4 ms·

Note to self - buy luxury goods stocks after the next stock market crash.

by psadri 7y ago

ThrustVectoring 7y ago
Manufacturers of luxury goods won't be mispriced in a way you can exploit, even after a stock market crash. Instead, what you want to buy is hobbyist and other niche goods, assuming you have cash through a recession. As people cut back their budget, there tends to be a glut of highly discretionary stuff in the resale market. Like, my brother-in-law got absolutely fantastic prices on model airplane kits in the aftermath of 2008.
- acchow 7y ago
  There have been significant reforms in banking since the 2007 financial crisis. The next recession will probably be more similar to the early-2000's recession (post dot-com boom) than the financial crisis - shallow and short. Don't expect such fantastic deals to be had again.
  - psadri 7y ago
    This is an interesting observation. I think you are saying that real estate prices crashed big time because the people who held the assets couldn’t afford to keep them because of their very high leverage. High leverage was possible because of subprime mortgages. But that channel is now closed because of post 2008 lending reforms.
- Swizec 7y ago
  Folks I know got absolutely fantastic prices on houses on the Monterey coast in the aftermath of 2008. Could only afford one but damn, talk about a solid investment in a niche product. That house airbnbs for $900/night nowadays :D
- benj111 7y ago
  "Manufacturers of luxury goods won't be mispriced in a way you can exploit, even after a stock market crash" Why not? I would expect luxury goods manufacturers to suffer during a recession, and I would expect the stock price to follow suit. I don't think it's a mispricing as it's reflecting to reality on the ground, nevertheless I would expect them to bounce back after the recession. So it does seem to be an opportunity you can exploit. Your second paragraph seems to have shifted to a completely different asset class. No doubt there was fantastic prices on model aircraft kits, but you need to know the market, and it isn't apparent to me whether the model aircraft kit market will behave the same the next time. Plus it's more risky. If I buy a stock, I don't have to worry about it being fake, getting damaged, I can sell trivially at the touch of a button.
  - goatinaboat 7y ago
    I would expect luxury goods manufacturers to suffer during a recession Well, you can look at say Rolex to see what happens. They suffered yes but they didn’t cut (list) prices because that would undermine their status. Instead they launched Tudor as the budget-Rolex brand and that seems to have worked OK (for the company anyway). Luxury goods manufacturers often have long histories and are able to look further ahead than a single economic cycle.
    - benj111 7y ago
      List prices aren't stock prices the gg(?)p was talking about buying luxury goods stocks, not luxury goods themselves. Plus the 2nd hand market would be more relevant to what you're suggesting. Edit: Spelling
  - ThrustVectoring 7y ago
    >So it does seem to be an opportunity you can exploit. There are effectively zero opportunities you can exploit by simply purchasing the stock of publicly traded companies. The probability that they bounce back after a recession is incorporated into the price, the professional investors and hedge funds you're trading against aren't idiots. >Your second paragraph seems to have shifted to a completely different asset class. No doubt there was fantastic prices on model aircraft kits, but you need to know the market, and it isn't apparent to me whether the model aircraft kit market will behave the same the next time. Plus it's more risky. If I buy a stock, I don't have to worry about it being fake, getting damaged, I can sell trivially at the touch of a button. The point isn't investing, it's to get the hobby gear you want at a good price. Any potential resale profit is very much a secondary concern.
    - benj111 7y ago
      "the time to buy is when there's blood in the streets" Baron Rothschild People are human, they over react to bad news, they inflate bubbles, etc, etc. It isn't just hedge funds and professional investors you're up against, and even if you are, so? The average hedgefund bod will be thinking about the year end bonus, a stock that may bounce back in 18 months isnt of interest to them. And the higher ups don't want to end up bottom of the performance tables so they aren't going to keep it either. Then theres the fact that the efficient market hypothesis can only really deal with knowns. The depth of a recession is an open question, sure you can make an educated guess, but theres plenty of wiggle room to take a different view, or maybe I should say your differing view is a vote in setting the 'correct' price. And finally, I'm not entirely sure the efficient market hypothesis has even been proven, exhibit A) Long Blockchain https://www.bloomberg.com/news/articles/2017-12-21/crypto-craze-sees-long-island-iced-tea-rename-as-long-blockchain https://www.bloomberg.com/news/articles/2017-12-21/crypto-cr...
- OscarCunningham 7y ago
  You're using "recession" and "stock market crash" as though they're synonymous. That's a dangerous assumption to make. It's possible for either to happen without the other.

Note to self - buy luxury goods stocks after the next stock market crash.

by psadri 7y ago

Note to self - buy luxury goods stocks after the next stock market crash.

Manufacturers of luxury goods won't be mispriced in a way you can exploit, even after a stock market crash. Instead, what you want to buy is hobbyist and other niche goods, assuming you have cash through a recession. As people cut back their budget, there tends to be a glut of highly discretionary stuff in the resale market. Like, my brother-in-law got absolutely fantastic prices on model airplane kits in the aftermath of 2008.

acchow 7y ago
There have been significant reforms in banking since the 2007 financial crisis. The next recession will probably be more similar to the early-2000's recession (post dot-com boom) than the financial crisis - shallow and short. Don't expect such fantastic deals to be had again.
- psadri 7y ago
  This is an interesting observation. I think you are saying that real estate prices crashed big time because the people who held the assets couldn’t afford to keep them because of their very high leverage. High leverage was possible because of subprime mortgages. But that channel is now closed because of post 2008 lending reforms.
Swizec 7y ago
Folks I know got absolutely fantastic prices on houses on the Monterey coast in the aftermath of 2008. Could only afford one but damn, talk about a solid investment in a niche product. That house airbnbs for $900/night nowadays :D
benj111 7y ago
"Manufacturers of luxury goods won't be mispriced in a way you can exploit, even after a stock market crash" Why not? I would expect luxury goods manufacturers to suffer during a recession, and I would expect the stock price to follow suit. I don't think it's a mispricing as it's reflecting to reality on the ground, nevertheless I would expect them to bounce back after the recession. So it does seem to be an opportunity you can exploit. Your second paragraph seems to have shifted to a completely different asset class. No doubt there was fantastic prices on model aircraft kits, but you need to know the market, and it isn't apparent to me whether the model aircraft kit market will behave the same the next time. Plus it's more risky. If I buy a stock, I don't have to worry about it being fake, getting damaged, I can sell trivially at the touch of a button.
- goatinaboat 7y ago
  I would expect luxury goods manufacturers to suffer during a recession Well, you can look at say Rolex to see what happens. They suffered yes but they didn’t cut (list) prices because that would undermine their status. Instead they launched Tudor as the budget-Rolex brand and that seems to have worked OK (for the company anyway). Luxury goods manufacturers often have long histories and are able to look further ahead than a single economic cycle.
  - benj111 7y ago
    List prices aren't stock prices the gg(?)p was talking about buying luxury goods stocks, not luxury goods themselves. Plus the 2nd hand market would be more relevant to what you're suggesting. Edit: Spelling
- ThrustVectoring 7y ago
  >So it does seem to be an opportunity you can exploit. There are effectively zero opportunities you can exploit by simply purchasing the stock of publicly traded companies. The probability that they bounce back after a recession is incorporated into the price, the professional investors and hedge funds you're trading against aren't idiots. >Your second paragraph seems to have shifted to a completely different asset class. No doubt there was fantastic prices on model aircraft kits, but you need to know the market, and it isn't apparent to me whether the model aircraft kit market will behave the same the next time. Plus it's more risky. If I buy a stock, I don't have to worry about it being fake, getting damaged, I can sell trivially at the touch of a button. The point isn't investing, it's to get the hobby gear you want at a good price. Any potential resale profit is very much a secondary concern.
  - benj111 7y ago
    "the time to buy is when there's blood in the streets" Baron Rothschild People are human, they over react to bad news, they inflate bubbles, etc, etc. It isn't just hedge funds and professional investors you're up against, and even if you are, so? The average hedgefund bod will be thinking about the year end bonus, a stock that may bounce back in 18 months isnt of interest to them. And the higher ups don't want to end up bottom of the performance tables so they aren't going to keep it either. Then theres the fact that the efficient market hypothesis can only really deal with knowns. The depth of a recession is an open question, sure you can make an educated guess, but theres plenty of wiggle room to take a different view, or maybe I should say your differing view is a vote in setting the 'correct' price. And finally, I'm not entirely sure the efficient market hypothesis has even been proven, exhibit A) Long Blockchain https://www.bloomberg.com/news/articles/2017-12-21/crypto-craze-sees-long-island-iced-tea-rename-as-long-blockchain https://www.bloomberg.com/news/articles/2017-12-21/crypto-cr...
OscarCunningham 7y ago
You're using "recession" and "stock market crash" as though they're synonymous. That's a dangerous assumption to make. It's possible for either to happen without the other.