Financial news: If you are looking to invest, perhaps luxury is another choice

Financial news: If you are looking to invest, perhaps luxury is another choice

Investing into the stock market?

When it comes to the stock market, many friends ask, what industry to buy? Well, if the industry is growing, everyone knows about it. However not every company inside the industry is worth investing into. Meanwhile some asked for the company name instead. Truth is, if everyone knows the company name, how could it be an undervalued counter? Or if the company is totally unknown, then why are we buying into the company?

Perhaps this can be worth trying? Whenever we visit any mall, look at the crowd. Look at how busy the shops are. Look at how hard it is to find a car parking space. If everything is super positive, look at the stock market and see if this mall is under any stock counter? If the price is okay and the dividend seems to be stable, then perhaps we could buy into this counter with the thinking that if everything goes well, then dividends may rise or the price may move upwards.

Now, there’a another potential. Read on to find out

Article in themalaysianreserve.com Chinese shoppers are spending with gusto buying luxury goods this year thus far. Two companies, Hermes and LVMH has a stellar first-quarter results. Well-heeled Chinese consumers still love pricey handbags and jewelry.

Zuzanna Pusz, an analyst at UBS Group AG said, “The strongest players have already reported.”

She added, “We expect more polarization in the luxury space because Chinese consumers are picky and they want to buy brands that are strong.”

LVMH Moet Hennessy Louis Vuitton SE’s results sent shares of the owner of Christian Dior and Tiffany to a new record. The rally briefly lifted the French luxury powerhouse into an exclusive club of the world’s 10 most valuable companies this week and made billionaire Chief Executive Officer Bernard Arnault even richer.

Pusz places companies such as Salvatore Ferragamo SpA, Burberry Group Plc, Omega-owner Swatch Group AG and Kering SA in a weaker category with less appeal, especially in China.  Please do read the full article here with a lot more detailed information. Article in themalaysianreserve.com

What’s the price of the LVMH today?

I do not own any LVMH Moet Hennessy Louis Vuitton and has no idea if it’s worth investing into. Do your own study and decide yeah.

The theory about scarcity

According to investopedia, this is definition of scarcity. “The scarcity principle is an economic theory that explains the price relationship between dynamic supply and demand. According to the scarcity principle, the price of a good, which has low supply and high demand, rises to meet the expected demand.” Full definition here.

In the luxury goods world, scarcity is at work as well. There are definitely more wealthy buyers versus the number of luxury goods which they have preference for. Many times, it’s not whether you have money or not, it’s whether you get it first or not because the brands would want to ensure there’s always scarcity. This pushes up its appeal and meanwhile buyers feel they are special because others could not have the same item. When emotions are at play, price is ignored and only perceived value would be the focus when it comes to buy or no buy.

Scarcity in property?

This is also at work in the property world all the time. City centre as an example. Number of properties which are possible within the city centre would always be limited. That’s why cities grow bigger because when people could not buy into the city centre, they will offer higher prices or they move slightly further away. This continue to happen and as prices go up even higher, then the surrounding areas also start to increase in price and less wealthier buyers buy even further away.

Just need to look at the property prices for suburbs and please do understand that given a choice, everyone would prefer to stay closer to the city centre and no one would want to drive 54km to work everyday in the city centre. Scarcity would force everyone to rethink and prices would force everyone to adapt accordingly. Happy understanding.

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