Cigars as Investments

[Ken Gargett]

Even if you had 5 of the latter as an example. True, your not exactly cornering the market but you most certainly could sell them close to double. That's a pretty good investment at no no real effort.

I have doubles of some test press records which I know in the current market can sell for over 3x for what I purchased them for but I can't bring myself to part with them. I feel the same about cigars but some interesting points

i have no idea what test press records are but for cigars, i think for every box of cohiba DC 03's, there are several boxes of monte C's.

i think if you have good knowledge, good contacts and worked at it, there is probably some dosh to be made. and, as with wine, if it doesn't work, you can always smoke/drink them.

then there is the issue of actually selling them, how best to do that, tax implications (if you are on sites like this, you can bet your entire stash that the ATO or equivalent would take an occasional look and if you are seen to be trading (as in selling) cigars, without declaring, good luck.

all seems rather too hard.

that said, i do have a couple of boxes of those very DC's....

[topdiesel]

I look at it like I am investing in my future pleasure. Why would I want to give that up for money?

[polarbear]

I don't buy to sell, either at a profit or a loss

I buy to smoke.

That being said, a lot of the time, when contemplating a high dollar cigar purchase (this years Cohiba LE for example) there is always this voice in the back of my mind helping me to justify the purchase by reminding me that I could recoup my costs (and perhaps a little profit) in the future should I NEED to.

This has happened recently, I got a very large bill that had to be paid ASAP and I had no money to pay it. I broke into some of my older and rarer boxes to put together a couple of samplers and sold them for what I needed to pay my bill. Some people thought I was offering a fair price, others didn't, but they all sold in under 15min.

A large and extensive cigar collection is a half decent financial fall back considering the rise in duties and prices over the last few year (a friend of mine likes to say that my cigar collection goes up 12.% in value every September)

Selling for "market value" has always been a sticking point for me

Who decides what fair market value is?

I could (in theory) source cigars from O/S and then sell them in Aus for 5% less than some retailers (not Rob) are charging and still make a profit

My rule of thumb when it comes to the few times I've sold cigars (usually to bail myself out of some financial hole) is:

If its a long gone limited/regional edition there is a number that I will be prepared to sell them for, if nobody is prepared to offer me that number, they go back in my humidor and stay there

If its an aged/discontinued cigar I take the price I originally paid for them (plus shipping and tax) and then add 5% for every year they've been in my possession. The 5% covers my power/storage costs ect

[El Presidente]

There have been some startling returns .

The Bolivar Distinguidos Jar comes to mind. The private market price doubled in 12 months.

That is a rarity however.

[polarbear]

1966s and Ed109s almost doubled inside of 2 years

[Jeremy Festa]

Was just thinking of a semi-plausible scenario. So, I head to the deck, ply Rob with good booze, negotiate a good price for 100 boxes of the next anticipated regional or EL. Maybe 5 or 10 jars of something or other. Wait 6 months. Ensure it is the third cigar in a an afternoon run of reviews with Ken, then pull Greg aside and bribe him to edit the hell out of the vid. Even dub some voice overs so it receives a 98 rating, with legs for years to come.

Wait another 6 months. Then boom.

Just sayin'

[spicycorona]

This is the sort of speculative buying practice that drives prices up and makes it hard for some to purchase those limited releases at the original price.

They're probably not available at the original price if people are paying more for it. If they sell for x, and you can't afford x, sorry have a nice day.

[polarbear]

Just gift a bunch of them out to your friends and get them to rave about them on social media

People will be clamouring for them in no time

[santela]

I will trde a cigar or a few but I have a very hard time to sell any of my ''kids'' like I like to call them.

But you have no problem burning them?

[Lotusguy]

Just gift a bunch of them out to your friends and get them to rave about them on social media

People will be clamouring for them in no time

Extra points if they are Cohiba or Montecristo LEs - doesn't matter if they actually taste good

[Guest rob]

Investing in something that:

- takes up significant space

- needs specific and consistent storage conditions

- with susceptibility to degradation

- difficult to insure

- has no declarable equitable value (you can't borrow against them)

Risky stuff in my opinion, unless the release is super limited and certain to be uber desirable. Most people suck at picking a winner.

Let's face it - it's nice to be able to flip a box for twice or thrice what you paid for it.... but at the end of the day it's not really going to make anyone rich, or shift them into the next socio economic bracket.

Percentage wise it looks great.... But dollar wise you'll wonder why you wasted your time.

Pride of ownership will be your biggest reward.

[GavLew79]

I have made some modest recent "investments" but only in the vein of old Bordeaux wine trading; "But two, wait, sell one, drink (smoke) the other one and it pays for itself".

[CdnLimitada]

I think I understand what the OP is getting at though I may be wrong. If I am reading it correctly he is not writing about turning this into a new business but simply looking at picking up a few more boxes of a certain cigar that can double up in price in a few years. Not a unrealistic scenario. I have bought a couple things recently for this reason. I do enjoy them and so if they don't really change in price then who cares? I don't plan on competing with these huge cigar collectors. If the cigars do go up in value and I can sell them to someone who didn't have a chance to grab them and loves them then it's a win/win. I will probably spend the profits on a couple things that I love that are no longer around. I understand that if I want some MC 2008 Sublimes today, I will need to pay for them. I don't see it as a BOTL party foul.

I'm an entrepreneur at heart and I love cigars. I can separate them at times but I am always looking at way to combine those two things that I am passionate about.

[CdnLimitada]

I've backed up on a few boxes with the thought they may appreciate over time. Based on past experience I'll probably end up smoking these at some point but one never knows.

That said, I've yet to sell any cigars though do occasionally offer up HTF for trade to friends that are looking for something I have. Typically leave to them what they want to reciprocate with.

To my mind, cigars are a less risky investment than equities as they rarely decrease in value.

That last sentence is perfect. I don't know of any cigar that decreases in value. Sure you may not see it dramatically increase but buy what you like and then it won't matter! If you don't sell them, smoke them. Of course it is a different scenario between buying 10 boxes or 500-1000 boxes.

[Guest rob]

Oh, and I meant to also say above - if you ever move to another country - there's a good chance you'll have to pay duties and taxes of you want to take them with you!

[Smallclub]

Other than that, having friends in Spain, Italy, France, Andorra and the like, that can post the harder to find items in your market, also makes this a viable endeavour.

This is not realistic. Shipping ANY tobacco product from (and to) these countries is not only illegal, but extremely watched.

Shipping a couple rare boxes is a thing, but more than that, and the sender risks huge fines and even jail time.

Basically you (theorical) are asking a friend to act as a BOTL so that you can make a profit in the future…

[Ryan]

There is an element of luck in buying the right thing at the right time.

It helps if you can physically get to markets where rare stuff becomes available.

The Cuban LGC jar went from $256 - $1,500 in 4 years, but you had to be in Cuba to get one at that price.

The Spanish PL Legendarios went from 116 euro - £250 in a year. There weren't many of them.

But as others have said, for every one of those, there are at least 10 releases that don't appreciate anything like that.

Then there are the storage/insurance issues.

Regarding tax, in Ireland and the UK, cigars, like wine or classic cars, are classed as "wasting chattel" or "wasting assets". That is, they are not designed to last more than 50 years, thus there is no capital gains tax payable on any profit from sales. I don't know about other jurisdictions.

You need to be careful though, tax becomes payable if cigar (or wine) sales become a "major source of income".

Having said that, I know someone who, with some "encouragement" from his wife, paid for a trip to Cuba with the profit from the sale of three boxes of cigars.

[canadianbeaver]

This is the sort of speculative buying practice that drives prices up and makes it hard for some to purchase those limited releases at the original price.

And there we have your answer. Bingo.

[Puros Y Vino]

There have been some startling returns .

The Bolivar Distinguidos Jar comes to mind. The private market price doubled in 12 months.

That is a rarity however.

The LGC jar outperformed that one. From 275CUC to over $1000USD within months. But in both cases we're talking about a truly limited and numbered item.

[Puros Y Vino]

I've gone deep on many boxes. Not with the intent of speculation though. I am not blind to the notion that over the years some of these will be sought after and may warrant a premium over what was paid. But, I'd rather enjoy them over the years as you never know when Habanos will bring down the axe on your favourite cigar. I also enjoy aging my cigars. IMO someone holding on to a 20 year old box of Esplendidos is not under any obligation to sell you one at the price originally paid or at par for a fresh one. If they do, they are awesome, but no one should expect that. They can apply a compounded interest amount to the original price every year for their safe storage and upkeep. Not to mention their intrinsic value in that many of it's brethren has been long since smoked. I do look down on people who flip recent releases. Such as the Cohiba Robusto Supremos. This is a hot item that Cuba has not released in huge numbers due to I'm sure a myriad of issues but I've seen some pretty good price gouging on them.

[Upmann2009]

Cigars for smoking.

To make a profit (or loss), share market is for you buddy ?

[CaptainQuintero]

Like others have said you have to be very lucky and have a good finger on the pulse. Eg the 1966 was a good investment, people have been buying boxes and boxes of the Cohiba robusto supreme for the same reason but for me I don't see them having the same collectors appeal, wether because of the success of the 1966 or what. I see people having boxes as an investment and them not getting anything like the return they were expecting.

The crash of the euro has made the CRS a lot cheaper now than at release for some. Id imagine that is a significant problem for those who paid the initial premium at first release looking to replicate the 1966 flip

Could be wrong though!

[mi000ke]

Putting aside politics, ethics, morality, and etiquette (cringe...) - and looking at it purely from an investment point of view, you can benchmark your risk/return profile and see where you want to go from there. Essentailly risk-free 10 year US treasuriy notes yield 2% return/year. AAA coporate bonds averaage close to 3%/year. My own bond portolio is averaging close to 6% per year. Stocks recently (well up to his week) would have returned you anywhere from 10-15% depending on when you got in and historically provide around 10% over the long term. I bought, fixed up and sold a house last year in my neighborhood and realized a net 20% return after all costs, in 6 months - a 40% return annualized. Cigars? I'd rather smoke them than rely on them to provide a return on my investment. And what happens if CCs flood the market if the embargo goes away?

[Quint]

Never bought with investment in mind, It's strictly a hobby and a quality of life thing for me. I did buy, and am now buying for aging purposes for my own enjoyment and the enjoyment of others whom I can turn on to a nice aged cigar.

I have no problem with people who do buy for investment whether its cigars, Barbie dolls, GI Joe's , or bottle caps, whatever. All the power to them, I have enough things that are the serious or business part of my life, I don't need to add something I enjoy doing so much to that list.

[Skyfall]

I give away 10 times as many sticks as I've ever sold or traded......