Did the market bottom in March? Or are we setting up for another leg down? I don’t have the answer to that. But at some point the economy will turn around. And when it does, there is one segment of the market that I believe will do extremely well.Over the last year or so many ‘luxuries’ in life have been eliminated to save money. Whether it is a new wardrobe, a new necklace, or a new car, discretionary spending has been drastically cut back. And I think it will be one of the first segments to rebound.
Let’s face it, people like to treat themselves to the finer things in life. There’s something about it that makes them feel better. And after the turmoil of the last 12 months or so, people want to feel better again. So at the first hint of a sustained recovery and a little more certainty about the future, luxury will be back.
I am not certain that the ultra-high end of the luxury market will rebound as quickly, but the more moderate end should spring back quickly. The two plays I like in this segment are Coach (COH) and Tiffany’s (TIF). There are two things women are constantly looking to update: purses and jewelry. Seasons change and so do tastes.
And it is a whole lot easier to convince yourself (or your significant other) to spend a few hundred on a new purse than a few thousand on more “upmarket” luxury goods. This is why I think demand will be strong at this end of the luxury market, and both companies should see a strong uptick in sales.
The rebound in emerging markets and the rapidly expanding middle class there, should also fuel demand for luxury goods.
I like Tiffany’s a little more than Coach since it hasn’t run up quite as fast off the March lows. But I think both names have room to run. Of course, you should do your own research and average into positions over time.
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You state in your article: ” There’s something about it that makes them feel better.” Why do we feel “badly” in the first place? What compels the capitalist drone to go to maximum depths of indebtedness and impoverishment to gain a momentary compensation of a “luxury” item which itself decays and almost invariably demands several forms of maintenance, leading only to further and further despair?
Catholicism has THE answer. Sin. Pure and simple.
Pride, Envy, Gluttony, Lust, Anger, Covetousness and Sloth, remember them?
If these 7 Deadly Sins are so prominent, inescapable and fundamentally legislated into our every waking moment so as to be a plague of nightmares for us each and every time we sleep, what is the remedy?
“Common sense,” such as it is to the modernist who has lost his/her way down the path of abortion, credit cards, home equity loans, divorce, homosexuality, drug abuse, alcoholism, ultra-violent video games creating a class of citizen totally inured to the horrors of murder and assault, fornication, sexually transmitted diseases to the point of pandemic saturation, relentless and irresistible alien invasion pouring over our borders and changing our culture, world-wide imposition of terrorism by the sole “religion” which is now, as communism attempted, trying to take over the world by violence or, as they put it, the sword.
Can we equate these gross mortal sins, not to mention the copious venial sins Catholicism teaches to its (few remaining American) Faithful, with the payback of human suffering in this day, a complete surprise to most folks who voted Obama in, in the promise of this becoming what Voltaire says mockingly and sardonically in Candide as, “This, the best of all possible worlds”? Obama, a champion, as all left wingers are, to the mass murder of the innocent. 100 million dead under atheistic Communism during the 20th century, and now Obama, who bows to Muslim prelates and heartily, virulently announces that America is not a Christian nation, who is also, not coincidently, the most heinous supporter of the murder of the unborn and thus was voted into office by the hoards of commie-wannabe abortionists, fornicators, divorcers, adulterers, child-abandoners, TV/Skinner Box addicts compromised by self-imposed Manchurian Candidate mental torture.
Study the Economy of Salvation as the only Church which Christ and the Holy Spirit created teaches. All this chaos will suddenly become reasonable and necessary as payback for our overwhelming abandonment of God, literally legislated into existence and saturatingly pandered in the media.
Thanks for sharing such great post and i agree that own research is very much essential.