Photo: VinoFamily via Flickr
It has been a terrible 7 weeks for stocks, with the Dow finally halting its losing skid this last week.But what if you didn’t need to watch the market everyday, and could instead be assessing the quality of vineyards to make your fortune?
For investors who already have some cash, some more prestige industries like wine, classic cars, and gold coins may be the way to another million.
Check out how some of the world’s alternative investment markets have performed, and how to get in to the field.
Performance: According to Alternative Outlook fine wine returned 40.5% in 2010.
How to invest: There are also a variety of wine funds where you can invest. Some of the best known include The Fine Wine Fund, The Wine Investment Fund, Bacchus Partners LLC, the Vintage Wine Fund, and the Wine Investment Fund. The industry's leading index, The Live-Ex Fine Wine Index, has enjoyed a 14.1% compound annual growth rate over the last 10 years.
Performance: The Mei-Moses Index, which tracks art re-sales in auction houses all over the world, had a return of 16.6% in 2010. The S&P had a return of 15.06%
How to do it: Buy what you like, because you're going to need to hang on to it for a while (on average 13-15 years). Also, its still worth it to buy lesser known works, but you have to believe in the artist. The work's value depends on their notoriety. The Mei-Moses Index was developed by Professors Michael Moses and Jianping Mei. They also advise privately through their company, Beautiful Asset Advisors. You can find more insight on the market by reading The Art of Asset Allocation and Mastering the Art of Asset Allocation, by David Darst, Chief Investment Strategist of Global Wealth Management for Morgan Stanley.
Performance: Sillsport Sports Development, a firm that invests in individual soccer players, claims investors see 50% returns after 5 years.
How to do it: You may not be able to buy a team, but there are still a variety of ways to invest in sports. Companies like Sillsport Sport Development and Sport Investment Fund find talent outside the U.S. and U.K., pay for them to move, and profit from their success. Athletes are a human asset though, so this investment is not totally stable. There are also hedge funds like Centaur Global that employ analysts treat sporting events like any other tradeable commodity.
Performance: It depends on the coin, but standard gold Double Eagles can garner returns of 8 to 10% annually.
How to do it: If you're buying a coin for the metal, buy low and sell high. That means now is not the time.
The U.S. Mint sold 3.65 million ounces of American Eagle silver coins last month and had the best January through May sales since 1986 as prices for the metal almost doubled.
If you're buying the coin for its significance as a collectors item, learn learn learn. Its a complicated market with savvy investors.
Performance: According to Smart Money, the price of autographs of famous figures spiked 147% from 2000-2010.
How to do it: Fraser's Autograph Index tracks the value of famous signatures and sells autographs and memorabilia. Over the last 13 years, they've enjoyed an average compound increase of 11.64%. Getting into this market can require a good bit of luck or money, but if you hold on to a good signature the returns can substantial.
Performance: In 2010, Christie's sold a 2004 Black crocodile Birkin for $80,819.54. Its original retail value was around $40,000.
How to do it: This is a market driven by name brands and if a celebrity is known for wearing a certain bag, that gives it even more value. Buy a bag from a respected fashion house, preferably in a classic style and colour that has a history of successful re-sale. A durable material is also important. Alligator, crocodile and calf-skin hold up well over time, especially if they are kept in cool, dark places.
Performance: At Sotheby's Geneva Sale of Important Watches, an extremely rare, circa 1960, Patek Phillipe Chronograph sold for $815,637.
How to do it: The key here is to buy what you like (because you will need to hold on to it as the price appreciates) and make sure its rare. Also, keep all certificates of authenticity. Vintage watches in brands like Rolex and Patek Phillipe are known for their great returns, especially Patek's stainless steel models from the 1940s and 1950s says Michael Ashton, whose Madison Avenue boutique in Manhattan specialises in vintage Pateks and Rolexes.
Performance: According to Daily Finance;
'Water infrastructure firms could grow by double the global GDP rate annually over the next 10 years, but in China, that growth would be 15% to 20% or more each year due to its tremendous demand for water.'
How to do it: The best way to get in this market is to invest in water infrastructure. The United Nations estimates that 1.1 billion people world wide don't have access to fresh water, and 2.6 billion don't have adequate water infrastructure systems in place. Countries in the Caribbean and Middle East already rely on desalination plants for fresh water. There are a few mutual funds in the water market that you can invest with including The Calvert Global Water Fund, Kinetics Water Infrastructure Fund, and the PFW Water Fund Class A.
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