarity, a brand. It is essential to know the product and the market perfectly to make the best investments. 

At Diversified, we choose for you the best properties to invest in to diversify your assets and boost your profitability. Join our waiting list! 

Diversified joins the Founders Program at Station F!

Diversified joins the prestigious Station F incubator and its Founders Program! Find out how we will accelerate our development to build a world where everyone can invest in ultra-rare and profitable assets!

We are delighted to announce that Diversified has been selected to join the prestigious Station F incubator in Paris in its Founders program. This is an incredible opportunity for Diversified to be part of one of the largest startup ecosystems in the world.

Since we were founded, we have worked hard to create a platform for co-investing in ultra-rare and profitable assets. Our mission is to democratize access to these asset classes usually reserved for the wealthy.

We believe that our participation in the Founders program at Station F will allow us to pursue our mission more effectively than ever. We will have access to a community of talented startups and entrepreneurs, mentors and renowned investors who will help us accelerate our growth and realize our vision.

We are proud to be part of a program that has already helped so many startups succeed. Station F's Founders program is designed to support entrepreneurs by giving them access to high-quality resources to help them overcome the challenges they face. We look forward to working with the Station F team to accelerate our growth and reach new heights.

We are also excited to join an exciting community of startups at Station F. We look forward to meeting and sharing our knowledge and expertise with other entrepreneurs in the Founders Program!

Finally, we are grateful to our investors, our team and everyone who believed in us from the beginning. Without their support, we would never have reached this stage of our development. We are committed to working hard to continue to earn your trust and support.

Inflation: The new guest at the European Saver's table

In 2022, we are experiencing a new inflationist cycle, particularly powerful and sudden since the post-Covid recovery and accentuated by the Ukrainian crisis.

If France is relatively protected since the beginning of the cycle with an inflation around 6%, the rest of Europe and the western world are taking this wave full force (>10%).

France is resisting better than its neighbors for several reasons: an economy that is sometimes less financialized, a high level of social protection and, above all, a series of measures called "tariff shield" that is extremely powerful and general in its application. There is no doubt, however, that the effects observed outside France will cross borders in a few months.

This inflation is therefore significant (over 10%), permanent (see the ECB's statement in September 2022) and exponential (18% expected in the UK by the end of the year).

We are even in an unprecedented situation: in the 1970s, our governments chose to index wages. Today, they refuse to do so in order not to feed the vicious inflation/wage cycle.

We govern with a cheque policy and not with a perennial revaluation of wages. We have therefore chosen to make citizens pay for the cost of inflation, not companies (even if there are discussions on this point in Europe), while betting on the hypothesis of a short period.

In addition to the non-indexation of wages, this inflationary period is also very different from previous periods because it takes place in a cyclical but also systemic context:

Tensions on raw materials (depletion or scarcity of resources)

New ecological constraints (linked to the acceleration of global warming and the growing mobilization of public opinion)

Strategic relocation movements (post geopolitical tensions and uncertainties about supply chains)

The conclusion is clear for the European saver:

With a Livret A savings account at 2% when inflation is already at 10%, "prudent management" must be completely (and quickly!) rethought.

Indeed, "non-risky" savings solutions have paradoxically never been so risky since they cause households to lose a significant part of their purchasing power every day.

There are actually two strategies for the saver in this type of configuration: the Offensive or Defensive solution.

If we wish to see this period as a window of opportunity, it is possible to invest in financial stocks that are often massacred during these cycles, due to the need for liquidity and the uncertainty intrinsically linked to periods of instability.

During previous crises, this type of "bet" is profitable if:

We have the means to invest (inflation has not dented the capital necessary for the saver's lifestyle)

We have a long term vision (we must consider the cycle over several years)

We are convinced that the systemic forces mentioned above will not disrupt the market when the crisis ends

The defensive approach has always been the same: buy safe havens that traditionally resist better than other stocks in times of inflation. We are thinking of course of the "barbarian relic" (gold) but not only: watches, fine wines or real estate are also often used in this context.

New assets have emerged since the last inflationary cycle.

One thinks in particular of "alternative" assets such as crypto-currencies. And in particular Bitcoin, initially considered by some analysts as the "digital Gold".

In reality, this alleged property of crypto-assets does not stand up to reality: their price is highly correlated to traditional financial markets. With increased volatility.

New solutions offer the greatest number of people access to alternative assets. The latter generally have the advantage of being uncorrelated with the financial markets, which, depending on the type of asset, could allow them to outperform inflation.

On the crypto-asset side, we can mention stablecoins based on the price of gold (Tether Gold, PAX Gold) or diamond (DiamondBack). There are also the famous NFTs, some of which are used to represent an underlying asset like wine.

Even more interesting are the services based on fractional ownership. These offer to invest in fractions of exceptional properties. Think crowdfunding of luxury items: wine, watches, art, cars, vacation homes, real estate, everything is now fractionalizable!

The advantages of these solutions make them very attractive: a low entry ticket and a high profitability. But what about the exit guarantees and the liquidity of the stake?

After all, these platforms do not guarantee that the underlying property will find a buyer at the end of the appreciation period and many projects have not yet reached their end. Thus, there is little experience with this type of investment. In addition, there are still few users on these platforms, which makes it difficult to have a liquid participation in the secondary market, when it exists.

Diversified stands out from these new players by offering a complete solution for investors who want to start in the high yield market. Thanks to an innovative technology (Web3), an exit at any time is possible thanks to a liquid secondary market. If you are a long-term investor, a buy-out of the property by the project owner is foreseen in 100% of the cases.

Academy

Diversified joins the Founders Program at Station F!

Get the news

Featured articles

Preserving value over time: The art of Swiss watchmaking

Why is it important to diversify your assets?

Wine: The magic potion of the European saver?

Preserving value over time: The art of Swiss watchmaking

Why is it important to diversify your assets?

Diversified joins the Founders Program at Station F!

Inflation: The new guest at the European Saver's table