A year ago, I could have got a 100% mortgage, without any problems, for a £120,000 flat. I couldn’t have afforded to pay it off and had heat and food at the same time, but my bank was willing to give me pots of cash with no consideration of whether I’d be able to make my monthly payments. A year on, my bank, with whom I’ve been with for eight years, won’t talk to me unless I have ten grand in my back pocket to put down as a deposit. And the reason for this is because the housing market is in as much trouble as a crab in a seafood restaurant. And the fact that I can no longer buy a house doesn’t bother me, and the reason that I am full of joy is that the bankers who were once wanting me to get into a shedload of debt, and now well and truly hosed! Banks have been trying to make money out of nothing, by borrowing and then lending vast sums of cash and skimming a small percentage off the top. The only problem is that the banks with the mortgage books are not being trusted to pay back the money they have borrowed. As a result, they are being charged a higher interest rate than they, in turn, are charging the homeowners. Throw into the fact that a load of people are defaulting on their mortgage payments, many financial institutions are going belly up as their outgoings are greater than their incoming.
Which is why I’m not a fan of gambling. On my only trip to a casino, I lost $80 before I hit the Blackjack table with my last budgeted twenty bucks. I somehow managed to claw back my lost money and left the table five dollars to the good, which I used to tip the dealer. I realised that I’d been lucky. I had lost a lot of cash and managed through nothing but luck, to get out of the hole I had dug myself into. The bankers haven’t managed to do this, they have lost billions on the slots, have hit the blackjack table to try and get their money back and have only succeeded in losing more. Now governments are bailing them out, and despite the politician’s promise that the greed mongers in the banking sector will not have multi million bonuses in the future, I would stake my non obtainable house that when they get their first bonus in a few years time they won’t share the wealth as I did at the blackjack table and give me a break in buying a house. If I want to buy a home for myself, I’m going to have work hard to save a deposit, and that is just fine with me.
In the meantime, I’ll enjoy watching the bankers suffer, and I’ll also watch another group of investors lose money knowing that they have made a bad investment. Over the past few months, prices of non drinkable Bordeaux (for that read the overpriced 2005 vintage) have seen, according to the Decanter website, a drop in price of between 10% and 20%. To sum up, this means that folk who have speculated on 2005 Bordeaux are losing money, and that fills my heart with joy.
For those of you who have read my articles before, you will know I’m a retailer, and may have thought that from a retailer’s perspective, I should be dreading this, as it means that any wines we bought will be worth less than what we paid for it. But unlike the investor, retailers are not in it for the money! Well, we are in it for the money, but we are not in it for the quick profit. We can weather this financial storm and come out, not only making money, but possibly increasing our stockholding for lower prices than initially available, and the great thing is so can you!
The basic gist is this. If, a few years ago, you spent five grand on wine and find it is now only worth four, as Bobby McFerrin said “don’t worry, be happy”! Keep it for the next few years, let the financial crisis sort itself out and, if you can, buy more wine when you see going at cheaper prices. Then over the next few years, the prices will creep back up to what you paid for your initial parcel of wines, and as soon as it is there, sell the original wines immediately. You won’t have lost anything on your initial investment, but will be sitting with a nice parcel of wines you bought when things were going cheap, that, all of a sudden, are worth much more than you paid for them. And the best part of it all is that if the market never recovers, you have some nice plonk to drink in a few years time.
And the reason you can do this is the investors, who won’t play this game. They will see their investment in wine as a liability as it is losing money and as they are purely in it for the cash, will flog it all off now, saturate the market (relatively), drive the price down even further and allow us wine lovers to buy wine that, a year ago, was prohibitively expensive. The people who screwed us oenophiles are now being screwed themselves – fantastic!
Comments