#MWWC10: Values


I find it a funny thing to talk about.  Value.  I know a lot of people are probably going to use this month to write about values, be it a set of beliefs or ways of living their lives, and above all about drinking their wines.  I’ve decided to take a slightly different approach.  I want to talk about the idea of value.  What’s something worth to you?

Now I’m going to go back to the lessons I learned as one of those wanker bankers.  I was a bond trader for years and as much as I never really enjoying it as a job, I couldn’t help but pick up a few things over the time.  More than anything else it was all about a sense of how much things are worth.

In the world of bond trading, you talk about the value of something in terms of cent on the dollar, or pennies in a pound.  Effectively just anything where 100 is the “par” value.  Now in the normal course of things prices of bonds tend to move at a glacial pace, but when all the sub prime lot poked it’s head out from the cupboard under the stairs where it was hiding, and everyone realised the entire financial system was just one big Ponzi scheme, these supposedly safe investments were…well…not so safe.

So there we were, the world was going to hell in a hand basket (never understood that phrase but whatever) and I was trading General Motors bonds in Europe and Asia.  All of a sudden bonds that were trading at 95c dropped in a week to 90c.  The next week to 80c.  The week after to 50c.  By the end of the sell off it had got as low 5c.  Doesn’t sound so bad when you’re only talking about a dollar or a pound.  What about when you realise these were investments totalling many billions of dollars that within a matter of a few weeks there had lost 95% of their value?  Fun, eh?

My job throughout this was give prices to clients where they could sell or buy these bonds.  Where the buggery do you even start?  It really is a full on best guess scenario when you hope you’re not buying a load of stuff that’s eventually going to be worth next to nothing.  I did ok, but for every hero moment of buying at 40c and selling at 50c, there were plenty of buying at 40c and getting stuck with them down to 20c.  Which is not fun!

So why did the prices move like that?  Why did no-one seem to know the value of these things?  Well value is a daft concept.  It is purely a price where someone is willing to buy it for whatever reason, and someone else, for their own reasons, is willing to sell it.  That’s it, nothing more.  People weren’t selling at low prices cos they thought they were overpriced.  They sold cos they needed the money out.  It’s their own reasons.  Nothing to do with a pricing model or anything.  Why did people buy them?  Well especially that far down, maybe it was worth a punt?  Not exactly scientific.

So how does this link into wine?  Well whenever I’m buying anything now, I use the old value barometer.  I’m stood there infront of the shelves in the wine shop.  I can physically buy anything on the shelves, but why don’t I always go for the most expensive option, cos surely that’s the best?  Why would you ever buy the cheapest wine?  Surely it’s going to taste like mouthwash (and not the good stuff, I mean the clinically proven crap that makes you whince every time!)?

Well with such an opinionated topic like wine, the idea of a “value” becomes even more of a struggle.  I had an example on New Wine This Week Week 23.  We did Pinot Noir from New Zealand.  I had a £10 bottle of own brand supermarket stuff (Sainsbury’s TTD), a £15 bottle from a well known large producer (Villa Maria), and a £20 bottle from smaller niche producer (Two Rivers).

For me, when you’re comparing wines, especially to give an opinion to somebody, you can’t not have the price you paid for it in mind.  You’ve got to think about whether you’d buy it again.  I gave the £10 bottle and the £20 the same mark.  8/10.  The Two Rivers was a better wine, but for the price the value of the TTD was amazing.  The Villa Maria though got 5/10, it was not better than the TTD and costs a lot more.  With everyday drinking wines I think it’s crucial to think about their value.

It’s a tad different with rare and expensive wines.  Why does that bottle of 1st growth Bordeaux cost £1000?  In someone’s opinion this is some of the best wine ever made.  So someone is willing to pay it.  Would I?  Well that’s just too hypothetical that one, I really can’t afford it.  It’s rare and plenty of people want it, so the price is right up there, no point in fussing too much about it.

To sum it up I guess in most things in life it’s important to remember value is a completely personal thing.  And no matter what price someone decided to whack it on the shelves at, if it doesn’t make sense to you, then don’t bother.

Failing that you can try become a world renowned wine writer and get it all for free!  Here’s hoping! 🙂


P.S. Big thanks as ever to Jeff, The Drunken Cyclist, for starting up MWWC



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