The economics of the Birkin handbag(wsj.com)
wsj.com
The economics of the Birkin handbag
https://www.wsj.com/style/fashion/hermes-birkin-bag-investment-031c215c
374 comments
https://archive.is/wwZ1k
I went to a buy.
Hermes gives you 24 hours to go into the store and buy the item. Otherwise the bag goes to the next buyer on the rolodex.
Buyers call their friends and make it into an event. They’re literally giddy and excited to go. It’s like winning the lottery.
You’re ushered into a private room with nice couches, mirrors, a phone. You choose a scarf and wrap the scarf around the strap.
Buyers text their sales rep almost daily.
In a way it’s like a drop in the NFT space.
Hermes gives you 24 hours to go into the store and buy the item. Otherwise the bag goes to the next buyer on the rolodex.
Buyers call their friends and make it into an event. They’re literally giddy and excited to go. It’s like winning the lottery.
You’re ushered into a private room with nice couches, mirrors, a phone. You choose a scarf and wrap the scarf around the strap.
Buyers text their sales rep almost daily.
In a way it’s like a drop in the NFT space.
I'd argue it's the opposite. This is a long running model copied for NFT.
Comparing a Hermes appointment to clicking "buy" on an NFT is hilarious. Nonetheless, I've gotten three appointments, have spent around 150k EUR on bags. So far I've made $30k after VAT and US duty. No idea why Paris original Hermes bags go for so much more in the states. If I have an appointment, I'll fly round trip to Paris, buy the bags, and hold them until I go to the states. Great experience, very high class!
You've spent half of your highest salary on bags? Feels like a lot but I'm just some guy. What was the biggest bag balance you've had on the books? Or are you buying and flipping at most one or two at any time? When you make these trips, do you have a US buyer lined up beforehand or do you find them once you're in the US?
With 20% ROI collected in a few months, after all duties, it's a good deal, even if you pay with a credit card. (You can certainly get a cheaper loan if you're the kind of person to be invited to a bag-dispensing event.)
Loan? I certainly hope no one is taking out a loan to do this.
Well, I guess if the resell is pretty certain, then a loan is a smart business move. But really no one should be going into debt for an item like this.
Well, I guess if the resell is pretty certain, then a loan is a smart business move. But really no one should be going into debt for an item like this.
Certainly, a loan was mentioned only for reselling, as a typical business loan to finance a surefire-looking deal.
1) My wife loves Paris
2) Credit card points + Travel miles
2) Credit card points + Travel miles
Are you actually Gary Numan?
pbj1968(1)
I think the biggest balance I had was ~$65k at one time. I'm buying one, maybe two per trip depending on what kinds of bags collectors are looking for in the US. I don't have a buyer setup before hand, but I'm in a couple of private facebook groups that I can usually find one a few weeks before I fly to the US.
> a couple of private facebook groups
There's the secret sauce: you need a high trust trade network. Well this is pretty cool. I love to learn about weird informal economies, thanks!
There's the secret sauce: you need a high trust trade network. Well this is pretty cool. I love to learn about weird informal economies, thanks!
Yep! It's very similar - albeit much smaller - market to watches, collectable vinyl records, trading cards, etc. Just easier to rely on trust and word of mouth sometimes.
Do you know if Hermes is OK with people purchasing with intent to immediately resell?
I think I remember reading that people have "gotten in trouble" (i.e. block-listed from future sales) for being suspected of this, but I might be confusing it with some other company.
I think I remember reading that people have "gotten in trouble" (i.e. block-listed from future sales) for being suspected of this, but I might be confusing it with some other company.
Hermes monitors the resale websites. If they can find out the identifier then you will be banned.
That seems like an idle threat. Hermes needs a "black market" to keep the brand in circulation. Making the item feel risky acquire can add to the thrill of the chase.
Maybe if you try to buy a truckload at once, they would step in, but I doubt any consumer-level flipping is hitting their radar.
Maybe if you try to buy a truckload at once, they would step in, but I doubt any consumer-level flipping is hitting their radar.
Personally, I haven't heard of it happening. Most of the market is off resale websites anyways. Now if you started a boutique trying to resell Hermes bags, then you might have an issue.
How much value do these bags lose if you so little as touch them with an ungloved hand?
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First appointment they have a limit, IIRC it's like 2 bags, but subsequent appointments you can buy a lot more
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so you're their sales rep?
No? It's a fun luxury item to flip, that can make some decent money. Rolex's used to be good to flip if you had a good rep with an AD, but now the resale market is down.
Not as bad as buying a Ferrari: where you have to already own a Ferrari to be allowed to buy one.
A friend of mine is a true petrolhead. Loves cars. When he was in his early twenties he bought a second hand Ferrari. Drove it around for years. He sold it, for the exact same price he bought it, back the person who’d sold it him in the first place.
I wouldn’t call a Ferrari an investment, but if you love them they hold their value pretty well.
I wouldn’t call a Ferrari an investment, but if you love them they hold their value pretty well.
Yes, but maintenance costs are very high. You can expect >$5k and typically another few $k for tires. That is true even if nothing breaks and milage is low (eg <5k mi/yr). Costs quickly go up once cars are past 20 years old due to the lack of parts. You definitely need $10-15k in an emergency fund if anything significant goes wrong (or you got sold a lemon).
So that $40-50k car price is about half of 5 years of ownership.
So that $40-50k car price is about half of 5 years of ownership.
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One reason they hold their value well is because they have low mileage. They’re not practical cars to use on a daily basis, not to mention maintenance costs which are quite high if you use the car often.
meanwhile a '93 Honda NSX recently sold for 60k showing 234,300 miles on the odo
https://carsandbids.com/auctions/3OnRAn0v/1993-acura-nsx
https://carsandbids.com/auctions/3OnRAn0v/1993-acura-nsx
I learned how to drive stick on an NSX.
I also wedged my skateboard in the back window when it was open, causing it to completely shatter when the owner tried to close it. Didn't appreciate what a bone-headed move that was at the time, but you've enlightened me.
I also wedged my skateboard in the back window when it was open, causing it to completely shatter when the owner tried to close it. Didn't appreciate what a bone-headed move that was at the time, but you've enlightened me.
Yeah but aren’t these cars big with people who do after market mods? Ferraris have to be serviced by licensed mechanics.
> Ferraris have to be serviced by licensed mechanics.
"Have to"? Says who? "Licensed"? By who?
As someone who is very close to both the "factory authorized" and "non-authorized" sides of the Ferrari service industry, this is incorrect or at best a gross oversimplification of things like warranty service or the Ferrari Classiche process.
There are a lot of misunderstandings and myths circulating about Ferrari ownership, but this is a new one to me.
"Have to"? Says who? "Licensed"? By who?
As someone who is very close to both the "factory authorized" and "non-authorized" sides of the Ferrari service industry, this is incorrect or at best a gross oversimplification of things like warranty service or the Ferrari Classiche process.
There are a lot of misunderstandings and myths circulating about Ferrari ownership, but this is a new one to me.
Not that car. A '93 NSX today will be bought by a new-money millionaire in his 40s as a nostalgia piece, his dream car from when he was a teenager in the 90s. It will be kept as stock as reasonable. Even the photographs are designed for such a buyer. An NSX on a crisp Chicago day is the definition of 90s cool.
> Ferraris have to be serviced by licensed mechanics.
If you’re talking about special ones like La Ferrari or some others, i can tell you that there are lots of 458 italia and California and Cali T that have been in no-name shops and still being sold without any problem.
If you’re talking about special ones like La Ferrari or some others, i can tell you that there are lots of 458 italia and California and Cali T that have been in no-name shops and still being sold without any problem.
>> not to mention maintenance costs which are quite high.
I remember watching Gas Monkey Garage where they bought a smashed Ferrari F40 for $400K. One of the funniest scenes was Richard Rawlings on the phone with the Ferrari parts dealer telling him how expensive the parts were he needed to rebuild the car with. The funniest was the juxtaposition of Richard, a guy who's used to haggling with people to get a good price on everything, and here he was being reminded that these were OEM Ferrari parts with the quip, "How much for a quarter panel? Yeah, I KNOW its a real Ferrari quarter panel!" with the standard eye roll that the cost of this was killing him.
The whole show gave a glimpse into owning one of these cars. IF something does happen to it, in order for it to be "certified" as a legit Ferrari, you have use all OEM parts and have a person from Ferrari oversee the repairs. The whole show was a lesson in the amount of time and money needed to own one of these - even if you don't drive it very much.
Here's an article that detailed the whole process: https://www.hotcars.com/what-happened-to-ferrari-f40-from-fa...
I remember watching Gas Monkey Garage where they bought a smashed Ferrari F40 for $400K. One of the funniest scenes was Richard Rawlings on the phone with the Ferrari parts dealer telling him how expensive the parts were he needed to rebuild the car with. The funniest was the juxtaposition of Richard, a guy who's used to haggling with people to get a good price on everything, and here he was being reminded that these were OEM Ferrari parts with the quip, "How much for a quarter panel? Yeah, I KNOW its a real Ferrari quarter panel!" with the standard eye roll that the cost of this was killing him.
The whole show gave a glimpse into owning one of these cars. IF something does happen to it, in order for it to be "certified" as a legit Ferrari, you have use all OEM parts and have a person from Ferrari oversee the repairs. The whole show was a lesson in the amount of time and money needed to own one of these - even if you don't drive it very much.
Here's an article that detailed the whole process: https://www.hotcars.com/what-happened-to-ferrari-f40-from-fa...
There's a very popular video from a dissatisfied owner who talks about all the maintenance nightmare of owning a Ferrari.
https://www.youtube.com/watch?v=-JgeU3X-2AM
https://www.youtube.com/watch?v=-JgeU3X-2AM
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The cost of a Ferrari isn't in the car. It's in the insurance, maintenance, and stress of anything happening to the car. I for one would hate to have a luxury vehicle even if I could afford it and even if you guaranteed to buy it back from me for the same amount I'd get investing in the stock market.
Yeah, I feel like I could (should?) get around town faster in a beat up Corolla, and getting around faster on a highway in a supercar would require taking a lot of physical + legal risk.
Thats true for most cars with a bit of a cult interest past a certain age, not just ferrari. An old civic in one of the nicer engine trims would also hold value at this point, even appreciate.
It's interesting that Jay Leno refuses to buy a Ferrari for this fact.
there are also severe restrictions on your ownership of the ferrari.
You are required to maintain and insure it. by ferrari.
You can't loan it out for performance testing.
You can't street race it.
You can't sully the brand.
and plenty more.
makes me wonder, do the new ones have telemetry to check this stuff?
You are required to maintain and insure it. by ferrari.
You can't loan it out for performance testing.
You can't street race it.
You can't sully the brand.
and plenty more.
makes me wonder, do the new ones have telemetry to check this stuff?
So...no fun allowed? You can buy the car exclusively for the purpose of being seen in said car. I am definitively not a car guy, but what's the point if you do not red-line it for some quick thrills?
Whatever makes people happy, I guess. I will continue to drive my ~zero maintenance Honda without regrets.
Whatever makes people happy, I guess. I will continue to drive my ~zero maintenance Honda without regrets.
I've ridden in two Ferraris, and they were very much "red-lined for quick thrills". The "Ferrari rules" may build a mystique, but there's also some juice in breaking rules.
it is the same model. in order to buy a birkin you need to buy tens of thousands of dollars of less desireable Hermes product.
...to get an allocation for the latest and greatest model. Pretty sure you can walk into most Ferrari dealers today and order a Roma, for example, without previous ownership history.
Actually the whole sneaker market is like this too now. They have weekly drops where inventory is restricted to create hype.
Not the whole sneaker market, a weird premium collectable subset of the sneaker market is like this. You can buy sneakers at Costco (as long as you like the one option they stock).
Not the whole market at the high end either, I have very little trouble getting any pair of Balmain, Versace, and Rick Owens sneaker I want - I have several dozen pairs of all three brands
Strategy at the high end is to price correctly but astronomically so almost no one can afford them, then offer seasonal sales to sell the less popular colorways or styles off to the aspirational upper poor.
Nike/Adidas is like the polar opposite, intentionally underprice so demand is frantic and there is a lot of action for middle men, then over the years try to steal back as much of the middle men profit as possible
All very interesting imo
Strategy at the high end is to price correctly but astronomically so almost no one can afford them, then offer seasonal sales to sell the less popular colorways or styles off to the aspirational upper poor.
Nike/Adidas is like the polar opposite, intentionally underprice so demand is frantic and there is a lot of action for middle men, then over the years try to steal back as much of the middle men profit as possible
All very interesting imo
> I have several dozen pairs of all three brands
I guess different colors? I've always wondered, what do people with 50+ pairs of shoes do? Surely most of them just gather dust.
> price correctly but astronomically
Based on materials or cost of labor, I doubt it's correct pricing. It's all artificial scarcity due to branding, I'm fairly sure.
I guess different colors? I've always wondered, what do people with 50+ pairs of shoes do? Surely most of them just gather dust.
> price correctly but astronomically
Based on materials or cost of labor, I doubt it's correct pricing. It's all artificial scarcity due to branding, I'm fairly sure.
Indeed, I have exactly one pair of sneakers. When they wear out I buy a new pair. I usually spend $50-100
There's a whole ecosystem for used nike shoes. https://www.youtube.com/@Ramitheicon gets over 500k each video and he's got a physical storefront where he trades cash to kids for their used nike shoes. There's so much hype for these shoes from NBA players, tik tok, instagram, and youtube.
We're far from the 2018-2021 levels of ridiculousness though, the hypebeat market has taken a big hit. Grey market watches as well.
Birkins haven't.
Birkins haven't.
Uh not really.
The unique part here is that in order to even have the chance to buy a bag you need to develop a relationship with a sales rep and buy a bunch of other stuff. The more other stuff you buy the higher on whatever list they'll put you and when they get a bag in stock they'll give the chance to buy to whoever they have a positive relationship with and who has spent a lot of money.
The unique part here is that in order to even have the chance to buy a bag you need to develop a relationship with a sales rep and buy a bunch of other stuff. The more other stuff you buy the higher on whatever list they'll put you and when they get a bag in stock they'll give the chance to buy to whoever they have a positive relationship with and who has spent a lot of money.
Sounds a lot like getting a mechanic in the USSR.
7 years from now. But will the mechanic come in the morning or in the afternoon?
Hopefully the afternoon since the plumber is coming that morning
i heard this is how it's working for a Rolex now, too, unless you go to secondary market and pay a big premium.
This is always how Rolex has worked. Supply is limited, and prices are fixed, so they have to pick and choose who gets the rarer and more desirable watches, and who better to offer them to than the people who are your best customers (or have enough clout to be free advertising?).
Ferrari works the same way.
Ferrari works the same way.
Definitely not always how Rolex worked. Just 10-15 years ago you could walk in and purchase a stainless steel sport Rolex watch for a good discount brand new at authorized distributors.
I find these systems fascinating. Hermes does make high-quality bags but really where they shine is in marketing.
You see a similar thing play out in the mechanical watch world. Rolex is the master of marketing. They make a good product, make no mistake, but they don't over-produce models, still have scarcity despite selling millions of watches a year and have a limited inventory so Rolexes have the strongest secondary market.
Compare this to Omega who simply produce too many watches and too many watch variants such that you just don't have the strong secondary market that Rolex has. This is despite Omega producing in some cases a better product in utility purposes (eg Planet Ocean vs Deepsea Sea-Dweller).
But there's a dirty little secret with all these brands, including Hermes. As much as they say it's about spend ratios and the like, ultimately it comes down to whether or not they like you. If, as a woman, you're attractive, stylish and likely to be seen with their products (eg red carpet events) you will have WAY more offered to you than your spend ratio might otherwise warrant.
You see a similar thing play out in the mechanical watch world. Rolex is the master of marketing. They make a good product, make no mistake, but they don't over-produce models, still have scarcity despite selling millions of watches a year and have a limited inventory so Rolexes have the strongest secondary market.
Compare this to Omega who simply produce too many watches and too many watch variants such that you just don't have the strong secondary market that Rolex has. This is despite Omega producing in some cases a better product in utility purposes (eg Planet Ocean vs Deepsea Sea-Dweller).
But there's a dirty little secret with all these brands, including Hermes. As much as they say it's about spend ratios and the like, ultimately it comes down to whether or not they like you. If, as a woman, you're attractive, stylish and likely to be seen with their products (eg red carpet events) you will have WAY more offered to you than your spend ratio might otherwise warrant.
Same goes ie for Ferrari. For those that don't know - you can buy 'cheap' V8 ie Californias, 458, 488, F8 etc, pretty much just like anything - you pay and get into queue, and once its your time, you get what you've selected with sales rep.
Not so much the better V12 / hypercars which they do in carefully limited amounts. You have to be previous owner of series of lesser ones. You have to be their customer for quite some time, with flawless trail as a stellar customer. You have to have very good relationship with their company (so like Justin Bieber got his car painted on some color that they didn't approve and Ferrari banned him for life). Unique extremely limited series are all this but 10x or 100x, since all know this is darn good investment right out of gate, if you don't screw up maintenance (and at those price levels nobody sane does that). Those are basically not driven, each km would be ridiculously costly in total costs and depreciation.
You can skip most of this if you buy second hand, for adequate inflated prices. This won't work for Bieber style of situation of course.
Not so much the better V12 / hypercars which they do in carefully limited amounts. You have to be previous owner of series of lesser ones. You have to be their customer for quite some time, with flawless trail as a stellar customer. You have to have very good relationship with their company (so like Justin Bieber got his car painted on some color that they didn't approve and Ferrari banned him for life). Unique extremely limited series are all this but 10x or 100x, since all know this is darn good investment right out of gate, if you don't screw up maintenance (and at those price levels nobody sane does that). Those are basically not driven, each km would be ridiculously costly in total costs and depreciation.
You can skip most of this if you buy second hand, for adequate inflated prices. This won't work for Bieber style of situation of course.
Ferrari broke their model this cycle. Their high end customers have put up with this for decades since the hypercars always gain value. Most people let them gather dust for a while, then sell them for a tidy profit once the Ferrari quiet embargo on aftermarket sales goes away.
This time they got really greedy and tried to insert a limited production mid-engine model into the middle, under the La Ferrari hypercar but above the 'base' mid engine car they have been making forever. The problem is that SF90 isn't special enough. It's the same basic technology as the much cheaper 296 (which is plenty fast and special) and no SF90 has re-sold for above or even that close to MSRP. All the special customers have taken a bath on SF90 and I hear are pretty annoyed with Ferrari.
They also tried to toss in the SP line of cars, further diluting the special, limited nature of the hypercars.
This time they got really greedy and tried to insert a limited production mid-engine model into the middle, under the La Ferrari hypercar but above the 'base' mid engine car they have been making forever. The problem is that SF90 isn't special enough. It's the same basic technology as the much cheaper 296 (which is plenty fast and special) and no SF90 has re-sold for above or even that close to MSRP. All the special customers have taken a bath on SF90 and I hear are pretty annoyed with Ferrari.
They also tried to toss in the SP line of cars, further diluting the special, limited nature of the hypercars.
The SF90 resale values seem to also be impacted by issues with the battery and charging system. I remember reading quite a few stories about electrical gremlins on FerrariChat. Even if the issues are worked out by later updates (which they may or may not be), that kind of bad reputation can have a big impact on depreciation.
Fascinating, thank you. What staggers me is how the very well-off people who can afford the Ferraris put up with this nonsense. In my book the whole point of being rich is the increased freedom which surely includes not complying to idiotic requirements (and I don't mean the social and legal norms here).
I guess an urge for status signalling is very hard to resist.
I guess an urge for status signalling is very hard to resist.
Having dipped my toes in the Ferrari world, there are three very different groups of Ferrari buyers- Status people, car people, and super rich people. The status people play the silly game with the dealers. The car people buy used from the status people after the new model isn't flashy any longer. The super rich people buy original era cars (before Fiat bought out the company in the 1970's) and use them as investments.
Well, the main reason that you'd buy a Ferrari in the first place is status signalling, so if it's extra-difficult to get, that makes it _better_ at status signalling. Kind of a variant of a Veblen good; the presence of whatever the special model is in their driveway indicates that the person has completed the rich-person equivalent of throwing a ring into Mount Doom, so is impressive to people who are impressed by that sort of thing.
Well, I've driven one basic (458) on a track circuit and let me tell you... If TCO would be below 1% of my net worth, I would buy it in an instant. It literally puts a smile on your face. And its a marvel in engineering compared to cars for regular Joes.
But completely useless in regular traffic, in fact much much worse than normal cars. And all kinds of idiots want to semi-constantly race you. So sort of great deal on the paper, actual reality not so much.
But completely useless in regular traffic, in fact much much worse than normal cars. And all kinds of idiots want to semi-constantly race you. So sort of great deal on the paper, actual reality not so much.
Not a ferrari, but I had a Mercedes AMG for a few years and it was exactly like that too - put a stupid grin on my face on the track or on the autobahn(5am drive at solid 160mph for like 30 minutes near berlin will always remain my favourite driving experience), but day to day it was awful - loud, uncomfortable, ruinous on fuel, and people wanted to race you constantly, every now and then people wanted to take pictures as well etc - which I imagine with a Ferrari it's even worse. Nowadays I settled for a completely inconspicious family car that no one would even look at twice, but which still has enough power to go fast if I want to. But owning "flashy" cars is definitely not for me anymore.
I confess to having a soft spot for sleeper cars. Dont know what the equivalent term would be in Germany. But anything that looks convincingly like a family car but can do 0-100kph in a flash would qualify.
Example: Volvo V60 Polestar wagon, or the legendary Ford Taurus SHO
Im sorry to say that in my corner of the US, an AMG Benz screams man-child rather than car enthusiast, because they tend to be driven by idiots. Ditto any BMW M.
Example: Volvo V60 Polestar wagon, or the legendary Ford Taurus SHO
Im sorry to say that in my corner of the US, an AMG Benz screams man-child rather than car enthusiast, because they tend to be driven by idiots. Ditto any BMW M.
My current car is actually an XC60 T8 :-) It's a bit of a barge, but the 400bhp is "enough" to go fast should you want to.
>>Im sorry to say that in my corner of the US, an AMG Benz screams man-child rather than car enthusiast
That's fine, everywhere is different.
>>Im sorry to say that in my corner of the US, an AMG Benz screams man-child rather than car enthusiast
That's fine, everywhere is different.
The EX30 does 0-100kmph in 3.5 seconds.
Same, I drove a factory-fresh F140 v12 GTC4Lusso straight off the line in Maranello while they were still being produced, and having background in German-built cars, it’s light years of difference. If I could have bought that same day I 100% would have. They’re that good.
They are amazing cars, but damned if they don't look like a hatchback Corvette
I see it as the Corvette looking like (copying) the Ferrari. I've got a friend who drives one of those 'high-end' wishes-it-was-a-Ferrari Corvettes. Every time she drives up I say "shoulda bought a real car", and I get a dirty look.
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I guess an urge for status signalling is very hard to resist.
Buyers who just want an exotic don't have to jump through Ferrari's hoops. There's the used market. Or, it's relatively easy to buy a new McLaren, Lotus, etc.
Buyers who just want an exotic don't have to jump through Ferrari's hoops. There's the used market. Or, it's relatively easy to buy a new McLaren, Lotus, etc.
[deleted]
> In my book the whole point of being rich is the increased freedom which surely includes not complying to idiotic requirements...
That's precisely why there are people flipping Porsche and Hermes Birkin bags for a living.
There are certain rich people who have absolutely zero patience and won't deal with that car configuration/salespeople/six months of wait bullshit.
So what do they do? They buy the car now, the day they see it brand new but second hand, at a price above MSRP.
That's precisely why there are people flipping Porsche and Hermes Birkin bags for a living.
There are certain rich people who have absolutely zero patience and won't deal with that car configuration/salespeople/six months of wait bullshit.
So what do they do? They buy the car now, the day they see it brand new but second hand, at a price above MSRP.
I think the parent's point is why would a rich person care about these items at all. If I were rich, I would hire my own artisan to make me a bag. Kind of like a bespoke suit.
Yeah I'm not rich but most of my clothes are made by a third generation tailor. Sometimes if I see a style I like at a retail shop I buy it and bring it to them to duplicate. You get to completely customize everything and having control of the fabric and literally everything is so nice. It kinda makes me wonder why there's so many retail stores selling clothes when above a certain income it's just better to get almost everything bespoke.
It's probably because of this "nonsense" that people see these cars as exclusive and therefore worthy of putting up with the nonsense...
>"but really where they shine is in marketing."
I guess they do since they can sell their stuff. But not to people like me. When I see product priced just for being status symbol my first reaction is - fuck off, go find yourself some suckers.
I guess they do since they can sell their stuff. But not to people like me. When I see product priced just for being status symbol my first reaction is - fuck off, go find yourself some suckers.
I don't know anything about the secondary market for Hermes bags but it seems like it's pretty healthy.
But watches from certain brands (and certain models) can be sold immediately for a profit. For example, a Rolex steel Daytona retails for $14k from an MSRP. You'll sell it in a heartbeat on the secondary market for $30k. The Rainbow Daytona a handful of years ago was $100-150k IIRC. It's now closer to $500-600k.
The market is off its peak of 2021-2022 quite a bit but I've bought several luxury watches that could be sold for a healthy profit if I was so inclined.
But watches from certain brands (and certain models) can be sold immediately for a profit. For example, a Rolex steel Daytona retails for $14k from an MSRP. You'll sell it in a heartbeat on the secondary market for $30k. The Rainbow Daytona a handful of years ago was $100-150k IIRC. It's now closer to $500-600k.
The market is off its peak of 2021-2022 quite a bit but I've bought several luxury watches that could be sold for a healthy profit if I was so inclined.
What makes some of these products go crazy heights, while (I guess that) some other just lose value or never gain value ? Are those products better than others or is it just some pure coincidental mix of factors ?
It's really difficult to predict and has to be managed well by the company. But a big one is when a model gets discontinued because at that point no more will be made so supply is fixed.
So the current generation of professional (ie steel) Daytonas have a ceramic bezel. This is to avoid scratches but means they can shatter with enough force. The ceramic itself is baked in a plasma furnace. The tech behind these things can actually be really cool.
So Daytonas have historically sold above MSRP on the secondary market but not by this much. About 10 years ago the new ceramic Daytonas were released and what happened was a lot of people sold their previous DAytonas to "upgrade". This meant that what was 6 months earlier a $13k MSRP watch was selling for $10-11k and that seemed crazy to me given it was now discontinued so I bought one. At the peak of the market, that watch would sell for $30-35k. Now it's probably under $25k but that's still a good investment.
But steel Rolexes never really appreciate that much because the volumes ard really high. You're not going to get rich buying a steel Submariner. There's simply too many of them out there.
But one exception is the really vintage Daytonas, particularly what are called Paul Newman Daytonas [1]. These were watches that back in the 1980s sat in a display case for years (at $500 or less) because no one bought them but an association with Paul Newman skyrocketed them in the public consciousness to the point that a 1960s era Paul Newman Daytona in mint condition can easily be worth $500k-$1m+.
The market dynamics are really fascinating but it's now become essentially impossible buy an in-demand watch from an AD unless you're a big spender on other products there (they're all typically jewelers as well). The history of Rolex was in utility not luxury (eg the GMT was invented for Pan Am pilots who suddenly were flying cross-country, the Submariner is a dive watch, the Daytona was originally for racing drivers, etc).
[1]: https://www.bobswatches.com/paul-newman-rolex-daytona
So the current generation of professional (ie steel) Daytonas have a ceramic bezel. This is to avoid scratches but means they can shatter with enough force. The ceramic itself is baked in a plasma furnace. The tech behind these things can actually be really cool.
So Daytonas have historically sold above MSRP on the secondary market but not by this much. About 10 years ago the new ceramic Daytonas were released and what happened was a lot of people sold their previous DAytonas to "upgrade". This meant that what was 6 months earlier a $13k MSRP watch was selling for $10-11k and that seemed crazy to me given it was now discontinued so I bought one. At the peak of the market, that watch would sell for $30-35k. Now it's probably under $25k but that's still a good investment.
But steel Rolexes never really appreciate that much because the volumes ard really high. You're not going to get rich buying a steel Submariner. There's simply too many of them out there.
But one exception is the really vintage Daytonas, particularly what are called Paul Newman Daytonas [1]. These were watches that back in the 1980s sat in a display case for years (at $500 or less) because no one bought them but an association with Paul Newman skyrocketed them in the public consciousness to the point that a 1960s era Paul Newman Daytona in mint condition can easily be worth $500k-$1m+.
The market dynamics are really fascinating but it's now become essentially impossible buy an in-demand watch from an AD unless you're a big spender on other products there (they're all typically jewelers as well). The history of Rolex was in utility not luxury (eg the GMT was invented for Pan Am pilots who suddenly were flying cross-country, the Submariner is a dive watch, the Daytona was originally for racing drivers, etc).
[1]: https://www.bobswatches.com/paul-newman-rolex-daytona
Thanks for that small piece of history, that's indeed fascinating
I would say: Careful marketing. Who gets access to buy this kind of watch? All you need to do is Google: Rolex Rainbow Daytona. Look at all the celebrities that appear wearing that specific model. It is not an accident.
A mix of quality, management of scarcity, x-factor (call it what you will, some kind of intrinsic appeal to the in group who buy this sort of thing or otherwise inherent desirability), and marketing
Yup and it's not so easy to buy them, you need to get into a queue and wait. People with access shops/employee privileges (sometimes you can buy a watch out of the queue if someone doesn't show up to get theirs) are making a killing.
Well, this is a bit different. It is a way to safely park one's money. Not paying 10x price for a thing with the whole purpose being to show that I am fucking rich.
It's such a weird market segment to me.
Sure, they are obviously very high-quality products, but they are clearly not worth the money you are paying for them. You're very obviously paying primarily for the opportunity to brag that you've got a "genuine Birkin". It's like those silly restaurants putting gold flakes on food: you can't taste or smell it, so you're paying solely for the opportunity to be ripped off.
If you've got money to burn, why not get a fully-custom product made exactly to your wishes by a local atelier and end up with a far superior product for the same price? What's the point if you can't even fully enjoy the fruits of your labor?
Sure, they are obviously very high-quality products, but they are clearly not worth the money you are paying for them. You're very obviously paying primarily for the opportunity to brag that you've got a "genuine Birkin". It's like those silly restaurants putting gold flakes on food: you can't taste or smell it, so you're paying solely for the opportunity to be ripped off.
If you've got money to burn, why not get a fully-custom product made exactly to your wishes by a local atelier and end up with a far superior product for the same price? What's the point if you can't even fully enjoy the fruits of your labor?
Yes, I know a guy who is of old Indian royal family stock (of course they have no special rights any more), and he will just show pictures of expensive bags and so on to his tailor and get them made for orders of magnitude less than retail.
It's entertainment.
It's just as right or wrong as buying tickets to watch a sporting contest.
It's just as right or wrong as buying tickets to watch a sporting contest.
> But not to people like me
I love the Enlightened Hacker News Commenter who can’t wait to share how they are different from other people when it comes to marketing.
Who’s the sucker, the person buying the Birkin or the person commenting hundreds of times on a website that’s a marketing campaign for a VC firm?
I love the Enlightened Hacker News Commenter who can’t wait to share how they are different from other people when it comes to marketing.
Who’s the sucker, the person buying the Birkin or the person commenting hundreds of times on a website that’s a marketing campaign for a VC firm?
>"Who’s the sucker, the person buying the Birkin or the person commenting hundreds of times on a website that’s a marketing campaign for a VC firm?"
Does that really matter? I just expressed my opinion. And I am not that different. I bet there are more people like myself than the ones who would pay $10000 for a purse.
Does that really matter? I just expressed my opinion. And I am not that different. I bet there are more people like myself than the ones who would pay $10000 for a purse.
I bet there are more people like myself than the ones who would pay $10000 for a purse.
Obviously. But are there more people 'like you', than people willing to pay 'too much' for something they know is irrational, just because it brings them joy. I might not want to buy that specific hand bag, but I'm not going to sit here and judge since I too have made plenty of irrational purchases in my life, many of which have brought me great fun and joy.
Obviously. But are there more people 'like you', than people willing to pay 'too much' for something they know is irrational, just because it brings them joy. I might not want to buy that specific hand bag, but I'm not going to sit here and judge since I too have made plenty of irrational purchases in my life, many of which have brought me great fun and joy.
I do make plenty of irrational choices too. Same people who do not mind paying thousands for a gun laugh at me when I pay $5000 for an EUC. Hard to explain but I think it is a bit different than paying for "status symbol"
> Hard to explain but I think it is a bit different than paying for "status symbol"
That is very fortunate for you because after all you’d never buy a status symbol!
That is very fortunate for you because after all you’d never buy a status symbol!
True. I can afford some but the thought to buy one just because I can had never crossed my mind.
Unironically saying that you have no interest in status symbols and then going on to talk about a purchase of a $5,000 electric unicycle is really something.
That $5,000 electric unicycle is a status symbol. You’re welcome to believe that I’m a fool and don’t know what I’m talking about.
Don’t you think that’s what every Rolex wearer and Birkin carrier thinks, too? “Oh they’re just really nice ________ with features I like and can afford.”
That $5,000 electric unicycle is a status symbol. You’re welcome to believe that I’m a fool and don’t know what I’m talking about.
Don’t you think that’s what every Rolex wearer and Birkin carrier thinks, too? “Oh they’re just really nice ________ with features I like and can afford.”
The only reason I've got EUC is because they're an incredible fun to ride. I've become a bit of an addict as for me it is pure mental and physical joy.
I do not give a flying fuck about its status value. It is most likely big fat zero since most people have no clue about the price.
Even though it was not a factor at all when buying it turns out to be very practical as it lets me run errands very fast and efficient. Nothing else beats the convenience. When I visit my current or prospective clients on a bicycle I have to leave it outside and risk it being stolen (nice bike and Toronto are very bad combo). Car - only if I want to ruin my day driving downtown. EUC comes with me into the office and 90% of the time it makes client very curious / amazed which is a good thing for conversation.
I do not give a flying fuck about its status value. It is most likely big fat zero since most people have no clue about the price.
Even though it was not a factor at all when buying it turns out to be very practical as it lets me run errands very fast and efficient. Nothing else beats the convenience. When I visit my current or prospective clients on a bicycle I have to leave it outside and risk it being stolen (nice bike and Toronto are very bad combo). Car - only if I want to ruin my day driving downtown. EUC comes with me into the office and 90% of the time it makes client very curious / amazed which is a good thing for conversation.
> I do not give a flying fuck about its status value.
It doesn’t matter whether you care about its status value. If I bought a Birkin and said, “I don’t care about the status value” you’d scoff and think I’m a sucker.
And yeah I guess I am surprised to learn that $5,000 is the cheapest available EUC.
It doesn’t matter whether you care about its status value. If I bought a Birkin and said, “I don’t care about the status value” you’d scoff and think I’m a sucker.
And yeah I guess I am surprised to learn that $5,000 is the cheapest available EUC.
An Hermes Birkin bag isn't fungible with other bags of equivalent design or quality. That it is that bag by that brand is essential. Most of the price and scarcity isn't for its qualitative or quantitative attributes but rather to maintain the appearance of exclusivity.
I doubt paulcole feels that way about their unicycle.
Yes, fundamentally, the possession of things of value is a signal of means, but that's mundane. Everything you own or do signals means to some degree, but that's different from signaling being an essential property of those things or activities.
I doubt paulcole feels that way about their unicycle.
Yes, fundamentally, the possession of things of value is a signal of means, but that's mundane. Everything you own or do signals means to some degree, but that's different from signaling being an essential property of those things or activities.
Not the cheapest but one that has Smart BMS, IP rating, good suspension, big range and big power margin for safety. Otherwise yes, you can buy cheaper one starting I think with as low as $1000.
> Hard to explain but I think it is a bit different than paying for "status symbol"
I mean, yes, this is what all buyers of status symbols think. No-one is going out buying a Birkin bag or a Ferrari or a Rolex or a monkey NFT or whatever saying "better go buy a status symbol today". Or, at least, very few people.
I mean, yes, this is what all buyers of status symbols think. No-one is going out buying a Birkin bag or a Ferrari or a Rolex or a monkey NFT or whatever saying "better go buy a status symbol today". Or, at least, very few people.
> And I am not that different
Your entire comment was saying how you aren’t like those people and calling them suckers.
Your entire comment was saying how you aren’t like those people and calling them suckers.
Well you can interpret it like this and there is a logic. But truthfully my reply was to express my attitude towards the sellers of "status symbol" when the equivalent in everything but brand name is easily available for a fraction of the price
The comment absolutely should not be downvoted it’s highly perceptive.
> When I see product priced just for being status symbol my first reaction is - fuck off, go find yourself some suckers.
This phenomenon is (or must be) so fundamental to existence that it has been produced over and over again by the process of biological evolution.
There clearly is a utility in a social setting to showing off the fact that you have sufficient resources to waste quite a few of them just visibly showing that you can.
This phenomenon is (or must be) so fundamental to existence that it has been produced over and over again by the process of biological evolution.
There clearly is a utility in a social setting to showing off the fact that you have sufficient resources to waste quite a few of them just visibly showing that you can.
Why not waste your money on literally anything else? Build a museum, fund a public library, get your name plastered on a university by giving tuition to some poor kids!
> There clearly is a utility in a social setting to showing off the fact that you have sufficient resources to waste quite a few of them just visibly showing that you can.
The modern world has much better ways to show this than relatively low cost jewelry/clothes/accessories.
Real estate, employer, board seats, private jet flights, yachts, and the simplest, vacationing often to destinations you have to fly to.
The modern world has much better ways to show this than relatively low cost jewelry/clothes/accessories.
Real estate, employer, board seats, private jet flights, yachts, and the simplest, vacationing often to destinations you have to fly to.
> Real estate, employer, board seats, private jet flights, yachts
Those are all way too expensive for regular folks.
> and the simplest, vacationing often to destinations you have to fly to.
That's too cheap to work as a status symbol for regular folks, plus provides all kinds of value (entertainment, relaxation, etc.) so it's not even a good way to burn money.
Regular folks show off by e.g. buying engagement rings that are multiple of the fiance's salary, or making other purchases whose defining characteristic is that others know it's expensive.
Jewelry, clothes and accessories are good for showing off because the more expensive ones aren't more useful or pretty at the margin. You're not buying utility for spending extra, other than that conferred by status games.
Those are all way too expensive for regular folks.
> and the simplest, vacationing often to destinations you have to fly to.
That's too cheap to work as a status symbol for regular folks, plus provides all kinds of value (entertainment, relaxation, etc.) so it's not even a good way to burn money.
Regular folks show off by e.g. buying engagement rings that are multiple of the fiance's salary, or making other purchases whose defining characteristic is that others know it's expensive.
Jewelry, clothes and accessories are good for showing off because the more expensive ones aren't more useful or pretty at the margin. You're not buying utility for spending extra, other than that conferred by status games.
Yeah, but you can't carry those with you.
> There clearly is a utility in a social setting to showing off the fact that you have sufficient resources to waste quite a few of them just visibly showing that you can.
That's the whole deal with engagement rings, and more generally with romance.
That's the whole deal with engagement rings, and more generally with romance.
The whole Debeers diamond ring scam has worked for decades until the last few years where synthetics are crashing the market.
And so they should be, there is absolutely no reason to pay more a mined diamond than lab-grown, it's synthetically produced but it's not a synthetic product if you see what I mean, it's not like say cotton vs polyester.
It only makes sense to mine diamonds if it's cheaper to do so than to manufacture one of equivalent quality.
It only makes sense to mine diamonds if it's cheaper to do so than to manufacture one of equivalent quality.
There's a great documentary about this called Nothing Lasts Forever which I think I caught on Netflix.
The outfits with big skin in the natural/mined diamond sector have told a story about something that's been in the ground for eons and being pulled out and turned into something special as a symbol of love, and hoping that turns people away from synthetics. It's just story telling. You can see the romance in it, but the price differential is huge.
There are various attempts to keep the synthetics out, and/or identifiable, but even the main players are admitting that a significant percentage of synthetics are now in the naturals market, nobody knows how many, and that they're undetectable. That means the naturals market has to come back to actual costs plus some markup over what they've been for 100+ years: costs plus insane markups.
The outfits with big skin in the natural/mined diamond sector have told a story about something that's been in the ground for eons and being pulled out and turned into something special as a symbol of love, and hoping that turns people away from synthetics. It's just story telling. You can see the romance in it, but the price differential is huge.
There are various attempts to keep the synthetics out, and/or identifiable, but even the main players are admitting that a significant percentage of synthetics are now in the naturals market, nobody knows how many, and that they're undetectable. That means the naturals market has to come back to actual costs plus some markup over what they've been for 100+ years: costs plus insane markups.
> something special as a symbol of love, and hoping that turns people away from synthetics. It's just story telling. You can see the romance in it, but the price differential is huge.
It's just BS, my wife's engagement ring stone is a size we picked, and then a quality (colour, lack of occlusions etc.) that I did some research on and picked to be a level for each that basically you needed to be trained & have equipment in order to determine the defects, i.e. I can't ever give her another one (natural or not) that looks better (it could be bigger but not more brilliant) to the naked eye. (And it's for her to wear, not an investment or whatever, so I figured really no reason to care beyond the naked eye.) If I'd added an additional requirement that it be formed over millennia in the earth, either it would have cost us a lot more, or more likely she'd have an objectively worse ring. Nothing romantic about that IMO!
It's just BS, my wife's engagement ring stone is a size we picked, and then a quality (colour, lack of occlusions etc.) that I did some research on and picked to be a level for each that basically you needed to be trained & have equipment in order to determine the defects, i.e. I can't ever give her another one (natural or not) that looks better (it could be bigger but not more brilliant) to the naked eye. (And it's for her to wear, not an investment or whatever, so I figured really no reason to care beyond the naked eye.) If I'd added an additional requirement that it be formed over millennia in the earth, either it would have cost us a lot more, or more likely she'd have an objectively worse ring. Nothing romantic about that IMO!
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I am not saying you shouldn't tell them to fuck off, but have you entertained the idea that the person who is the sucker is actually you?
These watches are part of a status and this status allows these people to dictate to the rest of us how they'd like their omelette.
These watches are part of a status and this status allows these people to dictate to the rest of us how they'd like their omelette.
Well I work as an independent company, I find clients, develop products for them on my own premises and get paid, sometimes it is licensing fees. I am not rich but do well enough and can retire. So no, except the government nobody tells me what to do and as long as I pay taxes the government not really interested in people like myself.
If you're interested in the craft/quality that goes into these products (or frequently doesn't), "Tanner Leatherstein"'s YT channel is a suggested watch.
https://www.youtube.com/@tanner.leatherstein
He dissects luxury leather products.
Tanner has two recent videos on Hermès that seem related enough to mention here:
What does Hermès actually sell? A closer look into astronomical price tags of the luxury legend.
https://www.youtube.com/watch?v=D_f0jFs22Ts
Discover the real value of Hermès: Unraveling the mystery behind luxury prices.
https://www.youtube.com/watch?v=6fkzpyHJ77g
https://www.youtube.com/@tanner.leatherstein
He dissects luxury leather products.
Tanner has two recent videos on Hermès that seem related enough to mention here:
What does Hermès actually sell? A closer look into astronomical price tags of the luxury legend.
https://www.youtube.com/watch?v=D_f0jFs22Ts
Discover the real value of Hermès: Unraveling the mystery behind luxury prices.
https://www.youtube.com/watch?v=6fkzpyHJ77g
I can understand why a bag that has been hand sewn by skilled artisans in some tiny town in Italy (say) might be expensive. Skills take time to learn, and the labor is costly. (The leather itself seems to be a negligible fraction of the cost of production.)
What I dont get is what stops Chinese manufacturers from recruiting equally skilled local artisans in Asia to create their own luxury brands, and what stops Hermès from outsourcing their own bag manufacturing to those artisans in China instead or France or Italy.
Its not like China doesnt have a rich craft tradition. Do those domestic luxury brands exist? If so, why arent they sold for export?
What I dont get is what stops Chinese manufacturers from recruiting equally skilled local artisans in Asia to create their own luxury brands, and what stops Hermès from outsourcing their own bag manufacturing to those artisans in China instead or France or Italy.
Its not like China doesnt have a rich craft tradition. Do those domestic luxury brands exist? If so, why arent they sold for export?
On a past trip to Paris and Florence, I wondered why there were so many non-tourist Chinese living in the region. It turns out... Many of those "Made in Italy" luxury goods are made by skilled Chinese artisans (in Italy).
The value of those "brands" are based on perception and the existing brands have put a lot of work into cultivating their brands historically.
https://www.newyorker.com/magazine/2018/04/16/the-chinese-wo...
https://forum.purseblog.com/threads/inexpensive-immigrant-la...
On a side note, this also applies to some "Made in America" brands too. Some of my favorite American brands used to host factory tours for their customers -- they tended to have a majority if not all southeast/east Asian workers making their garments and bags.
The value of those "brands" are based on perception and the existing brands have put a lot of work into cultivating their brands historically.
https://www.newyorker.com/magazine/2018/04/16/the-chinese-wo...
https://forum.purseblog.com/threads/inexpensive-immigrant-la...
On a side note, this also applies to some "Made in America" brands too. Some of my favorite American brands used to host factory tours for their customers -- they tended to have a majority if not all southeast/east Asian workers making their garments and bags.
Also interestingly Italy was basically the 2nd country hit with a massive spike in Covid cases right when the pandemic hit, as there had been some leather/fabric trade show with participants flying to and fro (I don't recall the specifics)
I remember reading it was "undocumented" Chinese nationals who were traveling back and forth between China and Italy. One of Italy's largest textile factories is literally within miles of the Wuhan lab and many speculated that many of the workers were moving back and forth and brought the virus from the factory to Italy.
But you are correct in the fact there is no denying Italy was hit very early on, well before many realized what was going on. I remember seeing an article were Italian doctors were concerned they had five deaths in a single weekend from new strain of influenza they hadn't seen before.
But you are correct in the fact there is no denying Italy was hit very early on, well before many realized what was going on. I remember seeing an article were Italian doctors were concerned they had five deaths in a single weekend from new strain of influenza they hadn't seen before.
Prato, just outside Florence, "is home to the largest Chinese community in Italy and one of the largest in Europe (...) the medieval Tuscan town of 195,000 counts around 12% of its residents as Chinese—though undocumented residents are suspected to bump the percentage up much higher" (to quote the first result I found on google search)
The rabbit hole of Chinese and Italy goes even deeper. They go gaga about Italy, at least Chinese women. I've listened to two Chinese women go on and on how Italy has a culture similar to Chinese etc. Prato is the tip of the iceberg if you ask me.
Are you saying that people living in America who (or whose parents) were born in China wouldn't be American?
The description of "non-tourist" Chinese is intended to describe persons that are of Chinese ancestry, and in these contexts, more likely than not, immigrants from China now living-in, and/or working-in a different nation, for example, France, Italy, or the United States; their (primary) purpose for physically being there is not tourism/leisure/recreation.
No, a person living in America who was born in China, or whose parents were born in China, could self-identify or be identified as Chinese, American, both (e.g. "Chinese-American"), neither, or something else entirely.
No, a person living in America who was born in China, or whose parents were born in China, could self-identify or be identified as Chinese, American, both (e.g. "Chinese-American"), neither, or something else entirely.
I think the implication is that these are people who trained in their home countries and were brought to Italy so the luxury brands could continue claiming a "rich history of Italian craftsmanship." In a way it's true but it's also lying by omission.
Yes. There's also an interesting tangential topic of so-called "counterfeit" or "replica" luxury goods where they can sometimes be unofficial items produced from the exact same factory, in-country, or abroad as "extra-runs", as well as items produced by those "skilled artisans" that previously worked at the official factories recreating the same items, using the same methods and materials, unofficially elsewhere.
> What I dont get is what stops Chinese manufacturers from recruiting equally skilled local artisans in Asia to create their own luxury brands, and what stops Hermès from outsourcing their own bag manufacturing to those artisans in China instead or France or Italy.
A bag of this sort gets dramatically less valuable to the clientele if you cut the price by half. They don't want a cheaper version. If anything, they want it more expensive.
A bag of this sort gets dramatically less valuable to the clientele if you cut the price by half. They don't want a cheaper version. If anything, they want it more expensive.
>A bag of this sort gets dramatically less valuable to the clientele if you cut the price by half. They don't want a cheaper version. If anything, they want it more expensive.
There's a name for this: https://en.wikipedia.org/wiki/Veblen_good
There's a name for this: https://en.wikipedia.org/wiki/Veblen_good
the French are good at finding answers to these questions, often to the benefit of themselves...see https://atelierwen.com
Yeah, luxury bags aren’t about buying a bag but owning an object that signals status.
Making it cheaper or local or available to more people is not the goal.
Making it cheaper or local or available to more people is not the goal.
Beyond a certain price, all goods become jewelry.
This does happen to an extent with smaller upstart brands.
For instance, in men's shoes, Grant Stone made a name for themself offering a very similar, albeit even better built, product to Alden for roughly half the price.
In guitars we see companies like Eastman doing a similar labor arbitrage producing products similar to Martin and Gibson.
The key though are price savings. These could be argued to be 'luxury' to an extent in that they're notably quality products, but the attraction is the savings from labor passed onto the customer.
The type of luxury we're dealing with for the Birkin's of the world is based on brand cache more than anything else. Price is simply not a factor, so it doesn't make any sense to take measures to reduce it. Worse, the moment a brand gives a hint that they're doing anything remotely cost cutting is going to be catastrophic as it goes against their 'spare no expense' mantra.
For instance, in men's shoes, Grant Stone made a name for themself offering a very similar, albeit even better built, product to Alden for roughly half the price.
In guitars we see companies like Eastman doing a similar labor arbitrage producing products similar to Martin and Gibson.
The key though are price savings. These could be argued to be 'luxury' to an extent in that they're notably quality products, but the attraction is the savings from labor passed onto the customer.
The type of luxury we're dealing with for the Birkin's of the world is based on brand cache more than anything else. Price is simply not a factor, so it doesn't make any sense to take measures to reduce it. Worse, the moment a brand gives a hint that they're doing anything remotely cost cutting is going to be catastrophic as it goes against their 'spare no expense' mantra.
[deleted]
>Do those domestic luxury brands exist? If so, why arent they sold for export?
The value of a luxury brand is in the history, reputation and social proof. I bet there will be Chinese luxury brands eventually, only after decades of cultural export. You can argue that South Korea "suffers" from the same problem as well, with SK being relatively new on the global stage. However Japan has luxury brands (like Commes Des Garcons, Issey Miyaki) that were established 50-60 years ago.
The value of a luxury brand is in the history, reputation and social proof. I bet there will be Chinese luxury brands eventually, only after decades of cultural export. You can argue that South Korea "suffers" from the same problem as well, with SK being relatively new on the global stage. However Japan has luxury brands (like Commes Des Garcons, Issey Miyaki) that were established 50-60 years ago.
it also depends on which luxuries market you're targeting.
South Korea is making a big splash in cosmetics, for example, but has never been a particularly large textile hub.
South Korea is making a big splash in cosmetics, for example, but has never been a particularly large textile hub.
> What I dont get is what stops Chinese manufacturers from recruiting equally skilled local artisans in Asia to create their own luxury brands,
Luxury brands are selling a story, and that story is generally ‘European, old (100+ years)’. Companies like Rolex and Hermes have perfected this, upstart luxury brands from China would need a good 20+ years or genius marketing to start building the type of brand that can sell a story.
Luxury brands are selling a story, and that story is generally ‘European, old (100+ years)’. Companies like Rolex and Hermes have perfected this, upstart luxury brands from China would need a good 20+ years or genius marketing to start building the type of brand that can sell a story.
It's certainly not impossible though, we now have luxury Japanese brands.
I think a bigger struggle for any Chinese brand would probably be rampant counterfeiting; for luxury goods to prosper, customers need to have a way to ensure they're getting the real deal. And China currently accounts for 75% of counterfeit goods by value seized at US ports.
I think a bigger struggle for any Chinese brand would probably be rampant counterfeiting; for luxury goods to prosper, customers need to have a way to ensure they're getting the real deal. And China currently accounts for 75% of counterfeit goods by value seized at US ports.
I've bought many leather wallets in the US even from seemingly upscale places like Nordstrom's. They all kinda fell apart after a few years. I bought a leather wallet in Italy near the Trevi Fountain for roughly the same price almost decade ago and it's by far the best wallet I've ever owned. It's even aged in a nice way.
https://lasellaroma.it/product/wallet-cod-5026/
https://lasellaroma.it/product/wallet-cod-5026/
Because "made in China" doesn't sell. A quality Chinese manufacturer could do a quality bag, but it would sell as just a good bag, with a price reflecting the quality of the materials and workmanship that went into it. I can imagine a lawyer, doctor, etc... buying such a bag as it is a work tool that will see heavy use and it is important for the image to have a reasonably nice looking bag.
But luxury is more than that, you buy a story and exclusivity. You want to think you are one of the few, you want to think about the small town in Italy, get the idea that by your purchase you contribute to a tradition, it has to be special, and China can't deliver that. At least not for handbags, I guess it is a different story for, say, ceramics, where China has a recognized tradition.
But luxury is more than that, you buy a story and exclusivity. You want to think you are one of the few, you want to think about the small town in Italy, get the idea that by your purchase you contribute to a tradition, it has to be special, and China can't deliver that. At least not for handbags, I guess it is a different story for, say, ceramics, where China has a recognized tradition.
It's seemed to me that there's a specific fast/good/cheap rule for consumer products.
1. High quality
2. Pays lower-level employees fairly
3. Low cost
Pick 2.
Consumers will complain that they can't get all three and frequently blame assorted factors such as price-gouging and CEO pay but I suspect that those rarely make as much of a difference as consumers hope.
1. High quality
2. Pays lower-level employees fairly
3. Low cost
Pick 2.
Consumers will complain that they can't get all three and frequently blame assorted factors such as price-gouging and CEO pay but I suspect that those rarely make as much of a difference as consumers hope.
It’s very hard to compete on quality in leather bags without a reputation and a good bricks and mortar network because online customers have no way to tell the quality and even in person customers probably lack the knowledge - so from the producers perspective why bother spending more?
The reason behind value is similar to the value of a military/exclusive medal. It's a "legitimate" way for the owner to signal prestige.
In economics terms - a Veblen good
https://en.wikipedia.org/wiki/Veblen_good
https://en.wikipedia.org/wiki/Veblen_good
True but not entirely.
There are big quality differences and often luxury brands do use material and labor that makes a bag cost hundreds of dollars or euros to produce.
But not all do and sometimes they flounder or cheat on certain products.
The margin between that production cost (Tanner always gives an estimate) and the actual price is definitely a function mainly of the prestige associated with the brand.
I.e. other factors such as shipping, display (think flagship stores), advertising & sales labor costs play much less of a role in the luxury segment.
There are big quality differences and often luxury brands do use material and labor that makes a bag cost hundreds of dollars or euros to produce.
But not all do and sometimes they flounder or cheat on certain products.
The margin between that production cost (Tanner always gives an estimate) and the actual price is definitely a function mainly of the prestige associated with the brand.
I.e. other factors such as shipping, display (think flagship stores), advertising & sales labor costs play much less of a role in the luxury segment.
[deleted]
There are a lot of people who will pay a lot of money to show that they are better than others.
Still the best shop was the one who sold stuff only to fit people - didnt have big sizes (I always wondered if they didnt sell big sizes at a premium).
Still the best shop was the one who sold stuff only to fit people - didnt have big sizes (I always wondered if they didnt sell big sizes at a premium).
[deleted]
This may not be the case for Hermes, but designer brands sometime also mean great and new design. Personally, I spend extra for Rick Owens and Balenciaga just because of the ideas they put into the looks.
> A Birkin bought at auction in 2010 would sell for around 50% more today... Hermès’s own stock has been a much smarter investment than the Birkin, rising more than 20-fold since 2010.
The more time goes on the more I think a good rule would be "however much I spend at the company, spend on the company (in shares)". I look at my Spotify sub, my MSFT sub, and an Apple IIgs sitting in a box and wonder 'what if'.
The more time goes on the more I think a good rule would be "however much I spend at the company, spend on the company (in shares)". I look at my Spotify sub, my MSFT sub, and an Apple IIgs sitting in a box and wonder 'what if'.
A much better strategy is to just buy an index for the equivalent amount every time you decide on a disposable / luxury purchase. That way there is no guilt about being able to afford it and generally you hit your savings rate etc.
> The more time goes on the more I think a good rule...
That's my main investment rule. I invest in companies who's products I like and own. But then I also buy the dip. So when a company I like/whose product I use is at a discount, I invest.
It makes me feel better too when I buy something from them: "oh, some of that money I just paid is going back to me"!
There are people here who bough NVDA at a bargain with the same reasoning.
I did an exception for Meta (no FB, no WhatsApp, no instagram: all the Meta CIDR blocks are blocklisted by my firewall and all the Meta domains are blocked by my DNS resolver: that's how much I hate that turd) which I hate with a passion because the stock at $100 in 2022 (was it 2022?) was just too good to be true. But then I do use React so there's that!
That's my main investment rule. I invest in companies who's products I like and own. But then I also buy the dip. So when a company I like/whose product I use is at a discount, I invest.
It makes me feel better too when I buy something from them: "oh, some of that money I just paid is going back to me"!
There are people here who bough NVDA at a bargain with the same reasoning.
I did an exception for Meta (no FB, no WhatsApp, no instagram: all the Meta CIDR blocks are blocklisted by my firewall and all the Meta domains are blocked by my DNS resolver: that's how much I hate that turd) which I hate with a passion because the stock at $100 in 2022 (was it 2022?) was just too good to be true. But then I do use React so there's that!
>There are people here who bough NVDA at a bargain with the same reasoning.
There are people here who bough Blackberry, Kodak and Blockbuster at a bargain with the same reasoning.
There are people here who bough Blackberry, Kodak and Blockbuster at a bargain with the same reasoning.
Thats a good idea. Portfolio of your own verified consumer sentiments.
Quick check: iPhone 1 was $500 at launch. Apple shares were $5, apple stocks 41x'd since. If you bought the same amount in shares you'd have $20k, not bad.
Quick check: iPhone 1 was $500 at launch. Apple shares were $5, apple stocks 41x'd since. If you bought the same amount in shares you'd have $20k, not bad.
I did this (bought Apple stock at iPhone launch). I did it for a non-standard reason -- I'd worked around the telephony space and found it amazing that Jobs had been able to persuade AT&T to a) not charge $100/mo for data service and b) not lock down the device. That was such an incredible feat that I felt they were going to sell large numbers, because the greed of the telcos had in my mind been the impediment to the success of older similar devices. It had nothing to do with all the normal Apple-fan stuff.
Of course I subsequently sold when I felt Apple had jumped the shark (I think they were making iPods in multiple colors, something like that). Around 2012 probably.
Of course I subsequently sold when I felt Apple had jumped the shark (I think they were making iPods in multiple colors, something like that). Around 2012 probably.
You'd probably have far more Nestle, Ford, Kellogg's, Nike and AT&T stock this way too. Apple is on the far far end of successes with this strategy.
And you would end up with an MSCI World Index - I recently invested in Intel rather than AMD or NVIDIA. In hindsight, NVIDIA would have been the better choice.
I also have some money in Index Funds - half a year ago it composed mostly of Apple, Microsoft and Meta, now NVIDIA is on top of the composition.
The lesson for me: I don't know enough of the industries to base any financial decision on it.
The lesson for me: I don't know enough of the industries to base any financial decision on it.
This has been my long-time takeaway too. I see the opportunities as obvious only in hindsight, it does not appear to me to invest at the time. Then again, that has probably saved me from quite many bad investments too.
3D cards, web, smartphones, search, social media, CPU advances, chip manufacturing and shortages, blockchains, AI, the list is endless I suppose. Like most here, I've read about them all from the early demos all the way to the mass adoption.
I'm very happy to invest in index funds and observe tech only from the tech point of view, without stressing about picking the winners.
3D cards, web, smartphones, search, social media, CPU advances, chip manufacturing and shortages, blockchains, AI, the list is endless I suppose. Like most here, I've read about them all from the early demos all the way to the mass adoption.
I'm very happy to invest in index funds and observe tech only from the tech point of view, without stressing about picking the winners.
MSCI World Index is much worse for historical performance compared to S&P 500. I would guess that half the profits of companies in the S&P 500 are international. There is little need to directly own companies in developing economies, when you can own their safer counterparts from developed countries that do a lot of investing in developing economies. This is probably true in the US, Europe, and Japan.
You were following logic, so NVIDIA made no sense, since they're basically a meme stock now.
That seems like cherry picking winners knowing that Apple roughly ends up on top. If your stock basket resembles other home purchases, you are going to see more modest returns.
I happened to buy a blackberry instead of the original iPhone. I can confirm that this is cherry picking.
My 2007 GE kitchen appliances for my new home funded with a WaMu mortgage may are similarly unimpressive as investments in 2024.
(And cherrypicking history is easy!)
My 2007 GE kitchen appliances for my new home funded with a WaMu mortgage may are similarly unimpressive as investments in 2024.
(And cherrypicking history is easy!)
And even if you did it properly, you're basically guaranteed to be overweight on luxury 'consumer discretionary' sectors because you have the surplus cash to do this, making the 'consumer defensive' part an inherently modest portion of your budget and therefore portfolio.
And your mortgage probably makes you wildly over/under (but not correct) weight on residential real estate according to whether you consider it a payment you need to reflect in your portfolio or a part of your portfolio and therefore it's mising a justifying expenditure.
And you'd presumably have no exposure to industrial real estate, defense, anything b2b, ...
But it's a fun idea and I'll admit to similar irrational thinking when I was annoyed by Amex charging (and refusing to refund) me and my wife separately while I was in the middle of trying to talk to them about merging them/closing one. (Which reminds me, must do that soon before it happens again..)
And your mortgage probably makes you wildly over/under (but not correct) weight on residential real estate according to whether you consider it a payment you need to reflect in your portfolio or a part of your portfolio and therefore it's mising a justifying expenditure.
And you'd presumably have no exposure to industrial real estate, defense, anything b2b, ...
But it's a fun idea and I'll admit to similar irrational thinking when I was annoyed by Amex charging (and refusing to refund) me and my wife separately while I was in the middle of trying to talk to them about merging them/closing one. (Which reminds me, must do that soon before it happens again..)
In that particular example, an unopened iPhone 1 sold at an auction last year for $190,000, a 380x return!
Does not scale. If everybody followed this rule ...
> If everybody
You can absolutely guarantee everyone isn’t going to follow that rule so why bother considering it? Also, nothing says you need to keep investments forever, a rolling fund where after X months you sell the stocks and repurchase based on current spending habits could work just fine at scale.
You can absolutely guarantee everyone isn’t going to follow that rule so why bother considering it? Also, nothing says you need to keep investments forever, a rolling fund where after X months you sell the stocks and repurchase based on current spending habits could work just fine at scale.
Everybody is more than welcome to buy into my long positions.
Also, Apple shares also do not replace the functionality of a phone, so the true opportunity cost of buying a premium phone instead buying a cheaper phone and spending the remainder on shares.
Nobody bought a iPhone because they thought it would appreciate in value.
Nobody bought a iPhone because they thought it would appreciate in value.
It isn't nobody, as evidenced by the continued existence of new-in-box original iPhones, which sell at auction for nosebleed prices.
The trick is to identify products which will be considered iconic, while they're still on the market. This is crystal-ball-gazing, and that kind of game isn't for everyone, but it only takes one smash hit to make a profit on the total investment. There are certainly people who do this as a hobby / side hustle.
The trick is to identify products which will be considered iconic, while they're still on the market. This is crystal-ball-gazing, and that kind of game isn't for everyone, but it only takes one smash hit to make a profit on the total investment. There are certainly people who do this as a hobby / side hustle.
If “everybody” continuously purchased the same stocks then those stocks would be precisely the ones you would want to buy
The price of other stocks would plummet from low demand
The price of other stocks would plummet from low demand
Stock price isn't based on demand, so no that wouldn't work the way you think it would. These same stocks would be overvalued, with no fundamentals backing them as everyone wouldn't be buying the products/services to create those fundamentals.
Stock price is 100% based on demand and nothing else (well aside from new issuances or splits).
Demand is ideally a function of fundamentals.
The stock price being overvalued is irrelevant if “everyone” is buying it. This is a hyperbolic example but it plays out in the valuation of the sp500 when legions of folks just dump into an index fund.
Demand is ideally a function of fundamentals.
The stock price being overvalued is irrelevant if “everyone” is buying it. This is a hyperbolic example but it plays out in the valuation of the sp500 when legions of folks just dump into an index fund.
what if they followed the Apple stock advice in movie Forrest gump? They would have millions already.
Vast majority do not have the disposable income to invest in stocks.
The Efficient-market Hypothesis[1] posits that someone with more resources than you has already made a similar analysis, so the prices of those shares already reflect the true value, including the value of potential future returns. Lucky for you, all those stocks are probably represented in large index funds, which are much less volatile than individual stocks.
[1]: https://en.wikipedia.org/wiki/Efficient-market_hypothesis
[1]: https://en.wikipedia.org/wiki/Efficient-market_hypothesis
The thing about hypotheses is that they can be either true or false. And seeing NVDA triple in the past year, even while there are many people devoting their working lives just to do financial analysis of the stock, tells us the hypothesis is false.
It's not that kind of hypothesis. It's more like a mathematical proof, with some underlying assumptions that aren't actually true in reality.
Figuring out which ones, and to what extent, is an unorthodox but effective path to wealth.
Figuring out which ones, and to what extent, is an unorthodox but effective path to wealth.
I share your skepticism, but the EMH doesn't mean stocks would never move in price.
After all, if it's election day, my analysis says FooCorp is worth $50 under a Biden administration and $100 under a Trump administration, and the candidates are neck-and-neck, that means the shares are worth $75. But tomorrow the shares will have either gained or lost $25.
After all, if it's election day, my analysis says FooCorp is worth $50 under a Biden administration and $100 under a Trump administration, and the candidates are neck-and-neck, that means the shares are worth $75. But tomorrow the shares will have either gained or lost $25.
Yes, that is true.
But as detailed recently in Going Infinite, Jane Street's losses around the 2016 election were because they didn't know outcome was worth the example $50 and which was $100.
But as detailed recently in Going Infinite, Jane Street's losses around the 2016 election were because they didn't know outcome was worth the example $50 and which was $100.
The Nvidia situation wasn't predictable as they sell an unique item with pratical applications.
There are no alternatives to Nvidia GPUs if you want to efficiently train an AI, they have an effective monopoly.
Personally i would have invested in TSMC/ASML or Intel as this point. Buy the shovel maker.
There are no alternatives to Nvidia GPUs if you want to efficiently train an AI, they have an effective monopoly.
Personally i would have invested in TSMC/ASML or Intel as this point. Buy the shovel maker.
NVidia make those things for quite some time you know? They also have done heavy investments in software side and had total dominance there for years. It's not like your needed to know 10 years ago.
>>TSMC
Relatively low margins, few good well negotiating customers. Can't grow fast.
>>ASML
What do you think market could have missed there? Good company with simple business model. Very unlikely to grow fast.
>>Intel
Terrible company with long track record of stupid decisions and deception. What make you think they will suddenly turn around and start innovating?
>>TSMC
Relatively low margins, few good well negotiating customers. Can't grow fast.
>>ASML
What do you think market could have missed there? Good company with simple business model. Very unlikely to grow fast.
>>Intel
Terrible company with long track record of stupid decisions and deception. What make you think they will suddenly turn around and start innovating?
Good points but they have the fabs.
That's why my bets are on them.
Everyone is reliant on ASML and unlikely to change.
Intel has fabs and is too big to fail, the us government won't let it happen.
I'm making a safe bet on the long term, not a speculative one based on a technology that will or won't be worth that valuation.
That's why my bets are on them.
Everyone is reliant on ASML and unlikely to change.
Intel has fabs and is too big to fail, the us government won't let it happen.
I'm making a safe bet on the long term, not a speculative one based on a technology that will or won't be worth that valuation.
Cue the classic joke:
A finance professor is walking across the University of Chicago campus with a student. They come upon $20 lying on the ground, and the student leans down to pick it up. The professor said, “Don’t bother. If it was really there, somebody else would’ve already picked it up.”
A finance professor is walking across the University of Chicago campus with a student. They come upon $20 lying on the ground, and the student leans down to pick it up. The professor said, “Don’t bother. If it was really there, somebody else would’ve already picked it up.”
It does make you wonder: What do economics professors buy in their stock portfolio?
You should read that entire wikipedia article because the EMH is useful but clearly extremely false.
If the Efficient-market Hypothesis was true, it would not be rational to buy (or sell), any stock, commodity, currency or other investment vehicle as an investment alone. Yet plenty of professionals and amateurs do, and many make a profit, which suggest the hypothesis is not provably true.
One way to think of trading is you're kind of in a ponzi scheme. Not an illegal one, but you're buying stock today you're hoping somebody else will buy off you at a higher price one day in the future. If you short a position, you're hoping that somebody will sell you stock at a lower price than it is today for some reason.
All of this suggests to me that markets are not the perfectly rational machines people insist they are. Sure, most people would do better to buy and hold indexes than to time trades on individual stocks (by a long margin), but the argument that all value is priced in all of the time is just daft.
One way to think of trading is you're kind of in a ponzi scheme. Not an illegal one, but you're buying stock today you're hoping somebody else will buy off you at a higher price one day in the future. If you short a position, you're hoping that somebody will sell you stock at a lower price than it is today for some reason.
All of this suggests to me that markets are not the perfectly rational machines people insist they are. Sure, most people would do better to buy and hold indexes than to time trades on individual stocks (by a long margin), but the argument that all value is priced in all of the time is just daft.
> If the Efficient-market Hypothesis was true, it would not be rational to buy (or sell), any stock, commodity, currency or other investment vehicle as an investment alone.
This is not an implication of the efficient-market hypothesis. The efficient-market hypothesis implies no investment strategy can have expected returns greater than the total market, but says nothing about what the returns of the total market actually are.
This is not an implication of the efficient-market hypothesis. The efficient-market hypothesis implies no investment strategy can have expected returns greater than the total market, but says nothing about what the returns of the total market actually are.
If you don't have expcted returns greater than the total market, you should not trade.
Your argument seems to be "yeah, assume there is no value or edge, and let's just hope for variance in our favour" is what the majority of professional traders, funds, quants, and so on are all doing. If that isn't what you meant, I'd be interested in how you clarify it: what do you think they're doing, and why?
Your argument seems to be "yeah, assume there is no value or edge, and let's just hope for variance in our favour" is what the majority of professional traders, funds, quants, and so on are all doing. If that isn't what you meant, I'd be interested in how you clarify it: what do you think they're doing, and why?
John Harvard statue of a comment.
1) Someone with more resources than you has different aims and incentives than you; the prices of those shares likely reflect their valuation, not a "true" value.
2) Because of 1, the the future returns that are reflected in the price of the stock are not necessarily for the company alone, but also of future returns of other companies and ventures that are connected to the stock in question through this hypothetical someone.
3) Volatility is good if you're poor. I want my money with a winner before everyone else knows it's a winner. Index funds are slush for smart money's liquidity scams.
1) Someone with more resources than you has different aims and incentives than you; the prices of those shares likely reflect their valuation, not a "true" value.
2) Because of 1, the the future returns that are reflected in the price of the stock are not necessarily for the company alone, but also of future returns of other companies and ventures that are connected to the stock in question through this hypothetical someone.
3) Volatility is good if you're poor. I want my money with a winner before everyone else knows it's a winner. Index funds are slush for smart money's liquidity scams.
The Efficient-market Hypothesis has been proven to be true only if P=NP.
https://arxiv.org/abs/1002.2284
What's your bet on the latter? I'm... skeptical.
https://arxiv.org/abs/1002.2284
What's your bet on the latter? I'm... skeptical.
I'm skeptical of that "proof". Specifically, for example, one of the first statements in the proof says:
> We ask our question, call it question 1: “Does there exist a strategy that statistically significantly (after accounting for possible data mining) makes money (after accounting for transactions costs)?” An answer to that question essentially tests each of the possible 3n strategies.
which is non-sequitur. It's like asserting the only way to find the shortest path between two vertices in a graph is to exhaustively check every path, because waves hand.
Also note that paper doesn't appear to have undergone any form of peer review.
> We ask our question, call it question 1: “Does there exist a strategy that statistically significantly (after accounting for possible data mining) makes money (after accounting for transactions costs)?” An answer to that question essentially tests each of the possible 3n strategies.
which is non-sequitur. It's like asserting the only way to find the shortest path between two vertices in a graph is to exhaustively check every path, because waves hand.
Also note that paper doesn't appear to have undergone any form of peer review.
Essentially that’s what I do. I’ve made more on company shares than what I’ve spent on the companies’ products, including Tesla. This is especially true for Costco and Apple.
Shares do nothing except gain or lose value. The other stuff can actually, you know, do things! Some people value the ability for things to do other things.
An expensive bag or watch “does” nothing different than a less expensive one, so it is not functionally different than a share in that its purpose is to gain or lose value, so the owner can show off.
Except a publicly traded share is much more liquid.
An expensive watch does even less than less expensive watches, especially smart watches.
Except a publicly traded share is much more liquid.
An expensive watch does even less than less expensive watches, especially smart watches.
[deleted]
I think it’s not buying the shares “instead” of buying the thing, it’s also buying the shares and the thing.
Because yeah, not buying things you want to watch your money high score go up is a pretty sad way to go through life.
Because yeah, not buying things you want to watch your money high score go up is a pretty sad way to go through life.
But if everyone does this, companies have no client and only shareholders. Like GME.
Yeah I figured Id do that after watching a video of a summary of ‘one up on wall street’. I bought tons of stock in my newest favorite energy drinks brand as well as my favorite nicotine pouch brand. i sold after half a year because it went down slightly. Now, the energy drinks stock has tripled, and the nicotine pouch company got sold and went private, buying out all stock for a lot higher as well.
I mean, on average you would expect this to be true if only because the markets tend to go up, whereas the value of an actual item tends to go down.
This model is not unique to Hermes. Watch and car brands work the same way. Early on in these markets, you can get one of the desirable items without spending too much on undesirable items.
Some examples:
Rolex - stainless steel models are desirable and appreciate, gold models go for below msrp
Porche - Bucking the trend a bit, Porche gives you the option of paying an additional dealer markup rather than making you buy a Macan to get a GT3 RS.
Over time, this arbitrage goes to equilibrium and resellers can’t make money. It is relatively easy to get into this market so naturally it gets flooded. Profit goes to 0. Resellers also carry a risk that the item loses market value while they hold it. The only real winner here is the brand.
Some examples:
Rolex - stainless steel models are desirable and appreciate, gold models go for below msrp
Porche - Bucking the trend a bit, Porche gives you the option of paying an additional dealer markup rather than making you buy a Macan to get a GT3 RS.
Over time, this arbitrage goes to equilibrium and resellers can’t make money. It is relatively easy to get into this market so naturally it gets flooded. Profit goes to 0. Resellers also carry a risk that the item loses market value while they hold it. The only real winner here is the brand.
On the watch side, there is some nuance here.
Rolex stainless steel models are highly desirable, but they really don't appreciate in value. They simply sell on the secondary market for a >50% markup because they are still less expensive than a lot of the precious metal versions. So a rolex authorized dealer will typically have a huge ratio of buyers to watches available for steel watches. Precious metal rolexes - it's a big "depends." Any of the platinum watches are highly desirable as well as the meteorite dial watches - they sell well above msrp on the secondary market. Note that rolex authorized dealers are not allowed to mark up new watches at all. The price is the price set by the brand. Most authorized distributors are also jewelers so they allocate steel sport watches to people who buy a lot of jewelry.
Pateks are a different beast. The sport watches are highly desirable, and generally not available to the average buyer under any circumstances unless they have > $100K Patek spend, which means you're going to have to buy what is typically more of an art piece type watch (complication, calatrava, etc) before you'll get a shot at a $20K Patek sport watch. This means you can very easily get a beautiful brand new Patek dress watch for 20% off on the secondary market, since buyers will simply purchase that watch to get the spend history, immediately dump it on the secondary market at a big discount, just so they can get the opportunity to purchase a $20K watch and sell it for a >100% markup. There's no shame for some of these people.
Rolex stainless steel models are highly desirable, but they really don't appreciate in value. They simply sell on the secondary market for a >50% markup because they are still less expensive than a lot of the precious metal versions. So a rolex authorized dealer will typically have a huge ratio of buyers to watches available for steel watches. Precious metal rolexes - it's a big "depends." Any of the platinum watches are highly desirable as well as the meteorite dial watches - they sell well above msrp on the secondary market. Note that rolex authorized dealers are not allowed to mark up new watches at all. The price is the price set by the brand. Most authorized distributors are also jewelers so they allocate steel sport watches to people who buy a lot of jewelry.
Pateks are a different beast. The sport watches are highly desirable, and generally not available to the average buyer under any circumstances unless they have > $100K Patek spend, which means you're going to have to buy what is typically more of an art piece type watch (complication, calatrava, etc) before you'll get a shot at a $20K Patek sport watch. This means you can very easily get a beautiful brand new Patek dress watch for 20% off on the secondary market, since buyers will simply purchase that watch to get the spend history, immediately dump it on the secondary market at a big discount, just so they can get the opportunity to purchase a $20K watch and sell it for a >100% markup. There's no shame for some of these people.
> There's no shame for some of these people.
It sounds like the market just fixing a stupid sales model.
It sounds like the market just fixing a stupid sales model.
Doesn't look too stupid for Patek Philippe. These shenanigans are why they can charge $20k for a stainless steel automatic watch with a simple date complication, which is only slightly better (at best) than a $300 Seiko.
When I think of "sport" I think of "fitness" watches from Garmin and Apple Watch. Patek sport watch is definitely not that. What is meant by "sport" in case of the Patek sport watch?
A sport watch is not a dress watch, not a dive watch and not a field watch. It’s typically water-resistant, but not hugely water-resistant (swimming, rather than diving). It typically has a metal bracelet or a tropical rubber strap.
A dress watch is thin, almost always with polished rather than brushed surfaces, rarely with a date complication, rarely with lume, sometimes without a second hand, with a leather strap. It’s meant to slide underneath a shirt cuff and be both elegant & discrete. It is probably not water-resistant. It may not have a minute track.
A dive watch is meant for scuba diving. It will have one-way bezel marked with minutes for tracking dive time. It will be heavily lumed. It will typically have a metal bracelet.
A field watch is based off of a WWI officer’s watch. It should be reasonably water-resistant (weirdly, many are not!). It will always have three hands, and must be hacking (means that the second hand will stop when you set the time, so that it can be set to the exact second). It probably has 13–24 in an inner circle. It definitely has a minute track.
A Garmin or Apple Watch is … not really a watch, but is a wearable computer.
A dress watch is thin, almost always with polished rather than brushed surfaces, rarely with a date complication, rarely with lume, sometimes without a second hand, with a leather strap. It’s meant to slide underneath a shirt cuff and be both elegant & discrete. It is probably not water-resistant. It may not have a minute track.
A dive watch is meant for scuba diving. It will have one-way bezel marked with minutes for tracking dive time. It will be heavily lumed. It will typically have a metal bracelet.
A field watch is based off of a WWI officer’s watch. It should be reasonably water-resistant (weirdly, many are not!). It will always have three hands, and must be hacking (means that the second hand will stop when you set the time, so that it can be set to the exact second). It probably has 13–24 in an inner circle. It definitely has a minute track.
A Garmin or Apple Watch is … not really a watch, but is a wearable computer.
Note that hardly anyone has actually used those "dive" watches for diving in decades. A wealthy, fashion-conscious diver might wear a dive watch while traveling to the dive site, but for actual diving they'll take it off (don't want it lost or scratched!) and bring a cheaper modern digital dive computer (which might come in wristwatch format for certain models, thus further confusing the terminology). In diving circles, if you mention "dive watch" then most people will assume you're talking about a Shearwater or Garmin rather than some Swiss toy.
> Note that hardly anyone has actually used those "dive" watches for diving in decades.
Yeah, the line about them is that they are ‘desk divers’!
I have the idea that plenty of folks do still use them for diving, but of course I could be wrong — it’s not a community I am much around.
Yeah, the line about them is that they are ‘desk divers’!
I have the idea that plenty of folks do still use them for diving, but of course I could be wrong — it’s not a community I am much around.
Sports is really just the traditional name of the category.
They are more casual watches. They will have a seconds hand and glow in the dark hands and markers. They will be able to tolerate getting wet (ie no leather).
They are more casual watches. They will have a seconds hand and glow in the dark hands and markers. They will be able to tolerate getting wet (ie no leather).
It’s like how Oxford cloth button down shirts or cotton knit polos are sportswear, or a sport coat (it’s in the name!) or how jodhpur boots are “equestrian”, et c.
They started that way, but not so much now. Still, that’s the lineage they fall under in certain contexts.
They started that way, but not so much now. Still, that’s the lineage they fall under in certain contexts.
In the watch world sports watch means a tool watch, something designed for a specific purpose like supporting an occupation, military use, or while participating in a sport (mainly uppercrusty sports). Sports watches have taken over, and can really be thought of as everyday watches since people are wearing rolex submariners with tuxedos now.
Sport watches started with things like the JLC Reverso, which was designed to meet a challenge of a watch that could survive a polo match. The case includes a swivel that lets the dial flip around to keep it protected while playing.
Quartz watches upended watch makers across every price point, totally destroying the bottom of the market. The survivors moved towards mechanical watches as luxury items, and even the holy trinity of Audemars Piguet, Patek Philippe, and Vacheron Constantin had to respond. Audemars Piguet revealed the luxury sport watch Royal Oak in 1972 and there wasn't any going back. PP designed Nautilus in 1976 and Vacheron brought out the Overseas in 77. These 3 lines make up a huge chunk of the holy trintiy business now.
Sport watches started with things like the JLC Reverso, which was designed to meet a challenge of a watch that could survive a polo match. The case includes a swivel that lets the dial flip around to keep it protected while playing.
Quartz watches upended watch makers across every price point, totally destroying the bottom of the market. The survivors moved towards mechanical watches as luxury items, and even the holy trinity of Audemars Piguet, Patek Philippe, and Vacheron Constantin had to respond. Audemars Piguet revealed the luxury sport watch Royal Oak in 1972 and there wasn't any going back. PP designed Nautilus in 1976 and Vacheron brought out the Overseas in 77. These 3 lines make up a huge chunk of the holy trintiy business now.
Nautilus and Aquanaut are what I think of as Patek ‘sport’ watches.
I like that Walmart "sells" them https://www.walmart.com/ip/Patek-Philippe-Patek-Philippe-Nau...
Really interesting, answered some of the questions I had on watch market economics and seller and buyer incentives. Is there a place where I can learn more (e.g. a youtube channel that explains how all of this works, the roles and incentives for the various parties in the watch market)?
Thanks
Thanks
Ah, the games people play when they have too much money.
In the watch market, a lot of the resellers who got in during COVID are still underwater.
Know a guy from the alternatives space who bought an 8 figure portfolio of Richard Milles, Pateks and some smaller brands and is still sitting on it. Bidders are coming at 15-20% below his ask at least.
Know a guy from the alternatives space who bought an 8 figure portfolio of Richard Milles, Pateks and some smaller brands and is still sitting on it. Bidders are coming at 15-20% below his ask at least.
At some point you have to think you'd be better off selling at a loss and reallocating the funds, especially if there are tax implications of being able to show a loss in business inventory (which you may not be able to if it's just some guy buying a box of watches and not an actual business venture).
If you hold the inventory, there is still hope of a rebound. Eating the loss and taking a bath has got to be painful.
Given how unpredictable the collector's market is, investing for short-term swing collecting seems a high variance strategy. Only winning move would be to pick up the goods, stack them in the attic for 20 years, and see what got lucky. Anything else would be too much mental stress trying to monitor the present value.
Given how unpredictable the collector's market is, investing for short-term swing collecting seems a high variance strategy. Only winning move would be to pick up the goods, stack them in the attic for 20 years, and see what got lucky. Anything else would be too much mental stress trying to monitor the present value.
Not a loss til you sell??
Yep! I know a ton of people who never lost money on Beanie Babies because they haven't sold yet and are waiting for the market to rebound! /s
What's the conversion rate from Beanie Babies to $GME?
I think you're missing a key point here and that is you have no chance of buying a Hermes bag unless you have a relationship with a specific sales associate and buy a lot of other stuff there. Very few other categories of goods can get away with something like this.
In some ways Rolex is like this but Rolex is relatively high production volume and there are many situations where you can get lucky and buy one relatively easily, especially now that the hype has died down a bit from 2021-2022.
In some ways Rolex is like this but Rolex is relatively high production volume and there are many situations where you can get lucky and buy one relatively easily, especially now that the hype has died down a bit from 2021-2022.
RIP "Rep Ladies" on Reddit, where there was a whole community talking about buying "replicas" (very high quality fakes) from China.
Bag purchasing aside, the whole community had a very specific and enjoyable vibe to it. It was like every poster was Charlotte from Sex and the City.
The Reddit was killed by this article: https://www.thecut.com/2022/04/repladies-fake-luxury-bags.ht...
Bag purchasing aside, the whole community had a very specific and enjoyable vibe to it. It was like every poster was Charlotte from Sex and the City.
The Reddit was killed by this article: https://www.thecut.com/2022/04/repladies-fake-luxury-bags.ht...
That was a great article and would probably appeal to some of the posters here:
> “My friends that spend a lot on authentics have either never worked a day in their life or they’ve married rich guys,” she says. “But if you’re working hard for your money, you don’t want to spend it on stupid stuff. In New York especially, wealthy people just have more interesting things to do with their money. They invest in crypto. They reinvest in their businesses. They invest in their children.”
> Still, most of Lisa’s rich friends ignore her suggestions to buy reps. “It’s just a snobbery thing,” she says. “They’ve literally told me, ‘I’m too good to buy reps.’” Instead, “they’re out here buying authentic Hermès, and they are stressing out every single day. ‘Will I get the bag?’ ‘What if it runs out?’ I’m just like, You literally don’t need this stress in your life; you can just be happy.”
> “My friends that spend a lot on authentics have either never worked a day in their life or they’ve married rich guys,” she says. “But if you’re working hard for your money, you don’t want to spend it on stupid stuff. In New York especially, wealthy people just have more interesting things to do with their money. They invest in crypto. They reinvest in their businesses. They invest in their children.”
> Still, most of Lisa’s rich friends ignore her suggestions to buy reps. “It’s just a snobbery thing,” she says. “They’ve literally told me, ‘I’m too good to buy reps.’” Instead, “they’re out here buying authentic Hermès, and they are stressing out every single day. ‘Will I get the bag?’ ‘What if it runs out?’ I’m just like, You literally don’t need this stress in your life; you can just be happy.”
"invest in their children" is just polishing up their children like a Birken bag.
And TikTok too. I used to frequent RepLadies just for the incredible review quality some years back that users were writing. Incredible pictures, auth vs replica comparisons, and total detailing of every step of the order/shipping process with a dated timeline.
Ironically it felt like the “Hermes” of the replica community because of its level of quality - such a shame it’s no longer, and the child subreddits that popped up to “replace it” just aren’t the same.
Ironically it felt like the “Hermes” of the replica community because of its level of quality - such a shame it’s no longer, and the child subreddits that popped up to “replace it” just aren’t the same.
Yes, the moderators there did a great job of enforcing a culture and a standard of review of the products. They also had loads of FAQs for all the steps in the process.
I hope that it lives on on a secret discord server or something somewhere. Would be a shame to lose it all.
I hope that it lives on on a secret discord server or something somewhere. Would be a shame to lose it all.
Replicas are great! I own a couple of Birkin bags, and I pretty much only wear replicas when I'm out and about. The resale on a vintage Birkin bag is insane, so it's better off sitting in my closet
How did the article kill it? Eternal September?
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The Birkin bag is nothing but overpriced hype. De Beers operates in the same manner, creating fake demand and spending tremendous sums on marketing to make you think that diamonds are "rare" when in fact they are not.
These bags are made by Chinese immigrants, not by Parisian or Italian "artisans." How do you think the Chinese counterfeiters are able to reproduce exact replicas that are indistinguishable to the naked eye?
Hermes and De Beers get the last laugh because they know that women are so desperate to appear wealthy that these products sell themselves to these low self-esteem trollops.
These bags are made by Chinese immigrants, not by Parisian or Italian "artisans." How do you think the Chinese counterfeiters are able to reproduce exact replicas that are indistinguishable to the naked eye?
Hermes and De Beers get the last laugh because they know that women are so desperate to appear wealthy that these products sell themselves to these low self-esteem trollops.
I would recommend listening to the Acquired podcast episode on Hermes. While the bag is very “overpriced”, they are genuinely the highest quality bags on the market in basically every important dimension.
Looking at the gif, it appears the protective feet are placed in such a way as to let the corners drag the ground. Is this not an obvious design deficiency?
[deleted]
Also, a classic:
https://www.styleforum.net/threads/mafoofan-struggles-to-buy...
https://www.styleforum.net/threads/mafoofan-struggles-to-buy...
Wow, that was an aggravating read. I don’t think I would have been able to keep my composure. Is/was that user notable on that forum?
I find the habits of the very wealthy fascinating. What incentivizes your behavior when you have own all the traditional incentives?
I assume you meant "none" of the traditional incentives.
I know some very rich people, and I've thought about this myself.
My conclusion is that we ALL need ongoing challenges in life. For most people, working to pay the rent is enough of a challenge.
But those who face no financial obstacles need to "create" new challenges. Having lots of kids is one way. Or having an experience (space, or bottom of ocean), or a handbag, that none of your friends has.
I know some very rich people, and I've thought about this myself.
My conclusion is that we ALL need ongoing challenges in life. For most people, working to pay the rent is enough of a challenge.
But those who face no financial obstacles need to "create" new challenges. Having lots of kids is one way. Or having an experience (space, or bottom of ocean), or a handbag, that none of your friends has.
>Having lots of kids is one way. Or having an experience (space, or bottom of ocean), or a handbag
One of these is definitely not like the others though. I suppose that's subjective, but a handbag is just a handbag.
One of these is definitely not like the others though. I suppose that's subjective, but a handbag is just a handbag.
Not in this case. A birkin bag is proof that you convinced the salesperson that you de3srve one or can afford secondary market prices.
Is this some kind a humiliation fetish I'm too poor to understand?
convincing hermes that you should be allowed to buy a bag isnt exactly easy. Bragging that you did it is exactly the point of these bags, not holding shit
A handbag can be more than a handbag.
I'm not much for fashion and the appeal of Chanel and Birkin bags leaves me scratching my head. But there are some handmade bags out there that are truly works of art and sell for considerably less than the many thousands that you'd need to part with for one of those.
But since no one has ever heard of their makers, nobody cares about them.
I'm not much for fashion and the appeal of Chanel and Birkin bags leaves me scratching my head. But there are some handmade bags out there that are truly works of art and sell for considerably less than the many thousands that you'd need to part with for one of those.
But since no one has ever heard of their makers, nobody cares about them.
> My conclusion is that we ALL need ongoing challenges in life.
Is existentialism really a "challenge"?
> For most people, working to pay the rent is enough of a challenge.
This seems like a bleak worldview. The average person is living for more than just surviving.
Is existentialism really a "challenge"?
> For most people, working to pay the rent is enough of a challenge.
This seems like a bleak worldview. The average person is living for more than just surviving.
The average person (in the world, perhaps not in Atherton) most definitely has ongoing stress about paying the bills.
Just because you have stress doesn't mean the entire reason for your being is paying rent...
People are spending a huge percent of their paycheck just to give their landlord the easiest job in the city.
How about self improvement? There are lots of new skills to learn. Or how about running a charity or a humanitarian political advocacy group? Loads of people need help.
I think this is another way of saying that sating desires does not get rid of desires. The brain will simply look for more things to desire.
Depending on your definition of very wealthy, a lot of luxury spending over the last decade is not from actual ultra rich, but mostly the middle class trying to signal something.
The "ludicrously capacious bag" thing in Succession makes fun of this very point - Tom (who is from a relatively modest background and therefore sensitive about such things) makes fun of Greg's girlfriends bag:
https://www.theguardian.com/fashion/2023/mar/30/succession-b...
https://www.theguardian.com/fashion/2023/mar/30/succession-b...
Problem with selling to ultra-rich is that there isn't actually very many of them. On other hand there is plenty of middle-class and even lower class that are ready to sacrifice other things for specific signal... So targeting them makes lot more sense.
Plus, a fool and their money are soon parted.
I'm in a weird bubble, because I don't know anyone in my friend group who does this, despite most of my friends in their late 30s early 40s being successful tech professionals.
Many have bought fancy houses (and some modest houses), a lot of them have nicer cars, but I literally don't know anyone who would fit the 'upper middle class' definition who spends money on high fashion, expensive watches, high end wine, etc.
The only people I know in my extended circle who buy that sort of thing either have many millions liquid from successful tech exits (as in, coudl retire) or inherited millions.
Many have bought fancy houses (and some modest houses), a lot of them have nicer cars, but I literally don't know anyone who would fit the 'upper middle class' definition who spends money on high fashion, expensive watches, high end wine, etc.
The only people I know in my extended circle who buy that sort of thing either have many millions liquid from successful tech exits (as in, coudl retire) or inherited millions.
Can I ask a daring question? Are all of them men? What about their spouses? Do they still work and how do they spend their husband's money?
One thing that I have noticed about the new rich: They might not buy Hermes bags (yet), but they overspend on everything -- groceries, dining, housing, cars, schools, vacations. It adds up fast, and their net worth is surprisingly small.
One thing that I have noticed about the new rich: They might not buy Hermes bags (yet), but they overspend on everything -- groceries, dining, housing, cars, schools, vacations. It adds up fast, and their net worth is surprisingly small.
> Are all of them men? What about their spouses?
No. Many are, but I know some fairly successful tech women who worked at FAANGs and made great money as well.
>but they overspend on everything -- groceries, dining, housing, cars, schools, vacations.
Yes, I guess I was trying to say that in tech focused circle in SoCal, traditional status symbols take a back seat to upgraded houses, vacations, and dining.
I don't know friends who buy themselves a rolex or fancy handbag if they get a huge bonus. They might treat themselves or friends to a high end dinner or a nice vacation instead.
No. Many are, but I know some fairly successful tech women who worked at FAANGs and made great money as well.
>but they overspend on everything -- groceries, dining, housing, cars, schools, vacations.
Yes, I guess I was trying to say that in tech focused circle in SoCal, traditional status symbols take a back seat to upgraded houses, vacations, and dining.
I don't know friends who buy themselves a rolex or fancy handbag if they get a huge bonus. They might treat themselves or friends to a high end dinner or a nice vacation instead.
I still think this is important anec-data. Thank you to share!
LMVH is very succesfull in selling luxury to the middle and lower classes. They really found a growth market there.
You might like "Primates of Park Avenue" - it's the memoir of a sociologist who married a rich guy. There's a couple whole chapters on Birkin bags. She sends her husband to get hers in Tokyo because they're easier to get there than in New York.
I always come back to this review of Paul Fussell's "Class: A Guide Through The American Status System" when I'm trying to make sense of wealth. I don't know how well it really holds up, but it did get me thinking about the difference between wealth and class. Birkin bags sound like an upper-middle-class phenomenon. The effort involved in trying to obtain a Birkin would go against the spirit of the upper class.
https://www.astralcodexten.com/p/book-review-fussell-on-clas...
https://www.astralcodexten.com/p/book-review-fussell-on-clas...
Status symbol - a weird concept to me. Exhibiting status symbols has various social, psychological, cultural and economic uses and meanings, but it seems to me that they often reflect the existence of a kind of deficiency.
True status is your impact on the world, both realized and potential. Being able to waste thousands of meals' worth on food for a mundane everyday item is a cheap approximation of that.
I really enjoyed the Aquired episode on Hermès. Not my type of brand, but interesting.
https://www.acquired.fm/episodes/hermes
https://www.acquired.fm/episodes/hermes
I did too. Actually I was introduced to the Acquired podcast by the WSJ last month[1] and Hermes was the first episode I listened to. I wonder if this was just another WSJ reporter falling down that same rabbit hole.
[1] Via https://www.wsj.com/business/media/acquired-podcast-tech-bus...
[1] Via https://www.wsj.com/business/media/acquired-podcast-tech-bus...
Coincidentally this exact thing happened to me. I checked out the podcast after reading about it here. Luckily I was visiting Europe last month so got some time to listen to this 3-4 hour podcast episode, almost like a half audiobook!
It is funny how there are so many articles purporting to explain the economics of a Birkin handbag, without actually explaining it. Here it is, I will actually and finally explain the economics of a Birkin handbag.
It is all about convincing the buyer to consider a consumer good to be an investment. People treat consumer goods and investments very differently mentally and rightfully so. A consumer good is something you use for you own enjoyment or necessity. An investment is something that is supposed to pay you back more in the future. You do not get to use or enjoy the stocks and treasuries in your investment account. But you do hope that they will bring you more money in the future.
So what if consumer good can also be an investment? It seems like a great deal. First of all you get to enjoy it. If you are woman (or a man that likes to wear handbags, I guess) you can walk around with your Birkin bag and show it off while it appreciates.
Stocks and bonds are the often recommended investments, but you need a large and complex political system to ensure your stocks and bonds are worth the money. They are after all just pieces of paper (and nowadays you usually do not even get to hold the paper yourself), but to get these pieces of paper to convert to ownership rights of large enterprises you need, as I said a large and complex political and legal system.
A Birkin bag on the other hand, is something you can keep close to you. In your closet.
So the sales potential of something that is both a consumer good and an investment is great. Hermes saw this potential and decided to make the Birkin that thing.
If the Birkin can be sold for more in the secondary market than what it sells for in store, it becomes an investment all of a sudden. And then you get all kinds of new demand. So Hermes made that happen by good marketing and (probably) by buying out Birkins in the secondary market.
But that is also a very unstable situation. If you can just buy a Birkin in a store and then turn around and sell it immediately for a profit, everyone would do that and the secondary market price would collapse. And that is where the exclusivity comes in. The plan for Hermes is that they would only sell Birkins to rich people that do not need to resell their bags in the secondary market even if there is a profit. Thus, the ideal client is a woman that feels good that her Birkin investment is appreciating in value but has absolutely no desire to sell it because she does not need the money and she loves her bag. She just likes to consider how much money she is making in her mental profit and loss statement by keeping her bag, while continuing to wear and use it.
So that is why sales of new Birkins are so restricted and are based on a personal relationship between a salesperson and a client. The salesperson judges the client on whether they are the type of client that will turn around and flip the bag. And meanwhile the company, Hermes, judges the salesperson on whether they can keep their clients in check.
Of course some bags get flipped, and that is necessary to keep a resale market going, and thus to keep up the evidence of higher resale values. But it is important to keep the flips to a very small number.
It is a very clever system, but it was not invented by Hermes. It has been tried before with art, fine wine and ferraris. And for those of you that might think that the Birkin madness is somehow related to women's lack of financial sense, keep in mind that Ferrari was doing the same thing with limited addition Ferraris marketed mostly to men long before Hermes hit upon their Birkin scam.
The problem, from the point of view of the consumer, is that it is a very unstable system. It seems great and safe to have your investment in your closet, but keep in mind that the value of that investment is being kept alive by Hermes doing hard work and spending a lot of money to keep up the secondary market for Birkins. If Hermes changes strategy or some new CEO makes some mistake, then the value of your Birkin will disappear in a second and you will have no legal recourse. If the fashion changes, the value of your bag may plummet even if Hermes does their very best to do everything right. Etc.
So my recommendation for someone considering a Birkin or another consumer good/investment combo is to stick to actual investments for investing and to actual consumer goods for consuming. An asset that produces value (such as stock in a good company) is a naturally appreciating investment (as it produces value) and it does not need to have some kind alternative reality created around it by a corporation in order to appreciate.
Of course one has also to make sure he/she is a good citizen and exercises their responsibilities to keeping up their nation as a stable democracy with a stable well functioning legal system and well established property rights.
It is all about convincing the buyer to consider a consumer good to be an investment. People treat consumer goods and investments very differently mentally and rightfully so. A consumer good is something you use for you own enjoyment or necessity. An investment is something that is supposed to pay you back more in the future. You do not get to use or enjoy the stocks and treasuries in your investment account. But you do hope that they will bring you more money in the future.
So what if consumer good can also be an investment? It seems like a great deal. First of all you get to enjoy it. If you are woman (or a man that likes to wear handbags, I guess) you can walk around with your Birkin bag and show it off while it appreciates.
Stocks and bonds are the often recommended investments, but you need a large and complex political system to ensure your stocks and bonds are worth the money. They are after all just pieces of paper (and nowadays you usually do not even get to hold the paper yourself), but to get these pieces of paper to convert to ownership rights of large enterprises you need, as I said a large and complex political and legal system.
A Birkin bag on the other hand, is something you can keep close to you. In your closet.
So the sales potential of something that is both a consumer good and an investment is great. Hermes saw this potential and decided to make the Birkin that thing.
If the Birkin can be sold for more in the secondary market than what it sells for in store, it becomes an investment all of a sudden. And then you get all kinds of new demand. So Hermes made that happen by good marketing and (probably) by buying out Birkins in the secondary market.
But that is also a very unstable situation. If you can just buy a Birkin in a store and then turn around and sell it immediately for a profit, everyone would do that and the secondary market price would collapse. And that is where the exclusivity comes in. The plan for Hermes is that they would only sell Birkins to rich people that do not need to resell their bags in the secondary market even if there is a profit. Thus, the ideal client is a woman that feels good that her Birkin investment is appreciating in value but has absolutely no desire to sell it because she does not need the money and she loves her bag. She just likes to consider how much money she is making in her mental profit and loss statement by keeping her bag, while continuing to wear and use it.
So that is why sales of new Birkins are so restricted and are based on a personal relationship between a salesperson and a client. The salesperson judges the client on whether they are the type of client that will turn around and flip the bag. And meanwhile the company, Hermes, judges the salesperson on whether they can keep their clients in check.
Of course some bags get flipped, and that is necessary to keep a resale market going, and thus to keep up the evidence of higher resale values. But it is important to keep the flips to a very small number.
It is a very clever system, but it was not invented by Hermes. It has been tried before with art, fine wine and ferraris. And for those of you that might think that the Birkin madness is somehow related to women's lack of financial sense, keep in mind that Ferrari was doing the same thing with limited addition Ferraris marketed mostly to men long before Hermes hit upon their Birkin scam.
The problem, from the point of view of the consumer, is that it is a very unstable system. It seems great and safe to have your investment in your closet, but keep in mind that the value of that investment is being kept alive by Hermes doing hard work and spending a lot of money to keep up the secondary market for Birkins. If Hermes changes strategy or some new CEO makes some mistake, then the value of your Birkin will disappear in a second and you will have no legal recourse. If the fashion changes, the value of your bag may plummet even if Hermes does their very best to do everything right. Etc.
So my recommendation for someone considering a Birkin or another consumer good/investment combo is to stick to actual investments for investing and to actual consumer goods for consuming. An asset that produces value (such as stock in a good company) is a naturally appreciating investment (as it produces value) and it does not need to have some kind alternative reality created around it by a corporation in order to appreciate.
Of course one has also to make sure he/she is a good citizen and exercises their responsibilities to keeping up their nation as a stable democracy with a stable well functioning legal system and well established property rights.
See also: guitars. People were always willing to pay $$$ for 1950s Gibson Les Pauls, holding them as investments. So someone smart at Gibson realized they could make perfect reproductions of those guitars, and persuade people they should also be held as investments.
off the original topic, but on topic for this -
Yes! Gibson recognized they were getting cut out of the vintage market and started making not only the reissues (RIs), but also the limited edition copy-of-famous-person's-guitar. What gets me is that Reissues these days are priced so close to vintage instruments. It's so hard to justify the purchase.
Yes! Gibson recognized they were getting cut out of the vintage market and started making not only the reissues (RIs), but also the limited edition copy-of-famous-person's-guitar. What gets me is that Reissues these days are priced so close to vintage instruments. It's so hard to justify the purchase.
Houses
Pretty sure you don’t need all these words to explain it.
It’s just a way for people to signal that they’re rich and high status.
Those kinds of things are inherently fairly fragile so one that has endured like this one is notable.
It’s just a way for people to signal that they’re rich and high status.
Those kinds of things are inherently fairly fragile so one that has endured like this one is notable.
I think there is slightly more to things like this (and Ferraris and Rolexes and so on). People often think of these as _investments_, not merely a way to show off, because they have very skilfully been marketed that way.
I’m glad the author pointed out rock bottom interest rates - basically free money has created a nightmare and we are in the adjustment period now - curious to see how the luxury sector goes.
The luxury sector will crush it. The wealthy have become wealthier across the board.
It’s not the wealthy making LVMH stock rise. Look at the stock max history and you’ll see it 100% coincides with low interest rates - in a low interest rate economy it’s those who can’t afford it and borrow that spend the most. The genuine wealth class are not spending more because they can borrow more, although they are likely making more money because they are an asset class who’s assets are then artificially inflated.
I'd be very cautious of trying to read stock charts like this. There were literally countless other things that happened during this period as well, including for example the birth of the wealthy Chinese consumer class.
Has Hermès trademarked the design? I would love to get my wife an homage Birkin, but every time I google for such a thing I don’t really find anything. The only thing that makes sense is that they aggressively shut down every competing maker — or just that my google-fu is lacking.
There’s no way that she would be happy with tens of thousands for a purse, but if I could find one with the look and utility for a few hundred then I think she’d be delighted.
There’s no way that she would be happy with tens of thousands for a purse, but if I could find one with the look and utility for a few hundred then I think she’d be delighted.
Go to like any large city and people sell knockoffs for cheap on the sidewalk.
Not necessarily complying with all relevant IP laws of course.
“homage Birkin”
A knockoff? Is that what people are calling knockoffs these days?
A knockoff? Is that what people are calling knockoffs these days?
A fake looks like an original, and is something which wrongfully and illegally misuses the original’s logo or other marks: it lies about what it is.
A homage is something which looks like an original, but does not use the original’s logo or other marks. I have no problem with an homage.
‘Knockoff’ could refer to either of those. What I would like is a well-constructed reproduction of a Birkin bag, which does not misappropriate Hermès’s trademarks.
A homage is something which looks like an original, but does not use the original’s logo or other marks. I have no problem with an homage.
‘Knockoff’ could refer to either of those. What I would like is a well-constructed reproduction of a Birkin bag, which does not misappropriate Hermès’s trademarks.
I can find many results for "Birkin inspired handbags".
A fool and his money are quickly separated.
The people who buy these bags cannot spend all they have, even in 10 lifetimes.
Don't worry about them. They'll be fine.
Don't worry about them. They'll be fine.
The actual target market is probably the one that burns all the money they have during their lifetimes.
This is why scarcity works so well for this target market. Its something they cannot just walk out and buy. They must instead earn it (buy spending lots of money and becoming friends with the sales assistant).
There was an interesting planet money episode on Birkin Bags from 2015, I recommend a listen (or a read)
https://www.npr.org/transcripts/460870534
https://www.npr.org/transcripts/460870534
closely related, just a few days ago I got a quote for a pair of boots that after taxes and duty would have worked out to about $12,000 and an 8-month wait not including travel costs to be there for a fitting. I'm passing on them for every conceivable reason, but it raised the question of why buy them at all. tbh, I didn't know how much they cost, and I just like them because the maker has figured in stories I've liked for years and there's a kind of actualization to making them part of mine. nobody would ever know as there's no brand or way to tell, it was a personal interest.
however, the "economics" of those boots or a handbag are closer to poor-coded aftermarket car accessories, in that they're more of an indicator of economic conditions. You've made good money but it's not life circumstance changing money. It's not actually wasted or surplus, it's just not enough to change anything, so you spend it. whether it's at Hermés or spinny chrome rims, the underlying belief is that below a certain capital threshold signalling is a better strategic bet than marginal savings. it's a bet against future purchasing power of cash, but also a bet on personal growth.
And that's how you talk yourself into buying stuff like that.
however, the "economics" of those boots or a handbag are closer to poor-coded aftermarket car accessories, in that they're more of an indicator of economic conditions. You've made good money but it's not life circumstance changing money. It's not actually wasted or surplus, it's just not enough to change anything, so you spend it. whether it's at Hermés or spinny chrome rims, the underlying belief is that below a certain capital threshold signalling is a better strategic bet than marginal savings. it's a bet against future purchasing power of cash, but also a bet on personal growth.
And that's how you talk yourself into buying stuff like that.
no matter where you are on the political spectrum, you might enjoy "splitting" the animated gif https://images.wsj.net/im-972116/?width=1278&size=1 into its component still-images.
The credited artist, Eric Helgas, is quoted as saying "My work focuses a lot on iconic imagery and challenges the viewer’s perception of the objects I choose to photograph." https://lvl3official.com/artist-of-the-week-eric-helgas/
Well Eric, I don't feel challenged by this work. I guess you thought that I thought that stevedores, people with dirty fingernails, thick black hair on their arms, a preponderance of upper body fat characteristic of males, etc. would not carry Birkins. HA! jokes on you! Any body can carry a Birkin, and we might expect anybody who is afraid their femininity might be questioned to make sure to carry such an iconic handbag, so I'm sure all you've done is take a random sample. Where's the challenge?
The credited artist, Eric Helgas, is quoted as saying "My work focuses a lot on iconic imagery and challenges the viewer’s perception of the objects I choose to photograph." https://lvl3official.com/artist-of-the-week-eric-helgas/
Well Eric, I don't feel challenged by this work. I guess you thought that I thought that stevedores, people with dirty fingernails, thick black hair on their arms, a preponderance of upper body fat characteristic of males, etc. would not carry Birkins. HA! jokes on you! Any body can carry a Birkin, and we might expect anybody who is afraid their femininity might be questioned to make sure to carry such an iconic handbag, so I'm sure all you've done is take a random sample. Where's the challenge?
I don't really understand your last paragraph.
It is in no way expected that Art that "challenges" is going to challenge every viewer. Of course some wouldn't be, in this case you. That's not a bug. I wouldn't even necessarily say that the quality of art is measured by the % of audience it is able to successfully "challenge", that also incentivises shock for shock's sake.
But I also don't really understand the specifics of what you're saying - There are no fingernails shown in the gif, and I suppose maybe one person with upper-arm fat?
To be clear, I'm not advocating for the art or the artist. It does nothing for me either. I'm curious about your seeming vitriol to it tho. (Could be a misread of what you wrote)
It is in no way expected that Art that "challenges" is going to challenge every viewer. Of course some wouldn't be, in this case you. That's not a bug. I wouldn't even necessarily say that the quality of art is measured by the % of audience it is able to successfully "challenge", that also incentivises shock for shock's sake.
But I also don't really understand the specifics of what you're saying - There are no fingernails shown in the gif, and I suppose maybe one person with upper-arm fat?
To be clear, I'm not advocating for the art or the artist. It does nothing for me either. I'm curious about your seeming vitriol to it tho. (Could be a misread of what you wrote)
See also:
Inside the Delirious Rise of ‘Superfake’ Handbags
Can you tell the difference between a $10,000 Chanel bag and a $200 knockoff? Almost nobody can, and it’s turning luxury fashion upside down. https://www.nytimes.com/2023/05/04/magazine/celine-chanel-gu...
An economist’s guide to the luxury-handbag market It is plagued by counterfeits—and information asymmetries https://www.economist.com/finance-and-economics/2024/03/07/a...
Inside the Delirious Rise of ‘Superfake’ Handbags
Can you tell the difference between a $10,000 Chanel bag and a $200 knockoff? Almost nobody can, and it’s turning luxury fashion upside down. https://www.nytimes.com/2023/05/04/magazine/celine-chanel-gu...
An economist’s guide to the luxury-handbag market It is plagued by counterfeits—and information asymmetries https://www.economist.com/finance-and-economics/2024/03/07/a...
With the rise of US economy and further wealth disparity, signaling "wealth" is a real thing.
We humans aren't that different from other animals that "peacock" to advertise their social status.
Interesting how certain brands are able to capitalize on the exclusivity of high end of fashion over the innate need to signal.
The problems of ultra rich are very different yet so similar to the poor. Humans gonna human.
We humans aren't that different from other animals that "peacock" to advertise their social status.
Interesting how certain brands are able to capitalize on the exclusivity of high end of fashion over the innate need to signal.
The problems of ultra rich are very different yet so similar to the poor. Humans gonna human.
[deleted]
I wonder if there's a long German word for "I'd be mad at these people for selling something so worthless for so much money, except the act of buying it makes you stupid enough to deserve wasting your money on it, so there aren't any real victims"
'Gold gab ich für Eisen' may be the closest thing to that.
https://de.wikipedia.org/wiki/Gold_gab_ich_f%C3%BCr_Eisen
https://de.wikipedia.org/wiki/Gold_gab_ich_f%C3%BCr_Eisen
Related:
The secret economics of the Birkin bag (2016) (https://www.economist.com/1843/2016/07/28/the-secret-economi...)
The secret economics of the Birkin bag (2016) (https://www.economist.com/1843/2016/07/28/the-secret-economi...)
Thorstein Veblen, Theory of the Leisure Class (1899): <https://archive.org/details/theoryofleisurec0000thor_p4x3>
Bliss Foster, fashion youtuber has a great video on Hermes
@11 minutes about why Hermes is peak of luxury even compared to other houses
https://www.youtube.com/watch?v=3F7Exfsto6Y
But entire video is a fun watch.
@11 minutes about why Hermes is peak of luxury even compared to other houses
https://www.youtube.com/watch?v=3F7Exfsto6Y
But entire video is a fun watch.
The economics of purchasing new are fairly simple, you walk out of the store with something worth more than you paid for it.
The people in the secondary market take all the risk by paying an inflated price that may go down and the risk of fakes.
It reminds me of the Rolex market.
The people in the secondary market take all the risk by paying an inflated price that may go down and the risk of fakes.
It reminds me of the Rolex market.
I don't really get it. I thought oh yeah I guess I buy expensive for my income so why not. But if I want a bag I research to try and find the best one for me, not for prestige. Same with every item. I guess people buy fancy watches and jewellery, and that's fine, but what I can't imagine is having all that money, meaning you have freedom to do pretty much whatever you like, and spending that freedom hanging around a posh clothes store frivolously buying shit in order to ingratiate yourself to buy a bag.
To put it in a way that might be more familiar to someone in tech, it's like buying an absurdly powerful computer to show off to friends. In all likelihood you don't actually need a 64 core, 128gb monster with dual 4090s, but you might want to be the kind of person who does need it and use it for the kinds of activities you imagine such a person might do. For computers, that might be playing a game at 16k at 240hz. For a purse it might having something appropriate to a gala or looks good in Paris. That's why luxury brands sell lifestyles, not extol the product itself.
Yah but you can just buy that. You don't need to waste your time sucking up to the sales rep, and if you did you could go get another, just as powerful a system from someone else.
> the sales rep
because in this case, there's only one company making that special computer, and it's either suck up to their sales reps or buy an 'inferior' product.
I guess probably like periods when NVIDIA GPUs or Raspberry Pis get scarce, and people go on eBay to buy them.
I guess probably like periods when NVIDIA GPUs or Raspberry Pis get scarce, and people go on eBay to buy them.
The bags aren't special high-quality bags. They're just bags. Even if they were made of tougher material, Sam Vimes Boots Theory doesn't apply at this massive price difference.
Their main purpose is showing off that you schmoozed the sales rep - nothing at all like how a computer works. "Check out this super rare thing I managed to get" does happen occasionally, like Intel Larrabee graphics cards - but only occasionally.
Their main purpose is showing off that you schmoozed the sales rep - nothing at all like how a computer works. "Check out this super rare thing I managed to get" does happen occasionally, like Intel Larrabee graphics cards - but only occasionally.
I mean, while I'm not in the market, I gather it was getting that way for high-end Nvidia cards during the crypto mining bubble if you wanted to get them at MSRP; I assume that is also difficult today with all the genAI stuff.
If you have more money than time, you just buy on the gray market for a big premium.
At this scale, things aren’t being bought with money, but with other systems of value. Imagine if you had near-infinite disposable income, and also all of your friends do too. What could possibly be considered interesting or status-worthy at that point? Luxury status symbols that can only be bought with things like your own time spent with a brand, status, and personal connections are the only ways to distinguish yourself from others.
Living your life as if conspicuous consumption is bullshit is much more distinguishing.
Call me crazy, but I'd guess that retail products that (a) have a SKU, and (b) are submarine advertised on websites with >40mm monthly viewers, however much they may be positioned as being sold to those with near-infinite disposable income, are really being hawked to those with merely disposable income.
see https://images.dowjones.com/wp-content/uploads/sites/183/201...
see https://images.dowjones.com/wp-content/uploads/sites/183/201...
> submarine advertised
https://www.paulgraham.com/submarine.html
Examples aplenty (from biblical times to the present, albeit in a slightly different domain) to be found in Linebarger, Psychological Warfare (1954)
> Almost all good propaganda—no matter what kind—is true. It uses truth selectively.
(note that PR people used to call themselves "propagandists" in peacetime as well, until WWI gave that a bad rep, and they needed to rebrand)
Examples aplenty (from biblical times to the present, albeit in a slightly different domain) to be found in Linebarger, Psychological Warfare (1954)
> Almost all good propaganda—no matter what kind—is true. It uses truth selectively.
(note that PR people used to call themselves "propagandists" in peacetime as well, until WWI gave that a bad rep, and they needed to rebrand)
I prefer me a excellent condition pre-loved Crumpler bag from ebay :-)
almost zero prestige so reasonable prices
almost zero prestige so reasonable prices
> The economics of the Birkin handbag
He's very rich and she is VERY pretty!
He's very rich and she is VERY pretty!
I'll grant you the VERY pretty for Jane, but was Serge Gainsbourg ever very rich?
The existence of absurdities like this, and everything there surrounds it is beyond obscene when there continues to exist poverty - in the same places where these are being carried
Everyone involved at every level should be ashamed of themselves and should be significantly questioning whether or not their life is a net negative on the world
Everyone involved at every level should be ashamed of themselves and should be significantly questioning whether or not their life is a net negative on the world
I think these things are stupid, but they cost about the same as the difference between a pretty good car and a mostly good car. It doesn’t seem like the most insane hobby to me.
When Omega and Swatch did a collab and released a series of plastic watches it was the poor who stood in lines around the block to get them and immediately resell at an obscene profit. There is a benefit to the poor if the figure out how to play that game.
this is true.
I suppose it still might be interesting for people considering spending 10,000 on a handbag to ask themselves if they might not overall be happier donating that money to help the homeless in their cities, however (because not having to step over homeless junkies on your way to the Hermes store is also kind of a luxury good?)
I suppose it still might be interesting for people considering spending 10,000 on a handbag to ask themselves if they might not overall be happier donating that money to help the homeless in their cities, however (because not having to step over homeless junkies on your way to the Hermes store is also kind of a luxury good?)
If 10k is all you have. Something durable like hand-bag allows you to visibly signal for weeks if not months... Same can't be said about donation... Can you even check such thing? So would anyone in peer group even believe?
Sounds like we need some way for someone to display their charitable donation amounts that are public and verifiable. Then more people could use their donation amounts as status symbols.
I am domiciled in a country where I don't have to step over homeless* on my way to the Hermes store; am I using this comment as a status symbol?
* they must exist here (et in Arcadia ego...), because I see the occasional newspaper article about them, but they're certainly not visible, as in Paris, or ubiquitous to the point of literally having to step over them, as they were in the Old Country.
[in my old city there was one individual who I thought might have been homeless ... but upon asking, my friends (a) immediately knew who I meant, and (b) told me, no, he has an apartment, he just looks like he doesn't]
* they must exist here (et in Arcadia ego...), because I see the occasional newspaper article about them, but they're certainly not visible, as in Paris, or ubiquitous to the point of literally having to step over them, as they were in the Old Country.
[in my old city there was one individual who I thought might have been homeless ... but upon asking, my friends (a) immediately knew who I meant, and (b) told me, no, he has an apartment, he just looks like he doesn't]
That is the purpose of the NPR tote bag
In some cases it’s a bumper sticker or in my case it’s a magnet that sits on my fridge
In some cases it’s a bumper sticker or in my case it’s a magnet that sits on my fridge
Some people are vain. It's pointless to appeal to their sense of compassion. The best way to deal with them is to charge them lots and tell them they have a sophisticated sense of style. Their money supports preservation of artisanal skills, which is a benefit to humanity as a whole.
Considering budgets that homeless-industrial complex spends on homeless in NYC/SF/other big cities with homeless, 10k will have absolutely zero impact on anything.
Maybe they're doing both.
And songs with lines like
The time was 6 o'clock on the Swatch watch
Gotta date, can't be late
...
Didn't hurt either. Can't believe I remember that, almost 30 years later :-)
The time was 6 o'clock on the Swatch watch
Gotta date, can't be late
...
Didn't hurt either. Can't believe I remember that, almost 30 years later :-)
The original NFT
whatever1(8)
anyone spending 20k$ on a handbag lost all touch with reality.
Same with any luxury good really. People are spending 100k on a car thats effectively no different than a $5k one considering driving in a way to actually take advantage of the capabilities of a $100k supercar is entirely illegal. People spend as much on prestigious private college that delivers the same classes as any public school.
> prestigious private college
There are wealthy, high status people in the public school too, and employers really don’t care where you got your degree these days. If anything, state flagship public schools skew larger which means economies of scale grow the variety of available internship/research and other opportunities.
There are such things as tracks where you can drive your super car on the weekend and take advantage of the capabilities.
What percent of these owners do that? Probably a single digit number if I had to guess. Orders of magnitude more people use that horsepower to drive like an idiot on the public road.