This page has been archived and commenting is disabled.
Investment Idea: Pre-Fukushima Sake and Shochu
What should we invest in?
Given the extreme uncertainty in the
investing environment, and given that housing, employment and wages, and
some of the other fundamental economic measures are flashing warning
signs, this is not a simple question.
Inflation
I have written thousands of essays examining the great inflation versus deflation debate (here's the latest). I can see both sides of the argument, as well as arguments for inflation and deflation at the same time. And see this essay by Shah Gilani on Chinese inflation.
If you believe that hyperinflation is in our future, then you might want to hear what PhD economist John Williams suggested in 2009:
Williams is advising people to stock up on gold and booze to bargain with once the hyperinflation makes dollars worthless:
“Three
or four years into the future I think we could be in a hyperinflation,
within the current year you’re going to see much higher inflation than
most people are looking at,” Williams told MarketWatch.
Williams
said that his definition of hyperinflation would be a situation in
which a $100 dollar bill would become more functional as a piece of
toilet paper than a store of value.
“This
is a time when you want to preserve your wealth and assets because
inflation will knock the value out of it,” he added, advising that
people buy physical gold and assets other than the U.S. dollar.
“Then
when the hyperinflation hits you’ll see disruption of normal commerce,
you won’t have enough $100 dollar bills to buy what you want,” said
Williams, adding that items to barter with, such as a bottle of scotch, would be more valuable than actual cash, even in large quantities.
Of
course, even if hyperinflation never hits, food prices are forecast to
rise. As such, the price of the grains with which fine liquor is made
will probably increase, and so will the price of the beverage should
rise as well.
Sake as a Japanese Luxury Good
There is some segment of the population that is always going to have a lot of disposable income, even in these times.
Indeed, the gap between the affluent and everyone else has been growing so fast that it is bigger than it has been since 1917 ... before the Great Depression.
As Reuters noted last year:
Ajay
Kapur, a Deutsche Bank strategist [and] former Citigroup strategist
created a stir five years ago when he built an investment strategy
around his thesis that essentially divided the world into two camps:
the rich and the rest.
Kapur told clients in 2005 that the
United States and a handful of other economies were developing into
"plutonomies" where the wealthy few powered economic growth and
consumed much of its bounty, while the "multitudinous many" shared the
leftovers.
Plutonomies come around only once or twice a
century, he argued -- 16th century Spain, 17th century Holland, the
Gilded Age. The last time it happened in the United States was during
the "Roaring 1920s".
Some shrewd investment advisors have recommended buying rare art and fine wines to cater to the wealthy few.
Given the widespread fear of the Japanese nuclear meltdown - whether you think it's founded or not - high-end sake made before the March 11th earthquake might be a smart investment.
There are a number of Japanese billionaires. And Japan has more millionaires than any country in the world other than the U.S.
At least some of these well-heeled folks have a taste for sake . And
wealthy people from other countries have a taste for Japanese beverages
as well.
And they would likely pay top dollar to buy their
favorite sakes made before the nuclear meltdown started, to make sure
that they're not exposed to any radiation.
A number of people have repatriated from Japan in order to avoid the devastation from the earthquake, the tsunami and the economic downturn.
There are also rumors that some of the wealthiest Japanese have moved to China, the U.S. or elsewhere. As Reuters noted on March 16th:
Thousands
of people desperate to escape Japan's deepening nuclear crisis have
inundated private jet companies with requests for evacuation flights,
sending prices surging as much as a quarter.***
Workers
are fleeing for Hong Kong, Taiwan, South Korea and as far afield as
Australia and the United States as power outages and shortages of basic
supplies compound the misery after Friday's 9.0 earthquake and
subsequent tsunami.
Expats will certainly be eager for a "taste of home" in the form of good sake and other Japanese luxury items.
Like wine, sake doesn't last forever. Dry, high-alcohol sakes last the longest. Both heat and light will degrade the flavor of sake over time, so sake should be stored in the cool and dark.
Premium
sakes usually have the "daiginjo", "junmai", "ginjo", "koshu", or
"genshu" classification on the label. Daiginjo is generally the most
expensive sake, requiring the brewer to polish each grain of rice down
to half its original size before brewing.
You can get up to speed on the best sakes by reading this website (and these books) subscribing to Wine Spectator (see this and this) and by reading roundups like this.
Hard Alcohol Lasts Longer
Because sake doesn't last all that long, an even smarter investment might be traditional Japanese versions of hard alcohol.
Shochu (pronounced as “show-chew”) is the traditional Japanese hard liquor.
Typically brewed from potatoes or wheat, shochu can also be brewed from rice, raw sugar, or even ... wait for it ... wasabi. Shochu is typically 25 to 35 percent alcohol.
Okinawa - the birthplace of Karate - has its own, stronger version of shochu called awamori (pronounced “ah-wah-mo-ri”), which ranges from 35 to 45 percent alcohol. So highly regarded is awamori among some Japanese connoisseurs that sake expert John Gauntner writes:
It
was said that while wealthy people might
entrust their money to others, they would always keep the keys
to their awamori cellar with them.
Shochu, and especially awamori, should last a long time. And they fit into John Williams' booze and gold recommendation.
Note: Okinawa is over 1,000 miles
from Fukushima. But the potatoes, wheat, rice or other base materials
could come from closer to the site of the reactors or to other types of
contamination from the Japanese disaster. More importantly, perception
is key, and pre-Fukushima alcohol will likely carry a premium.
I am not an investment adviser and this should not be taken as investment advice.
- advertisements -
Did you see the article about the politicians trying to get tourists into FUKUSHIMA?!?! "Come and eat our fruits!" LMAO!
http://fiatsfire.blogspot.com/2011/06/tgiw-to-ease-or-not-to-ease-that-i...
This getting outta control boys n girls. Outta control!!
People do very strange things when they are shell shocked.
An investment in the SUKI (tm) RELIGION (SUKI (tm), The New World Religion (tm)) is likely to do better than an "investment" in alcohol. Call up your local recruiter; there are fast-track paths to Elite (tm) and SuperElite (tm) status for the wealthy, and with over two million members, the religion continues to grow rapidly.
Invest in a still and a shitload of mason jars.
I've been buying silver candlesticks. I'm guessing in a hyperinflationary collapse they will be a decent investment..
I love your attitude, get a few sacks of corn, cut out the middlemen and end up being the low cost producer. You'll be the "toast" of the neighborhood and have access to all the items others only dream of: black stockings, perfume and toilet paper. Scratch that tp, I think I have a few reserve notes stashed away somewhere.
GW, thanks for all your work (I haven't thanked you lately)...
You do realize that there are new guidelines in Japan governing 'rumor-based' damage compensation? ;*)
Also, did you see the story on the French institute's visit and survey finding higher than permitted levels of radiation outside the evacuation zone, including Fukushima City? Very nasty, showing that they still don't have a handle on the air emissions/deposition.
http://www3.nhk.or.jp/daily/english/01_36.html
French research institute finds high radioactivity
A French independent radioactivity watchdog has found radiation in Fukushima Prefecture 60 times higher than the annual reference level for ordinary people recommended by an international commission.
Bruno Chareyron, director of the research institute CRIIRAD, briefed reporters in Tokyo on Wednesday on the results of its survey of the air in Fukushima Prefecture.
The measurements and calculations found an annualized amount of 60 millisieverts at a farm in Iitate Village in the prefecture.
The level is 60 times higher than the annual limit for ordinary people, except for radiation workers, of 1 millisievert, recommended by the International Commission on Radiological Protection.
The researchers also found high radiation levels in Fukushima City. At some places in the city, the levels of radioactivity were 7 to 9 millisieverts a year.
Chareyron urged Japan to increase the number of monitoring spots so that it can provide the public with detailed information on the negative effects of the radiation caused by the troubled Fukushima Daiichi plant.
The one-week survey from May 24th was conducted in cooperation with a Japanese nongovernmental organization.
Wednesday, June 01, 2011 21:49 +0900 (JST)
The thesis that Japanese millionaires have fled Japan is foolish MSM nonsense.
Those who "fled" were primarily foreign expats and many have returned at least for the time being. As for investing in Sake, why would one do so for an item with shelf life much more limited than wine? High end French wines are going through the ceiling here along with fine art. The normal symptoms of a bubble economy.
So.....the pre-Fukushima sushi portfolio is not looking good on a mark-to-market basis either?
Mr. Banzai, you have class! Right after slamming part of my thesis (the hard booze would obviously last longer), you then crack me up with brilliant art! Well-done, sir ...
I never said I'm not a clown...did I just say that ;-)
GW you do notice the 10 year is below 3%....right.....