"The Super Rich Are Investing In Magic Mushrooms And Fancy Batteries"
From ZeroHedge, Dec. 16:
At some point, the super rich reach a level of wealth where
"traditional" boring investments like real estate, precious metals,
equities and bonds all become a little too mundane. That’s generally
when they find time for investing in things like art, collectible cars,
fancy batteries and even psychedelic drugs. In fact, we recently wrote
about the boom in insurance for items like whiskeys, which are also
becoming popular collectible items, having recently priced at more than
$1 million per bottle in auction.
But art has always been at the top of the list for those who simply
have more wealth than they know what to do with. With the art market hot
by virtue of the last decade of "prosperity", those selling high-priced
pieces have enjoyed the benefits of a minimum price guarantee at many
auctions, as there remains significant demand for these "alternative
investments".
To keep business consistent, auction houses have negotiated with
third parties to help guarantee bids for art that is put up for sale.
And it’s great money, too: the guarantor on the sale of Leonardo da Vinci’s “Salvator Mundi” was said to make as much as $150 million, according to Bloomberg.
Not surprisingly, the super rich are also collecting rare exotic
vehicles, like Ferraris. The recent sale of a 1962 250 GTO went for a
whopping $48.4 million. Only 36 of that particular model were made and
the vehicle was also guaranteed by an auction house. Vintage automobiles
reportedly returned 280% over the past 10 years according to the Knight
Frank Luxury Investment Index. That's twice what the S&P returned
in the same amount of time.
And with the marijuana game officially going mainstream, investors
are now also looking toward the next "big thing": psychedelic drugs,
including synthetic psilocybin (the active ingredient in magic
mushrooms), which has been known to help alleviate depression and
disorders like PTSD. With psilocybin finally being embraced in some
large scale clinical trials, including one that recently launched in
Europe and North America by Compass Pathways, large financial backers
are starting to step up to the plate.
Mike Novogratz, an investor in Compass Pathways and famous bitcoin
investor, told Bloomberg: “It just feels like a cultural shift going on.
It’s been around for thousands of years; people kind of know its side
effects.”
And if that wasn’t far enough off the mainstream, the wealthy
are also investing in, well... batteries. Even though right now the
lithium ion battery industry has very low margins, Citigroup estimates
that “very efficient manufacturers will generate higher profit margins
over time”. This has drawn in the attention of investors who hope to see
the $22 billion industry swell to over $100 billion within the next six
or seven years.
Citigroup is planning on offering a product that tracks the performance
of seven stocks exposed to battery manufacturers and the mining of raw
material that is used in the production of batteries. Citi's projections
estimate that the portfolio could have a 36% average return over its
first year. Buyers of the product would get their initial investment
back at maturity while also collecting 70% of any performance gains.
David Bailin, the unit’s chief investment officer told Bloomberg:
"Clients can choose when to get in but won’t be taking a significant
capital risk if the note-writer pays it off at maturity"....MORE
