Live Order Board Price vs Our Valuation: What's the Difference?
Clients occasionally notice that the 'average deal price' on the Live Order Board does not match our valuation for that same whisky. Sometimes the deal price is higher, sometimes lower. The question is usually the same: which figure is correct?
Both are correct. They simply answer different questions.
The Differences Explained
The 'average deal price' is a record of recent trades: one buyer and one seller agreed a price, for a specific quantity, at a specific moment. It is accurate, but it is also a single data point.
Our valuation performs a different function. It is built from a blend of evidence, recent trading on the Order Board, Bulk Trade Bids from industry buyers, and pricing from the wider Scotch whisky market, to provide a considered assessment of what a whisky line is worth, rather than a record of what one trade happened to settle at.
Why It Moves Both Ways
A seller who needs to exit a position quickly may transact below our valuation; that does not revise the valuation downward. A buyer seeking to secure supply immediately may transact above our valuation; that does not revise it upward either. More often than not, individual trades reflect the circumstances of the parties involved rather than the underlying value of the asset itself.
Why We Do Not Value Stock Using the Most Recent Average Deal Price
If our valuation moved to match every deal, two consequences would follow. First, portfolio values would fluctuate based on individual trades rather than genuine changes in value. Second, and more significantly, industry buyers submitting Bulk Trade Bids would anchor their offers to unnatural prices, to the detriment of clients. A steady, broadly-evidenced valuation preserves that benchmark for buyers and sellers alike.
A gap between the Order Board's last deal price and our valuation is not an error on either side. It reflects the difference between one transaction and a considered assessment of value. Clients remain free to trade at the current live price, but the valuation exists to indicate what the whisky is worth, rather than what one party was willing to pay or accept on a given day.
The value of whisky can fluctuate, going down as well as up. Past performance is not a reliable indicator of future price movements. No content on the WhiskyInvestDirect website nor in any of its communications constitutes investment advice. It is recommended that you seek professional advice to assess whether investing in whisky aligns with your financial goals.