The Liv-ex Lafite Index hit a new high at the end of November, reaching 778.7 – an increase of more than 10% in just one month. Incredibly, the index is up almost 80% in 2010.

Liv-ex Lafite Index - November

 But when does a bull market become a bubble? 

Andy Xie, an ex-Morgan Stanley analyst and a notable bear when it comes to China (Wikipedia has a run down of his record), feels Lafite has now strayed into bubble territory. In a blog post bluntly titled "Sell Lafite now", he states:

"What I have seen and heard in the past few months convinces me that, not just Lafite, the whole fine wine market is a bubble. Like other assets, the force for the bubble is the low interest rate environment. Bernanke is a bigger reason for the fine wine price than 1.3 billion Chinese."

He goes on to describe the current pricing of Lafite as similar to the inflated share valuations seen in the dot com bubble:

"In the 2000 internet bubble, a lot of companies were worthless but were trading at billions of dollars of market capitalization. Some were really good companies but were priced several times higher than their intrinsic worth. Lafite is like the latter…The top Bordeaux chateaus behave like internet companies in 2000. They sell a small proportion for each release. The shortage triggers market frenzy. They then sell more into it bottle by bottle over time."

His argument is threefold. First, Lafite isn't being consumed at the rate most commentators imagine. It is actually being "hoarded" by collectors, merchants and the chateau itself. Second, the issue of fakes is of growing importance and could eventually "destroy the demand for it completely". And third, the market conditions that have enabled the Lafite "bubble" to grow – plentiful supply of money and low interest rates – is only a short-term factor; "when interest rates go up, Lafite in the cellar shines a bit less."

Xie is the second commentator to call the top of the market for Lafite, following on from Tim Atkin MW (wine writer at the Times). Following the recent ex-cellars auction at Sotheby's in Hong Kong, Atkin commented:

"Is this just Lafite mania, well attested in Asia, or is it proof of what economists calls 'the greater fool theory' (however crazy the prices, there’s always someone out there stupid enough to pay them)? I may be proved wrong, but I think we have reached the top of the curve here, or The Peak if you prefer."

More than a year after Lafite started its vertiginous run, we are now hearing the first murmurings that the Lafite bull has run too far. The market, however, has yet to show any signs of a slow down.