Michael Burry says the best defense against dollar doom and AI disasters might be a fine Bordeaux

Michael Burry, the financial investor famous for his role in the film "The Big Short," has suggested that fine wines could be a smart investment during times of economic and technological uncertainty. In a recent Substack post, Burry argued that fine wines could be a valuable diversifier in a portfolio. He explained that fine wines could potentially benefit from a declining dollar, as well as from concerns surrounding artificial intelligence (AI) and its potential impact on the financial system.

According to Burry, fine wines could serve as a hedge against the potential collapse of the dollar, which he expects could happen within the next five to 10 years due to irresponsible spending and mounting debt. Additionally, Burry pointed out that fine wines are highly differentiated, with a limited drinking window, meaning that once consumed, a bottle of wine is gone forever.

This unique characteristic of fine wines means that supply destruction is continuous, providing a bullish supply dynamic that spirits, watches, and art can never match. Fine wines, particularly those from renowned producers like Pétrus, Margaux, and Mouton Rothschild, are typically reserved for the ultra-wealthy, and as such, they tend to enjoy resilient demand regardless of economic conditions.

Burry noted that the prices of fine wines have recently dropped by around 25% to 30% from their October 2022 peak, presenting an attractive entry point for investors looking to capitalize on this depressed market. In his post, Burry emphasized that fine wines offer easy access to exceptional wines that can be enjoyed and gifted to others, while also providing a sturdy value proposition in the face of potential technological disruption and a weakening dollar.