Buy junk bonds, lean hogs or soybeans

Telegraph

29-03-2025

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Do you actually know anything about whisky? Sure, you might know Laphroaig is that peaty one, whether or not to include an 'e' and what the barrel economy is.
Maybe you've heard of the angels' share and know why you can't find a 39pc whisky. You might know why Macallan 1926 is an important bottle or how to pronounce 'quaich'.
But are you aware of what the reform of WOWGR means for you? Can you explain the difference between OLA and RLA and whether AYS would affect that? Or know how many times VAT is due from the time you purchase a cask to it landing in your glass?
However tempting that advert on Facebook offering returns of 18pc a year and a chart showing that whisky outperforms gold and every stock market, let this be your pause for thought.
The chances that you are in any position to invest in whisky are, for all intents and purposes, zero.
Disregarding the potential for it to be outright fraud, even the most scrupulous and legitimate proposal should be ringing very loud alarm bells for an investor.
For a start, the whisky cask investment world is entirely unregulated. There are no protections offered by the Financial Conduct Authority, and you have no recourse with either the Financial Ombudsman Service or the Financial Services Compensation Scheme.
Even the advertising of these schemes is so misleading that the Advertising Standards Authority issued a widespread enforcement notice against the concept of it. The City of London Police was compelled to press release a warning – not for the potential fraud, but simply the deceptive marketing.
Nobody seems to have paid much attention to this though, with whisky cask websites still strewn with promises that your cask will increase in value and assertions they outperform markets. There are cherry-picked charts showing the performance of a backdated whisky 'index' to seemingly random points in time, a move that would get a regulated fund manager in real trouble.
But let's say you've done all of your research, found one of the genuine brokers offering legitimate and transparent investment in whisky casks, of which there are a few, and are keen to plough your cash into casks. Have you actually considered the investment proposition at hand?
This could not be a less diversified investment. Even buying a single stock or one particular gilt is a better spread of risk thousands of times over. Hell, a share in a tiny whisky producer is significantly more diversified. That one share represents a slice of every single cask they own, all of the distribution networks they have established, the legacy and power of that producer's name, bottling, labelling and manufacturing costs, all taxes, debts and earnings accounted for.
That investment represents thousands of whisky casks, so when a few of them inevitably succumb to rotting or tasting foul or not meeting the legal definition of whisky, your eggs aren't all in that singular cask.
Let's say by some miraculous coincidence you do manage to pick a particular cask that winds up worth 10,000pc more than you paid for it. How long do you think you have to wait for that ship to come in?
Most of the websites suggest that a cask should be considered an investment of at least 10 years. But you know in your heart you wouldn't be impressed if somebody gave you a 10-year-old whisky for your retirement gift, would you?
We're talking decades to have your money locked up in a dream that could become a nightmare at a moment's notice.
Fine, you've done your research, considered the proposition in full and you're comfortable with staking your capital for decades at the risk of losing it all. Before you commit, here's a potted selection of every other investment you should consider before venturing into the deep space of this most distant of satellite holdings.
Global index funds, US index funds, UK index funds, European index funds, emerging market index funds, actively managed funds of each of the above, actively managed funds targeting financial sectors, tech sectors, consumer sectors, individual stocks, bonds, gilts, Treasuries, junk bonds.
Buy a house, buy a second house, buy a holiday let. Have you maxed out your Isa? Have you maxed out your premium bonds? Buy some VCTs, some EIS, some SEIS. Invest in Aim stocks, and buy some private equity. Do you own gold? Silver? Uranium, copper, platinum? Do you have a position in lean hogs, soybeans and wheat? Carbon credits, oil, gas, wind farms, solar farms, regular farms. Have you considered wine?
If the answer to any of the above is no, then, like me, scam or not, you shouldn't be investing in whisky.