Whoever says that fashion is not a real investment has probably been living under a rock for the last half century. Designer clothes, designer hair products, sports cars, luxury cars, and all of those other things we purchase are definitely investments. Sometimes we find our investment in the Shea Moisture leave in conditioner is worth it because our edges are extra laid and our color pops. Sometimes our freshly washed and waxed Chevrolet Camaro brings us so much joy, especially when we hear the engine roar in 3rd gear under a tunnel. Other times we try on an outfit that looks so-so at first, but when we take it up a notch and add in hair, makeup and accessories, your whole look will snatch edges.
The way you make decisions on your car, clothes or hair, is the same way you should make stock, ETF and mutual fund investment decisions. Because reality is: the items you spend money on, someone else is making money as a result. Why not invest in the things you buy regularly?
Take Coach for example. Coach is publicly traded under the ticker symbol COH and it actually pays a really great dividend. Coach has been a well known global luxury brand over the last century along with Prada, Michael Kors and Louis Vuitton. The New York City based company sells everything from shoes and purses to suitcases and perfumes and they guide fashion trends annually. However, the profits they generate are heavily dependent upon the strength of the consumers dollar. When all is well in a country’s economy and consumers have buying power, they will spend a little more to have the Coach name brand in their closet. But, if the economy is under a strain, people won’t be flooding the malls to buy luxury brand items. This tendency leads to somewhat cyclical revenue/earnings patterns that reflect a country’s economy.
Similarly there are GQ Men and Trendsetting Fashionistas that frequently hit the racks at Macy’s. With more variety to choose from and frequent sales, Macy’s positions itself to serve people regardless of the economic fluctuations. When people are pinched for a dollar, but still need that outfit for an interview, or dress for the company Christmas party, Macy’s is a place people turn to for quality clothes at a reasonable price.
All in all, money talks. Consumer spending drives investing. You can see this not just in fashion, but also in technology with the likes of Apple and Google. And this is true even in the food retail industry with Trader Joe’s and Whole Foods leading the wave of healthy food options. Reality is the place to start looking for opportunities to invest is in your own home, in your purse or even in your car.
Until next post folks…