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?
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.
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.
...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.
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).
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.
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.
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.
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.
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 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.
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?
> 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.
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.
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?
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.
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.
> 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.
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.
>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.
> 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.
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.
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.
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.
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?
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 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).
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'.
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!
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.
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.
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.
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.
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.
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.”
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.
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.
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.
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.
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.
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.
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?
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)?
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.
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).
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.
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.”
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.
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.
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
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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.
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?
Readit News
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 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.
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I wouldn’t call a Ferrari an investment, but if you love them they hold their value pretty well.
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?
Birkins haven't.
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.
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.
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.
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.
I guess an urge for status signalling is very hard to resist.
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.
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.
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?
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?
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.
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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.
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
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?
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.
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.
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.
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.
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.
https://lasellaroma.it/product/wallet-cod-5026/
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.
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.
https://en.wikipedia.org/wiki/Veblen_good
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.
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).
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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'.
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 Blackberry, Kodak and Blockbuster at a bargain with the same reasoning.
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.
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.
[1]: https://en.wikipedia.org/wiki/Efficient-market_hypothesis
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.”
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.
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.
https://arxiv.org/abs/1002.2284
What's your bet on the latter? I'm... skeptical.
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Except a publicly traded share is much more liquid.
An expensive watch does even less than less expensive watches, especially smart watches.
Because yeah, not buying things you want to watch your money high score go up is a pretty sad way to go through life.
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.
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.
It sounds like the market just fixing a stupid sales model.
Thanks
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.
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.
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...
> “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.”
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.
I hope that it lives on on a secret discord server or something somewhere. Would be a shame to lose it all.
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.
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