Should You Buy Stock In Your Favorite Brands?

This article was last updated on April 16, 2022

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We’re as guilty as the next fashion fiend of gushing over “investment” pieces. (Read: Justifying their sky-high cost. Hello, you’ll wear that Hermèscarré forever.) 

But, what if you put on your business pants and really looked for a good investment? We’re talking about buying equity in brands like Louis Vuitton, Michael Kors, and Burberry, all of whom can be bought and sold on the stock market.

While you can’t tote a stock around over your arm, snapping up a piece of LVMH (owner of Louis Vuitton, Moet & Chandon, Sephora, Dior, and De Beers) does have one advantage over an It bag. It will (hopefully) increase in value — instead of getting creased and slouchy, then sold to a consignment shop for a quarter of what you paid for it. 

For example, if you had invested $1,000 in Michael Kors when it debuted on the stock market in December 2011 at $20 a share, you could cash out at $55 today, for almost $2,800. Try almost tripling your money by buying a Kors bag and reselling it two years later. 

If jumping into the market scares you more than Crocs, we got you. Grab your Tiffany and Co. pen (currently priced at about $66 a share) and take notes. 

Are You Ready to Invest?
Before you even think of putting money in the stock market, get your financials zipped up. That means no credit card debt, a stocked-up savings account, and monthly contributions to a retirement account. (We know, easier said than done.) 

How do you know if it’s time to invest? “I can think of lots of women who have high earnings and some extra money after saving for retirement,” says Lauren Lyons Cole, a Certified Financial Planner from New York City. “And they don’t know what to do with it — they don’t have kids and don’t want to buy a home — so, they say, ‘Let’s go shopping!’ That’s the kind of woman who should start learning about investing.”

Are Luxury and Retail Stocks Actually a Good Investment? 
Luxury companies have been on a tear recently, with three straight years of double-digit market growth fueled by Chinese shoppers. Stock from Burberry, LVMH, Ralph Lauren, and Tiffany and Co. stock have all outperformed the broader market over the past five years. 

But, beware! The performance of retail stocks is as fickle as the fashion world itself, and you never know when a designer’s fortunes will suddenly fall. (Hello, Galliano.) Plus, just because they’ve done well over the past five years, doesn’t mean luxury and retail will continue to go up forever. Memorize this: Past performance is not an indicator of future performance. 

Finally, even if you have a front-row pass to Fashion Week, you probably don’t have the time to put in 70 hours a week crunching inventory and cash-flow numbers like professional investors do, putting you at a disadvantage when trying to buy and sell stocks at the right time.

“Play” the Market
Instead of stressing, have fun! “Set aside a small amount of money to play with,” Cole says. “Go in with the knowledge that you might lose it, but it will be a learning experience that could be even more valuable than a purse.” 

If the possibility of losing money makes you sweat, she suggests trying a website like We Seed, which lets you pretend-invest in stocks and track their performance — without actually putting your year-end bonus on the line. 

If you’re going to invest for real, be cool. Don’t check the market performance every day — you’ll freak out, sell at the wrong time, and lose money. While all stocks bounce up and down from month to month, over the long term they’re more likely to go up. For tax purposes alone, you should hold each stock or fund for at least a year.

Variety Is the Spice of Investing
Above all, diversify. You wouldn’t fill your closet with all one brand, would you? Similarly, accessorize your portfolio with a variety of companies and industries. That will protect you from losing 100% of your money if one company or industry flames out. 

You can do this by investing in an index, like the S&P Global Luxury Index, which tracks the luxury industry as a whole. Putting your money in both small and large companies can help, as can investing in foreign markets instead of just in American companies. And, there are plenty of other fields — tech, banking, real estate, energy, to name a few — that can be smart investment choices. 

Now, you’ve made it through our crash course in designer investing. Go celebrate with a glass of Moet & Chandon champagne — and, if you’re a LVMH stockholder, that bubbly will taste extra-sweet.

Illustrated by Ammiel Mendoza

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