Sales in luxury goods are booming, signalling a shift among the well-heeled to passionate investment. Amanda Morrall Replica Roger Dubuis Watches reports.
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BLING is back, or so it has been declared in attempts to rationalise phenomenal sales recently of all things decadent and expensive.
Designer handbags, diamond jewellery and coveted French bubbly are flying off the shelves as though the recession were but a bad memory.
LVMH, the biggest luxury-goods maker in the world, is cautious to say it is a harbinger of restored consumer confidence, but admits the recent turnaround has been heady.
In LVMH's drinks division, sales rose 20 per cent, led by a thirst for champagne. Sales of Louis Vuitton handbags were up 13 per cent in the first quarter.
All told, LVMH's fashion, drinks, jewellery, perfume and cosmetics divisions posted sales growth of more than 10 per cent.
Susan Ellis, of independent business analyst group Datamonitor, says the renewed appetite for high- end material goods reveals a trend among the wealthy towards "passionate investment".
In essence, the term refers to the resumption of guilt-free buying of goods beyond the means of the average Joe. Reportedly, this has seen affluent individuals shuffle their portfolios to accommodate a fair measure of indulgence alongside the security of a higher-than-normal weighting of cash and government bonds.
"It is a way to invest and spend simultaneously, while adding to the richness of their lives," says Ms Ellis, who says it is a "perfectly legitimate" response to the financial crisis.
Jewellery has proven the most popular "passionate investment" while art is the most common "emotional investment", according to Datamonitor.
Massey University lecturer and economist Ben Jacobsen says while carefully chosen artwork may produce returns over time it is a stretch to describe pricey handbags and such as either assets or investments.
"I think it's a misnomer," he says of the term passionate investing. "They're just purchases, not investments."
Auckland-based investment columnist Michael Coote briskly dismisses the idea of passionate investing as "marketing bumph". "Since when was conspicuous consumption investing?" He says investors who want to make a buck are better off converting their cash into stocks, rather than consoling themselves with status symbols.
But Ms Ellis maintains that passionate investments do produce a return.
"Passionate investment is not a contradiction in terms. It is wisely using one's money to invest in a market about which one has emotional attachment, unlike, for example, bonds. There are many studies which show good returns for tangibles over a long period."
If disconsolate investors and consumers have a proclivity for making bad or perhaps illogical choices, Mr Jacobsen for one is not surprised.
The study of behavioural finance highlights all manner of incongruent stockmarket trends by irrational investors. Incongruent champagne and caviar celebrations in bad times? Retail therapy for the rich.
To the average consumer, the current bling blowout may seem extravagant, but relative to the wealth of the purchasers, it is small potatoes. Similar, albeit small-scale, purchasing behaviour, takes place among indiv
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