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Investing in Argentina's Wineries?
Part of the perks of having a blog that is read by thousands of people is that you get to meet really interesting people, and they're not always in finance. In fact, some of the most interesting people I've met though my blog are not traders or investors, but just regular, hard-working folks or entrepreneurs.
On Wednesday, I had lunch with Nathan, an entrepreneur who with his partners has invested in Argentinian wineries. Nathan contacted me and I was more than happy to meet up with him. We met at a nice Portuguese restaurant near my house that makes the best BBQ chicken (their grilled chicken salad is awesome!).
I found Nathan to be smart, charming, well traveled, and very on top of things. I had met a buddy of his, Brian Ostroff of Winderemere Capital, who along with Jacques Lacroix and Paul Beattie of BT Global Growth told me all about Canada's phosphate reserves.
Nathan is smart and understands private and public markets. He has investment banking experience and reads a lot, including my blog, Zero Hedge and a few others. We talked about Greece, Israel, Turkey, China, Brazil, gold, the stock market, interest rates, the euro, timberland, infrastructure, farmland and of course, wineries in Argentina. It was a fascinating discussion because I got fresh insight from someone who has traveled the world and knows the countries very well. Here are some insights I learned:
- First, Argentina is simply breathtakingly beautiful. He showed me a series of photographs from the winery and I was in awe. They have the best meats and it's generally a safe country, especially if you compare it to other places like Brazil.
- Speaking of Brazil, Nathan thinks they're headed for a major slowdown. It won't happen right away and they have money pouring in to prepare for the World Cup and then the Olympics, but he thinks after that the country is in trouble. He told me despite what government officials say, income inequality is getting worse: "The poor and working poor are making more but it's not enough to keep up with the ultra-rich. Crime is a huge problem. If you go to Brazil, you don't want to venture off to the favelas. Their airports are crappy; they really need to revamp them fast for the Olympics and World Cup."
- Interestingly, I told him Brazil is the "hot spot" for Canadian pension funds investing in emerging markets. They are buying up everything, including shopping malls and public shares. He thinks that might come back to haunt them.
- In terms of the euro, I told him that I don't see it or the eurozone collapsing because there are too many global interests who want to see a unified Europe under one currency. He told me some very wealthy friends of his agree with me (those global macro funds shorting the euro, betting on a collapse, will get slaughtered).
- The stock market made a comeback, making up all its losses, pretty much like I had predicted. Nathan was surprised but I told him there is no choice but to "reflate this sucker." He asked my thoughts on gold and I told him that I never invest in gold but it has been rising steadily (know a bear who keeps telling me the time to buy the Dow Jones is when it falls to 3000, the price of gold!!!)
- I told him there are huge opportunities in Greece right now but there is no rush to move in. I even shared with him where he and his investors should be looking and what projects they can develop there. But right now, Greece is a mess and the taxi drivers are pissed off because their licenses are about to become worthless so they're wreaking havoc pretty much everywhere (the Greek government is so stupid! They should have partially compensated the taxi drivers and passed a law to make the strikes illegal).
- I asked him if he has been watching the massive strikes in Israel and he said yes. It's quite weird but there seems to be unrest pretty much everywhere now. I told him that Israeli tourists are flocking to Greece for their summer vacations because relations between Turkey and Israel have been strained since the flotilla incident.
- As far as Turkey is concerned, I told him the smartest move the National Bank of Greece did was close down their North American operations to focus on the Balkans and Turkey. But I also told him I am concerned about Turkey because it is becoming increasingly less secular (that is why the generals resigned last week) and it too could be hit hard in the coming years after growing like crazy over the last six years.
- We then got into an interesting discussion on timberland, infrastructure, farmland and wineries in Argentina. Nathan told me the Dutch pension funds and select US funds are very smart about investing in farmland, but Canadian funds are behind the curve. I told him that Canadian funds are into infrastructure projects in Chile and that PSP and bcIMC recently announced the TimberWest deal. Each investment carries its own set of risks, including investments in timber, farmland, and infrastructure.
- As far as Argentina, they are developing the winery to have tourists come tastes wines and enjoy the scenery. They also have tons of land to sell to prospective investors. Their main product is Private Vineyards. They sell small plots of land to people who would like to own their own small 3-10 acre vineyard. They have about 100 owners now - and the oldest owners (the ones who planted in 2007 and 2008) are now making wine with the grapes grown on their property.
- The land is one of the best wine-making regions in Argentina and they have the top wine-maker in Argentina as a consultant, who helps our owners plan their vineyards and create their wines. They are also building a resort and a tourist oriented winery village. It really is spectacular but I did ask him about how the country is doing now. He told me: "Unemployment and inflation are still very high but they're much better off than 2001."
- I told him if he and his investors are worried that the government there will nationalize land like they nationalized pensions and he said "no because property rights are enshrined in their constitution."
- Finally, he told me to come visit the winery in Argentina and I think I'll take him up on the offer. Apparently March is the best time to visit, smack in the middle of harvest season.
I thank Nathan for this interesting lunch and will ask pension funds and family offices interested in receiving details about the project in Argentina to contact me by email (LKolivakis@gmail.com). Given the volatile state of public markets, it may make a lot of sense to invest in wineries. At the very least, if the stock market crashes, at least you'll be able to drink some good wine to help you forget about it. :-)
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Very Nice destination is Argentina. Now it is not difficult to explore it and other such destinations. Just take cheap flights to Thailand from Manchester and enjoy beauty of Nature.
leo,do not pay attention to these suckers.come to argentina,we´`ll be happy to take your dollars,like we did in 1982,1990 and 2001.
please contact me i have plenty of real estate for sale ,even a trafic light in abeautifull spot
Leo,
I'm going to joing all those others who point to all of your past enthusiasm for the extend and pretend approach. You said a 100 times that this was the answer. You're wrong.
When I make a bad call in print I follow it up with admission of being wrong.
I'ts time you did the same. Check the tape pal. You're way ain't working.
.
Wineries? have you actually done any homework with regards to the current state of the wine industry? Do you actually have any understanding how wineries work/operate? and the associated costs, expenses of farming grapes? it's agriculture/farming and extremely hard work, not this romanticised idea of growing grapes to make wine. We're in the middle of a glut and i'll think you'll find growers and wine makers are having a pretty hard time of it at the moment(though like everything in life there are exceptions to the rule, though is Bordeaux currently experiencing a bubble, will the Chinese support the first growths to infinity?).
Plenty of cheap wineries and distressed sales in australia/nz if you want to get an idea of how well the industry is going.
Leo you've become the late nite info-mercials on the Zero Hedge site - abstract, devoid of reality and irrelevant. Is investing in Argentina wineries the new 6 minute abs for you?
Sorry mate but it seems rather pointless.
How's your buying the dip going this week Leo?
Are you still waiting for the rally your predicted last week would happen this week??
Are your 'major plays' in tech and green investments pinging their stop losses yet???
You didn't answer my question yesterday: are your losses into 5 figures yet????
I've always said you're behind every curve, not ahead of it... where's this Index collapse curve ball hitting you Leo, on the nose or between the legs!!
Hi Leo,
Not heard back from ya this week, has the cat got your tongue?
Did you BTFD this week like you told us to do last week? ...great advise that, just as well nobody listens to you here
Did your stop-losses 'ping' as soon as you BTFD, or did you miss even them and took a beating (Bulls in Bear markets don't do to well don't ya know!). I know you only "play with money you can afford to lose" but it still hurts just as much doesn't it!
Me? Well i went long Silver this week, should be up 15-20% by next week (2x leverage ETF). i'm short the US Indexes (have been for months) both turned into profits this week and also short US real estate (25% profit this week;)
So my (uber) bearish outlook is paying off rather than your usual idealised, socialised 'Nanny World' which is crumbing (Govt, charities, State schooling, healthcare, pensions, transport etc) incase you didn't notice
But then you always wanted to be Nannied, never did want to grow up did you? You wanted a great socialised (subsidised) world that allowed you to also be the great admired capitalist investor didn't you? You can't have it both me old chum, being a zombie on a drip and an achiever don't mix (being an idealist rather than a realist is why you're so fuked up, has your shrink told you that yet?)
so LEO, what about CRESY, which is the stock symbol for the Argentine agricultural and mining business? Most investors have no business investing in (any) private business, unless of course you love the wine (yesyes) because the US wine market has been on the ropes for a couple years, (thinkTwoBuckChuck) and rumors going around Walmart suggest that global agribusiness is facing some stiffheadwinds, (as it seems the supers are beating WMT and buying locally - see yesterdays post by TD?). S
Shocked, shocked to learn Pension Funds are investing in this risky emerging market stuff, and I tried to give (CaPers) some pushback by organizing my fellow workers to vote for conservative and responsible people to the board (but apathy rules ), but am not sure board members have any real say over investment decisions. what's your take on that? does it matter who we elect to our board?
signed SC#1
When I hear "tourists" are buying 3 acre plots for hobby wineries, I know another bubble is blowing. Dumb touristas overpay for everything and they have no farming experience. Expect large losses and a glut of bad wine in the local market. 3 years from now all that land will be fallow and probably damaged.
The global economy is slowing. It has to because gov's are all tapped out on ponzi borrowing. Hedge funds don't care because it's not their money to lose. Farmland is just the latest hot button -- like nasdaq stocks once were, like mortgage paper once was... like tulip bulbs once were. No cash flow. Just hype.
Argentina is a place to lose an investment. The country should be stupidly rich with all it's geographical and mineral riches, but it is run by a revolving door of economic morons, and politics can easily overcome any economic pluses a country has.
Someone sent me an email which began like this (added emphasis is mine!):
''I read your posts on zerohedge and check out your blog from time to
time, and was intrigued by your post on Argentina. Side note: man do
you ever take a lot of shit in the comments section, there are some
serious clowns on that site.''
typical of a crone, you search for external validation of an opinion you hold because you do not trust in your own judgement (who can blame you for that!) and you pick out the exception to make the rule... namely the twat that emailed is a rarity, you need to deal with the reality of your 'loyal following' here at ZH that think you're a Statist progressive a-hole
ZH's resident Omega wolf.. trust you to end up bottom of the class again eh!
Got laid yet Leo... 50 bucks in a red light area should do it (as per usual)
Zero Govt:
I've got a customer in Montreal. Hell, $50 is 5 BJ's from the girls from the Eastern Townships.
Hell, during the Ice Storm hookers were doing BJ's for free- anything for a warm meal !
Leo is a masochist.
Buy solars on the dips.....
Wineries? *huge grin* I dare ya, I double dare ya!
http://www.guardian.co.uk/world/2009/feb/20/argentina-priest-expulsion
speaking of argentina, do any of you remember this? free speech in argentina. maybe yes, maybe not, all depends on who and what you are talking about.......hmmmmm.........
C'mon, Tylers - time to bench this guy and put in a reliever.
Ack.
Leo - How much did you have to drink at your lunch ? I think you have mixed up the differencews between definitions for "liquid" investments.
Don't cry for me Argentina...!
You're 10 years to late Leo. Nathan was trying to sell you a bill of goods, I hope he paid for lunch.
Wineries are going bust left, right & centre, especially those 'boutique' ones.
with the kirchner cabal , running argentina, i promise you, things there will never be ok. they have the same problem we have here.
This author should familiarize himself with the writings of FerFAL.
Well Spoken ArgentDawn
Here it is "Surviving Argentina".....
http://ferfal.blogspot.com/
Leo did you pile into the markets yesterday at close like you said for the 'big bounce'?
'Leo hasnt personally invested in gold, but does acknowledge it has been steadily rising' uh yea Leo, dont leave out its ALL TIME highs. And the time to buy gold is at $3,000? Gee that makes about as much sense as anything else youve said Leo. Have you been hitting the Night Train again or what?
Leo loudly embraces socialism ("don't touch public workers or their pensions, ever!") because it helps the cause of the people he wants to be like; that he yearns to be like:
People that he knows who manage pension funds handling taxpayer bloated (extracted) retirement plans for government workers/leeches.
These pension fund managers take him out to lunch at a nice restaurant, buy him as many wine coolers as he can handle, drive him around in their "awesome cars" (Leo's words, not mine), and Leo just can't wait to write down their thoughts on how socialism is a positive force and how government workers are modern day heroes.
Leo K, the defender of the status quo ante.
In Leo's words:
Sheep, you must be getting rammed up the arse again! I quoted someone I know who told me the time to buy the Dow Jones is when it reaches the price of gold @ 3,000!
Sorry pal. You quote it you endorse it. And watch the obscenity. You post on fight club you can't have a glass jaw.
Some of the comments are right. You merely quoted someone who's selling you. No analysis. No fact checking. You deserve to get shellacked. Don't just be someone's advertising shill.
franlin sanders used to say that. one day the dow could be bought with one ounce of gold.
deleted
"....a blog that is read by thousands of people." !!
B****r me rigid, I'm impressed
Canadian pension money should be invested in good Canadian opportunities. Let the Greeks rebuild their piece of earth. Globalism is not the solution.
God gave Argentina some of the finest arable land in the world. Then god evens things out by giving the country the Argentine people.
One would have to be nuts to think some gringo Canukes could make a go of it.
Beautiful country. Great people. BA is world class. Go for a visit. You won't regret it. But for heavens sake don't invest there.
Leo...
BTW, Making wine is probably the worlds second oldest business model and about all the 'secrets' to be successful in the business have been discovered and employed. Simply because making wine is a 'new' idea to you doesn't mean that it's a wide open biz opportunity.
Bruce, my apoligies for the confusion.
Well said, Bruce. The Kirchners have delivered something like 30% annual inflation while gutting the middle class.
It is very, very difficult to make a go of farming or winemaking under the Kirchneristas. They steal everything that isn't bolted down, and they lie constantly. They just hit a private analyst with a huge fine for reporting a higher inflation number than the govt's laughable 8% estimate. The Kirchners have zero concern for anything "enshrined in the constitution".
Leo needs to do a little less Doug Casey and a lot more Fernando Aguirre (FerFAL) before he recommends investing in Argentina.
http://ferfal.blogspot.com/2008/10/thoughts-on-urban-survival-2005.html
Pleas go away Leo, maybe you can write for Marketwatch or The Street.
I don't think I'd invest anywhere infested with corrupt Peronistas at the helm.
old news, where do you think malbec comes from?
At the rate this country is going, most people will be lucky to afford an evening invested in Mogan David.
Thanks for the laughs, Leo...
If you want to know what it's like to own farmland, vinyards, ranches and real estate in Argentina, visit 'The Daily Reckoning' blog and read past comments made by Bill Bonner...
Among other things you will find that...
1) If people (peasants) have been living on land that you aquire there is no way that you can have them removed... and, if you attempt to physically remove them yourself you will be faced with a mob of peasants weilding various weapons.
2) The wine business is among the most competitive in the world and it's very expensive and needs personel with experience to even have a chance to BREAK EVEN on a winery. Bonner looked into converting his ranch into a winery and you can find the details in a search at the above mentioned site.
3) Many of the farms, ranches and wineries are very difficult to reach... with drive times from the nearest airport of up to 12 hours over poor roads. How would one in remote locations get their wine to market... if a market existed... which it doesn't.
4) Be sure to read Bonner's comments on how his ranch bottom line was affected by the arbitrary gov export ban on many beef products.
5) Be certain to visit this site and read what happened to urban and rural residents during Argentina's las economic collapse... "Surviving in Argentina During Economic Collapse"... http://www.rapidtrends.com/surving-argentinas-economic-collapse-part-1-3/ Gangs of thugs roamed the countryside killing families at will and went unpunished. Many old scores were settled. Crimes beyond anything you can imagine were committed... and , now the world economy is on the precipice and you are telling us to move to a locale that has a proven track record of extreme lawlessness during economic upheaval? You must be a mad man.
Leo, sitting around over a chicken salad talking to a bunch of hustlers pushing land that they have bought and marked up for resale is one thing. Coming on this site and making recommendations to readers here, based on your luncheon conversation, is another.
If you don't have first hand experience in a country, why the hell do you feel that you can recommend it to others?
Your cred here is shot!
"Surviving in Argentina During Economic Collapse"... http://www.rapidtrends.com/surving-argentinas-economic-collapse-part-1-3... Gangs of thugs roamed the countryside killing families at will and went unpunished. Many old scores were settled. Crimes beyond anything you can imagine were committed"
That was a bunch of horse manure based on nada. No citation given as to the source of these reputed killings.
You think when the second crash happens in EEUU, the Gingos are going to be civilized and all when the food runs out? The last laugh is on you, mi amigo.
"You think when the second crash happens in EEUU, the Gingos are going to be civilized and all when the food runs out?"
No. I think human nature is the same everywhere and the results won't vary much wherever one happens to be.
OTOH, why would one remove one's self from a location where s/he is familiar with laws, customs, language, climate, topography, et al, to relocate where s/he is considered an outsider at best and is totally ignorant of the culture, language, history, ect, when s/he has a strong belief that the entire world economy is about to fall into difficulty if not collapse? Such a move would be supremely stupid.
"That was a bunch of horse manure based on nada. No citation given as to the source of these reputed killings."
Even if it was 'horse manure', which you cannot prove, the story is probably very representative of what would happen if such an economic collapse took place.
In the past during hard economic times there are many horrendous stories of events that are not 'horse manure'. Hell, if people get hungry enough they eat each other... would you like a citation for these events?
It is called escaping from Nazi EEUU, ever heard of Jews escaping from Nazi Germany? America is a fascist state in everyway imaginable. The final curtains haven't dropped yet. Do I want to be 2 minutes too late or 2 years too early what it happens?
Supremely stupidity is when food is used to get the Gringos into your FEMA camps like what was done to the poor people of New Orleans after Katrina at the Houston superdome.
No, I don't cite horse manure as facts.
The stupid comments below about Argentina reveals a complete lack of understanding of the situation on the ground.
I have lived in Argentina for over 2 years. It is a beautiful country with lots of natural resources and very few people. There are problems like most South American countries but manageable. When the NWO gets implemented as it is already, viz., military police during protests, you will wish and hope for the kind of small scale corruption that is common in South America. I mean, try to talk back to a fat Gingo meter maid in Houston and you will get you Tasered!
If one has a bit of money, not a lot, one can literally live like kings and queens here, especially in the southern part called the Lake District or northern Patagonia.
The inflation rate here for food and things is running about 25-30% per year and the number one cause of it is the Yankees print zillions of USD and exporting it to countries like Argentina (read my article "Currency Wars for Dummies" for how this Ponzi Scheme works in causing inflation inexpert-driven countries like Argentina). http://www.rense.com/Currency%20Wars%20For%20Dummies.pdf
But if one has euros or USD, the bite of local price inflation is more than mitigated.
Land and property rights are sacred here as it is about the only form of investment that everyone, including the politicians, trust and count on. So, this fear-monger issue of the gov't nationalizing private property is bogus.
The food is great here, minus the GMO shit that is grown here like soya or soy and maize or corn. There are organic farming regions in Argentina where they produce really wonderful fruits and vegetables.
Sorry, but I must disagree. The NUMBER ONE cause of Argentina's 30% consumer inflation is the Kirchner Kleptocracy. They control the peso supply by intimidating the Arg. central bank into doing their bidding, or simply replacing the chief bankster.
Argentina has crashed its currency and defaulted on its sovereign debt at least SEVEN times. THEY are their own worst enemy.
They are buying USD to keep the peso from appreciating like the Chinese and everyone else that is an exporting nation. The fucking USD is being hyperinflated by you Yanks and it is the number UNO reason why inflation is going through the roof in Argentina, China, etc.
"So while everyone is worried about Spain, Italy, Portugal, Greece, Ireland, and the US debt ceiling deal, I tell them to relax, keep buying the dips because once a debt deal is finalized (neither Republicans nor President Obama want the US to default on their watch), you're going to witness a massive relief rally in risk assets. And when I say massive, I mean MASSIVE."
http://pensionpulse.blogspot.com/2011/07/beautiful-day.html
Nice Call on the debt deal, Leo. Count me in on the wineries. Big Bucks!
Dan, that was cold brother. Downright frosty. But true.
What are your views on investing in gold, Leo?
Leo, oh dear Leo, Wineries?
The lack of return turns people mental. Wineries? Dear god, I own one, I do it for fun, not profit. There are thousands upon thousands of wineries going tits up due to capacity issues.
You buy wineries as a 100 year venture my friend. The first three generations lose money. It's only when the land and gear is paid off that you begin to show a little profit.
Venture funds in wineries has ruined the industry. The dipshits couldn't cork a bottle nor know what one was if their life depended on it. Venture funds are daddy's little suckheads who couldn' get work anywhere else so daddy created a job for them.
How to become a millionaire in wineries- use daddy's billions.
Jeez Leo, Methane from bovine integrated meat factories has a better shot. Further, the local Argentinians are fleecing guys like Nathan. City slickers rolling into the country we call them. All shiny and bright thinking they have the answers to world hunger.
I sold a bunch of my "farm land" to some TO dudes the other day - sight unseen. At least they called it farmland.
We couldn't figurte out WTF a guy was doing out in the moose pasture until he came up and asked to buy it. He was a broker who was buying land for TO big wheels. 4 families went broke "farming" that land in the depression and these TO dudes are turn it over?
Going to Florida this year for a break. Thanks TO, Bought 30 condos with the profit at 6K a condo. I looked at every one and inspected every one - notice a difference?
Farmland! Before you dips from the city go running to buy farmland. I would advise to WIKI it so at least you haev a chance of buying somethign remotely close to it. If you go and the farmers all smile at you and tell you that you are sum smart - .... well you know what I mean.
If you need some farmland let me know. I have planty more for ya.!!
Thanks Leo,
Great post.
Where in Florida did you buy the condos. Great price.
I'm investing in a unicorn farm!