This would have been true five years ago; not so today. Years ago Hermes
only had about 400 craftsmen and was opening new stores at a fairly
fast pace so supply did not begin to equal demand. Today Hermes has more
than 3,000 craftsmen and the Birkin has been around since 1984...so
demand is beginning to slow - and supply is exceeding demand. The
article (and ones like it) are quick to point out that an Hermes Birkin
sold last year at auction for $223K - but they don't mention
that that bag cost more at Hermes than $223K (so it defeats their
premise). And why do all of these stories perpetuate the MYTH of the
waiting list? There is NO waiting list. Even the CEO of Hermes, Robert
Chavez, has stated that there is no waiting list. My book debunks the
waiting list. And finally, your block of gold, your Exxon stock
certificate, will not lose their value if you get a drop of wine on
them....
If you’re looking for a long-term investment, you
might want to forget the stock market, skip the gold, and instead, buy
yourself a new handbag. Though not just any bag will do—it’s got to be a
Hermès Birkin bag, possibly the most exclusive handbag in the world.
According to Baghunter, an online marketplace for
buying and selling high-end bags, the average annual return rate for
the Birkin bag actually outpaced that of both the S&P 500 and the
price of gold over the last 35 years. Accounting for inflation, the
S&P returned an average 8.7% a year, and gold -1.5%—while the resale
value of a Birkin in pristine condition rose 14.2%, according to
Baghunter’s number crunching.
The bag’s value also showed considerably less
volatility than the stock market, which could be good or bad depending
on what type of investment you want. The figures above assume the
investor purchased the item or stock and simply held it all those years,
without actively trying to maximize profits by moving in and out of
investments as the markets moved. In the timeframe examined, the S&P
saw a high annual return of 37.2% in 1995 and a low of -36.6% in 2008.
The Birkin, on the other hand, fluctuated between a high of 25% and a
low of 2.1%, never falling in value. But an investor who timed the
market just right could have made more from the S&P.
Baghunter
tells Quartz that its figures for the S&P and gold start in
December 1980, just before the Birkin’s conception in 1981, when actress
Jane Birkin, in a chance encounter on a plane with the then-CEO of Hermès, said the company should offer a bag with pockets.
Evelyn Fox, the founder of Baghunter, which has an obvious stake in promoting the Birkin’s resale potential, told Luxury Daily
the findings reflect the stability of the ultra-luxury market. Unlike
the stock market and the regular old luxury market, which includes
high-end but still relatively accessible goods from brands such as
Burberry or Gucci, it fluctuates little, even in difficult economic
times.
The comparison between “investing” in a bag and
the stock market is somewhat apples-to-oranges, though in some ways
that’s because of the very reason the Birkin is so valuable to begin
with: The barrier to getting a Birkin is extremely high compared to
buying stocks. To start, the average cost of a new Birkin is about $60,000, and they’ve reached as high as $223,000 at auction. Even a Class A share of Warren Buffett’s Berkshire Hathaway Inc. will only set you back $192,000 at present.
One reason for the Birkin’s lofty prices: Scarcity. The bags, a status symbol carried by celebrities from Victoria Beckham to Pharrell Williams, are infamously “sold out” almost constantly,
creating wait lists up to six years long. Hermès says the lengthy
process required to produce the bags, made of premium animal skins that
take time to harvest and are then hand-sewn by rigorously trained
artisans in France, prevents it from meeting demand. But not everyone accepts that reasoning; there’s a lot of motivation for Hermès to create shortages to keep the bag’s value and prestige high.
Exclusivity also helps keep the Birkin’s value
from pitching wildly: You don’t get a lot of people dumping $60,000 bags
they waited years to buy and flooding the market. Though if the bags
did go out of fashion, their “investment” value would plummet. Of
course, you don’t necessarily have to buy new: Baghunter would be happy
to have you invest in your bag through them.
Update, Jan. 14, 5:00pm EST: Baghunter
clarified that its calculation of the Birkin bag’s average annual return
rate includes inflation. The post was changed to compare this figure
with the inflation-adjusted returns for the S&P and gold.
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