The economics of the Birkin handbag
wsj.com
wsj.com
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.
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.
2) Credit card points + Travel miles
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.
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!
I wouldn’t call a Ferrari an investment, but if you love them they hold their value pretty well.
So that $40-50k car price is about half of 5 years of ownership.
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.
"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.
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 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...
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?
Whatever makes people happy, I guess. I will continue to drive my ~zero maintenance Honda without regrets.
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 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.
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.
Ferrari works the same way.
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.
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.
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.
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?
It’s fun to post online and it’s fun to buy things that make you happy.
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.
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.
That is very fortunate for you because after all you’d never buy a status symbol!
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.”
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.
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's almost like you have to have a certain something to buy it...
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 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.
Just wondering; didn't know this one.
Your entire comment was saying how you aren’t like those people and calling them 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.
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).
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.
That's the whole deal with engagement rings, and more generally with romance.
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.
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.
It only makes sense to mine diamonds if it's cheaper to do so than to manufacture one of equivalent quality.
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.
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!
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?
It's just as right or wrong as buying tickets to watch a sporting contest.
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.
I guess an urge for status signalling is very hard to resist.
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.
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.
>>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.
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.
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.
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.
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.
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).
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?
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.
Making it cheaper or local or available to more people is not the goal.
There's a name for this: https://en.wikipedia.org/wiki/Veblen_good
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.
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.
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.
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.
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.
South Korea is making a big splash in cosmetics, for example, but has never been a particularly large textile hub.
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.
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 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.
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.
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'.
Because yeah, not buying things you want to watch your money high score go up is a pretty sad way to go through life.
Except a publicly traded share is much more liquid.
An expensive watch does even less than less expensive watches, especially smart watches.
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.
Nobody bought a iPhone because they thought it would appreciate in value.
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.
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.
The price of other stocks would plummet from low demand
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.
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 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..)
The lesson for me: I don't know enough of the industries to base any financial decision on it.
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.
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
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.
>>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?
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.
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.
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.
Figuring out which ones, and to what extent, is an unorthodox but effective path to wealth.
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.”
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.
> 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.
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.
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.
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?
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.
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.
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.
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.
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.
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 started that way, but not so much now. Still, that’s the lineage they fall under in certain contexts.
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.
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.
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.
Thanks
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...
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.
> “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.”
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.
https://www.styleforum.net/threads/mafoofan-struggles-to-buy...
https://www.theguardian.com/fashion/2023/mar/30/succession-b...
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.
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.
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 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.
One of these is definitely not like the others though. I suppose that's subjective, but a handbag is just 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.
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.
https://www.astralcodexten.com/p/book-review-fussell-on-clas...
[1] Via https://www.wsj.com/business/media/acquired-podcast-tech-bus...
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’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.
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.
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.
A knockoff? Is that what people are calling knockoffs these days?
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.
Don't worry about them. They'll be fine.
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.
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?
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)
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...
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.
The secret economics of the Birkin bag (2016) (https://www.economist.com/1843/2016/07/28/the-secret-economi...)
@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 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 guess probably like periods when NVIDIA GPUs or Raspberry Pis get scarce, and people go on eBay to buy them.
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.
> the sales rep
see https://images.dowjones.com/wp-content/uploads/sites/183/201...
> submarine advertised
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)
almost zero prestige so reasonable prices
He's very rich and she is VERY pretty!
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 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?)
In some cases it’s a bumper sticker or in my case it’s a magnet that sits on my fridge
* 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]
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 :-)
> prestigious private college