Kevin Hassett – director of economic-policy studies at the American Enterprise Institute and a Bloomberg News columnist – tackled the "Lafite effect" in his most recent Bloomberg article.
As we outlined recently on this blog and in our August Market Report, the price of numerous vintages of Lafite Rothschild has soared in recent months.
In his piece Hassett asks the question: "Is the Lafite price spike yet another bubble, or are there sound fundamental reasons?"
In his conclusion, Hassett place himself firmly with the bears:
"It’s a tempting bet, and a risky one. As Lafite prices have soared away from those of close substitutes, Lafite has begun to look — especially to unsophisticated investors, and those who rely on past correlations — like an increasingly safe investment, with steady and predictable returns. In fact, the opposite is true. The risk of Lafite prices plummeting and wiping out your investment has skyrocketed along with the price."
