In any given wine auction, whether in good or bad times, there are always examples of extreme price variations in both directions. Just look up your favorite auction-quality wine on WinePrices.com and see the spread between high and low prices in any given year. The wide variations stem from traditional auctions being an imperfect mechanism for selling wine. Typical auctions depend on buyers showing up at a given time (or bothering to submit absentee bids) and typically only a very finite supply of a given item is available. Moreover, many of the items offered are not that "special" or scarce to warrant making this effort.
So if a modest quantity of wine has a few people driving up the price or nobody bidding at all at a single auction, does that mean the value of that same wine owned by everybody else should be marked to that value? No! Only averages across a broader set of transactions provide insights into pricing trends which is why an index or transactions across multiple auctions are both better indicators than one-off prices obtained at a single auction.
Bottom line: When you see attention-grabbing headlines about either large one-off declines (or increases), remember to focus on the bigger picture.
