Over the past decade whisky has become a mainstream complement to more traditional investments. To better understand and profit from this thriving market, analysts have begun applying classic financial analysis techniques to the whisky world. Recent analysis by Whiskystats examined the breadth of the whisky market using their vast database of auction prices, finding that over two-thirds of the whiskies in their database increased in value between the first recorded auction price to the most recent auction price.
Before diving deeper into these figures, it’s worth taking a minute to understand how market breadth applies to the whisky market and how this metric can be useful for investors. Seasoned investors will already be aware that traditionally breadth indicators are used by stock market analysts to predict how the market is likely to move. Whiskystats has applied the same principle to their database of over 45,000 whiskies which have been traded more than once, analysing the proportion of whiskies which have gained value.
Taking August 2020 auction results as an example, Whiskystats calculated market breadth by analysing how many whiskies had a higher auction sale price in August than the previous known market price before August. Their results reveal a market breadth of 54%, meaning that over half of the whiskies analysed experienced a price increase in that month.
Extending that analysis across 2020 as a whole, there’s a clear upward trend in market breadth over H1 with a very slight decline over the summer period. Overall there have been significantly more value gainers than value losers, with market breadth surging from 50% in January 2020 to a high of almost 60% in early summer.
Whiskystats also looked at total market breadth, comparing the most recent auction price with the first recorded price for every whisky in their database. Interestingly, the results reveal 69% of the 45,000 whiskies in their database gained value. Crucially, the average price increase for this vast dataset was 70% with over 50% of the whiskies included increasing in value by 25% or more.
This analysis is excellent news for investors who may be on the fence about entering the whisky market. Not only is whisky now considered a top-performing alternative and complement to more traditional investment portfolios, it also has a very bright future to come. As global appetite for luxury goods continues to grow and grow, demand is rapidly outstripping supply. These macro trends are in turn leading to aggressive price rises, as indicated by the average 70% price increase shown by the Whiskystats research. Now is the time to acquire the top performing bottles of the future and lock in market-beating returns at the earliest opportunity.
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