A Hermès Birkin vs. stock in Hermès. Which one is a better investment? [Thread]

Over a 35 year period:

Hedge funds make just 6% on average. The US stock market makes 11% a year

What about returns from a Birkin?

Birkin value has increased 500% across the last 35 years (roughly 14% per year). In fact– Birkins outperform the stock market nearly every year

"WTF, how is a handbag an investment?!"

Handbags can be a terrific investments, especially certain rare collections

Handbags usually feature at the top of alternative asset, luxury investment collectible lists followed by stamps, art and rare whisky

Just how pricey can a Birkin get?

Very.

Enter the “holy grail” of handbags, the white Himalaya Birkin bag. Made from Nile Crocodile hide which undergoes a special dye process turning it a special white. Featuring 18-karat white gold and more than 200 diamonds.

Price? $500k

Hermès stock is up 195% across the past 5 years and 32% last year. 2017 to 2019 was a slow period for Hermès, their growth has really been across the last 2 years.

For 15 long years prior to 2017, LVMH had boardroom battles with Hermès (a rivalry that deserves it's own thread).

Can Hermès stock continue delivering returns of 40% a year? It's pretty expensive on an earnings multiple basis. The entire sector is really expensive. Luxury brands usually trade of 20x their earnings, the sector is at over 40x

Price/ earnings multiple of Hermès? 88x

Wall Street agrees these valuations are lofty and Hermès is trading well above broker target prices. Many analysts feel this is closer to a €800 stock... it's trading at €937 today.

Research analysts have shifted to HOLD recommendations on the stock.

Hermès stock might be a better bet - but right now it's at pretty expensive levels. If you're comfortable with a 14% return each year owning an actual bag - there's just one problem...

Actually getting one.

Getting your hands on a Birkin is notoriously difficult.

I have $200k how can I get a Birkin?

There are countless forums dedicated to top tips and insider hacks on how to score one.

Your Birkin (like Hermès stock) can be traded on the second hand market. These bags retain value remarkably well especially when well taken care of.

If you really want designer bags regularly, seriously consider getting onto a guaranteed "buy back" programme.

Whether you own stock or an actual bag - both investments require time and effort

The ongoing costs of owning an actual bag include maintenance, touch-ups & handbag insurance.

Owning a potentially overvalued stock in a volatile market also means regularly check-ins.

"My friends are laughing that I received stock as a gift!"

Chances are you will be laughing to the bank over the longer term.

Remember when Kanye bought Kim stocks as a gift? Some of those stocks are up nearly 270% in 3 years.

I need more designer handbag content. I got you. Here's a @Banker__X piece worth checking out. https://bankerx.co.za/2020/09/07/the-luxury-series-secure-the-bag/

A thread covering the cut-throat world of deal-making within the cosmetics industry. https://twitter.com/iamkoshiek/status/1266426138739474432?s=20

Shout-out for making it to the end. Next time you receive an envelope with a list of stocks, it may just be a gift that consistently creates value for you*

*Everyone who received Enron or Lehman Brothers stock disagree