Collectors Corner: Can your Margaux or Sassicaia hedge the dollar?
Michael Burry is renowned for anticipating the US housing market crash before the 2008 financial crisis, a story later popularized in the movie ‘The Big Short’. Now the physician-turned-speculator has turned his ponderings to the value of fine wine against a weakening greenback and uncertainties emerging from the AI revolution and quantum computing.
Posting recently on his Substack, Burry championed fine wine collecting as a potential hedge against a weakening US dollar and risks related to emerging technology. He also highlights the considerable correction in fine wine prices since their peak in 2022, with opportunities for stocking up the cellar across still, sparkling, and (particularly) Old World wines very compelling as the fine wine market shows signs of stabilizing.
For wine collectors, the argument isn’t so much turning a cellar into a fine wine hedge as considering what it offers alongside the pleasure of ownership and enjoyment.
A physical asset in a digital world
At the heart of Burry's position is a straightforward observation: a case of fine wine is a tangible asset.
Unlike shares, currencies or digital assets, he argues its value is attached to something tangible, finite, and increasingly scarce. Once you enjoy a bottle of wine, that particular bottle can never re-enter the market. A case of Château Margaux from a celebrated vintage like 2009, 2010, or 2015, for example, has a ‘diminishing availability’ trajectory: it can only become more limited as bottles are poured around the world.
Burry describes fine wine as potentially acting as a “short position” against the US dollar. He goes on to argue that physical assets can offer a degree of protection against any purchasing power decline of this currency. That said, he isn’t conclusive about this relationship because it’s complex. For collectors, the more concrete attraction is that fine wine is valued by a global community, with demand extending across multiple currencies.
In short, his comments represent a starting point for changing the perspective on the potential of a wine collection.
A market in flux
Burry's observations also mirror what has happened to fine wine over the past few years.
Fine wines were most sought after in 2022. Since then collectors interest has softened and, overall prices remain lower than they did four years ago. However, segments of Bordeaux, Tuscany, Champagne, mature Burgundy, and California wine have shown signs of value stabilization with some segments even making small gains.
Worth noting, however, for collectors, more availability doesn’t necessarily mean an automatic buying opportunity. Fine wine represents a complex market where name, region, provenance, and vintage remain crucial to value.
What the pullback has changed is the scope of opportunity. Wines that previously commanded substantial (even hyped) premiums are now on par with mature vintages whose provenance and drinking windows are already established.
It’s now less about chasing momentum than about selection, patience, and knowing what deserves a place in the cellar.
Wine provenance remains key
Rather than deviating from the fundamentals of fine wine collecting, Burry's argument bolsters their importance. Provenance and wine scarcity remain central, particularly in the upper echelons of the market.
- Provenance - a bottle with impeccable provenance and a documented, transparent history is essentially different from one whose journey can’t be mapped with the same precision
- Scarcity – compelling wines combine limited availability with a recognized producer, an important vineyard, appellation, strong vintage, and a long-established collector following.
Looking beyond the legendary names
Cellar diversification is also a central theme in Burry's overview. This is ‘de rigueur’ for a wine collection but is always worth repeating! It’s where collectors need to blend their admiration of particular regions, estates, and wines with a sense of how value will grow.
Bordeaux remains an integral part of the international fine-wine market, but today’s collectors have a much wider selection to choose from. Burgundy's most distinguished domaines, prestige Champagne, Piedmont, Tuscany, and California all offer different expressions of rarity, provenance, and longevity.
This is important because the forces influencing demand are not the same across regions and vintages. Burgundy's scarcity, Champagne's luxury appeal, and the individual reputations of producers in Italy and California create very different collecting dynamics from those surrounding the big-name Bordeaux châteaux.
For a collector, breadth can simply mean building a cellar that includes different regions, grape varieties, vintages, stages of maturity, and changing tastes.
Pleasure is paramount
One of the most fascinating aspects of Burry's observations is not news to wine lovers. He places fine wine within a broad dialogue about collectibles without stripping it of its essential character.
The world's greatest wines are unique because they effortlessly represent history, craftsmanship, a sense of place, scarcity, and pleasure. Collectors can:
- Choose a wine for its provenance
- Hold it in your wine cellar for future occasions
- Monitor its value as a physical asset
- Enjoy it!
Final thoughts
The argument that fine wine could provide some protection against US dollar weakness is not as certain as the more obvious point that it’s a physical asset with a global market. In his Substack overview, Burry is cautious when he presents some of the supporting data on hedging, simply because the relationship between wine and the dollar is difficult to establish conclusively at this point.
What’s undoubtedly useful about Burry’s intervention, though, is how it offers a broader perspective for wine collectors on their cellars.
It’s not necessary to start viewing your Domaine Leroy or Opus One as financial products for them to have enduring value. Their unique appeal lies in the fact that they can be shared, enjoyed, and appreciated while also standing as something tangible, finite, and increasingly rare.
In a fine wine market offering more options following several years of adjustment since the 2022 highs, that combination may be more relevant than ever - whether or not your Bordeaux is a surefire dollar hedge.
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