Should I invest in Birkin bags instead of stocks?

Should I Invest in Birkin Bags Instead of Stocks?

Should I Invest in Birkin Bags Instead of Stocks?

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Feb. 8 2016 7:19 AM

Should I Invest in Birkin Bags Instead of Stocks?

476947418-photo-taken-on-june-11-2015-shows-hermes-birkin-bags-at
Hermès Birkin bags at a workshop in Montbron, France.

Mehdi Fedouach/AFP/Getty Images

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Answer by Shefaly Yogendra, ran a luxury venture, knows luxury brands, writes and speaks about them:

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The short answer is a qualified maybe. The long answer is a suggested framework to think about your investment philosophy and goals and your risk propensity and how they match with Birkin as an “alternative asset class,” with the huge qualifier that this is not investment advice.

What is your investment goal? Is it growth in capital, or do you seek income? If the latter, Birkin is not a great investment for you. Regardless of the legends surrounding them, Birkin bags don't pay dividend! I make the point with levity if only to ensure the point is understood, but this is the serious first question to ponder.

Then, if you are seeking capital growth, you need to consider carefully the kind of Birkin you buy. They are often extensively customized with choice of skins, hardware, and color. This is where it gets tricky. Because in order to realize that capital growth at some point in time, you (or your heirs) need to be able to sell the bag. Which means there needs to be a buyer for the bag you buy. For a common version, such as gray or brown crocodile skin, there may be many buyers, but equally there may not be so much growth in value. You will also need to think of the channels through which you can sell the bag for a profit, and unlike stock brokerage accounts, there is no one clear channel for the sale transaction.

For a less common version, say a white and platinum and diamond-encrusted Himalayan Birkin, you may not have many buyers because it is a serious test of affordability. The channel here may be clearer; antique houses or auction houses could advise you on disposal, although they will certainly take their cut, which will come from your capital growth. It may also be difficult to predict which bags will retain value and which may become common over time. The only consolation is that you are at least able to use this asset class, unlike stocks.

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This, if you will, is the Birkin equivalent of fundamentals analysis.

When it is argued that Birkin delivers a better investment growth than some stocks, it is important to take into account all the comparators behind that claim. Are you comparing for risk? Are you comparing for time horizon over which you hold the stock? Which other asset classes, other than stocks, are you taking into account? For instance, London residential real estate has been a high-growth asset class over the past two decades, for sure.

If you can conduct this analysis rationally while remembering you could always keep a Birkin and pass it on as a bequest, then you will arrive at your own answer to the question. As antique dealers often point out, such alternative assets often have less growth in market value, but they can and do grow in intrinsic value due to the personal stories we imbue them with.

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