Forget S&P 500: Luxury Goods is New Investment ?
Luxury goods have long been coveted for their craftsmanship and exclusivity, often serving as symbols of status and wealth. (see above)
Think Rolex watches, Hermes Birkin, Kelly or Chanel’s 2.55, and even classic cars, they have long held a certain allure.
In recent years, they have also emerged as a potential investment avenue, like:
Traditional assets - stocks, bonds or real estate.
Contemporary asset - cryptocurrency.
Allure of luxury goods as investments lies in their “tangible” nature and the emotional value they carry, that could sometimes (not 100% always) translate into financial value over time - in part no thanks to vloggers and influencers keep marketing the concept of “investment pieces”.
Luxury Retails - Best investable?
Were you as surprised as I was when I chanced upon the post for the first time? (see below)
Luxury goods vs S&P 500 index
Above is the latest Knight Frank Luxury investment index compilation.
On the 10-year performance of various luxury good classes as of Q4 2023.
This report was released as part of the 2024 Wealth Report.
S&P 500’s 10-year return was included for additional context.
Top 3 luxury investable:
Whiskey - +280%.
Wine - +146%.
Watches - +138%.
Sorry ladies, unfortunately “investable” handbags only ranked #6 out of 10 luxury good classes.
Stacked against S&P 500 Index ?
To ensure above ranking is “bias-free”, enclosed is another comparison between US luxury goods and $S&P 500(.SPX)$ index. (see above)
The comparison is over a 12 months. period.
Luxury goods definition here comprised of companies engaged in specialty retail of luxury items, including (a) jewelry, (b) watches, (c) crystal, (d) clothing, (e) handbags, and (f) accessories.
Collectively, luxury goods yielded a +5.97% gain from 27 Mar 2023 to 22 Mar 2024.
On the other hand, the S&P 500 index gained +31.81% over the same time period.
Truth be told that the S&P 500 index only really made steady gains from November 2023 onwards, when all-things AI suddenly took flight.
Interestingly, it took artificial intelligence (AI) and ChatGPT a-year to gain traction after it was first launched in November 2022.
My viewpoints: (mine & mine only)
Personally, I think it is a privilege to be able to “splurge” & “pamper” oneself, once in a blue moon.
Buy what you like, could afford and use it to its “death” carefully, to prolong its shelf life.
Where possible, try not to get too caught up in the hype for it will come to pass.
If you begin to consider buying a luxury piece because it is an “investment”, then suggest you walk away because the premise of real-pampering is less likely to be true.
Most important, when the luxury item you have purchased is no longer a “cult” favourite and yet you still loved it, then it is truly luxury (to you).
You do not need to research too in-depth to know that luxury is un-sustainable. (see below)
Having said that, if $LVMH-Moet Hennessy Louis Vuitton(LVMUY)$ (Mother of ALL luxuries) falls to $150, I might just relent and buy !
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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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