Why is he only selling the “investment” bottles from year 1 in year 5? Isn't he suppose to sell initial kick (120 bottles) + 72 per year * 5 years? Thanks!
Given that the investment strategy is to hold each bottle of wine for exactly 5 years before selling, they will not sell everything in the inventory immediately at year 5.
If we assume that any wine bought is at the end of the year, then the wine bought in year 1 will be sold in year 6, and so on. Conversely, if we assume that any wine bought is at start of the year, then the wine bought in year 1 and the initial kick-start will be sold in year 5, those bought in year 2 will be sold in year 6, and so on.
Hi there,
I think this is an interesting question that may be relevant for many people. I would be happy to share my thoughts on it:
If you would like a more detailed discussion on how to address your specific situation, please don't hesitate to contact me directly.
Best,
Hagen
Thank you so much! I guess my confusion came from the fact that I have missed the word "always," which suggests that the wine needs to stay for 5 years before it gets sold (assumedly, to enhance its quality).
My pleasure. While it seems logical that a wine must mature, I understand that the case study lacks clarity.
Hi there,
Completely agree with the other coaches. 5 year inestment horizon means that extra batch will be sold in year 6
Thank you!
My pleasure!
Thank you so much for this explanation! I must have missed confusion the word "always" in the Background info, which has also led me to miss accounting for the fact that the wine needs to stay for 5 years before it gets sold.