Yahoo Finance Which is the better investment: gold, stocks or a Hermès Birkin handbag?
In Sex and the City, a snooty salesperson tells Samantha there’s a 5-year waiting list for a $4,000USD Hermès Birkin bag. When she questions the wait he delivers this bon mot: “It’s not a bag. It’s a Birkin.”
The episode first aired on television almost 15 years ago and today $4,000 for a genuine Birkin bag would be a genuine bargain, too.
With a steady increase in retail price since Hermès first started selling the bags in the ‘80s, a website that hocks luxury handbags is claiming that buying one of the iconic Hermès bags is a better investment than investing in gold or the S&P 500. Baghunter analyzed the three investment options over the past 35 years and concluded that a Birkin bag had the best average annual return rate of 14.2 per cent between 1980-2015.
Experts weigh in
“It’s silly,” said Don Thompson, an economist and professor emeritus at York University’s Schulich School of Business in a phone interview with Yahoo Canada.
Luxury goods, such as a Birkin or a Lamborghini sports car, are fun, but aren’t exactly readily accessible to most people. “Luxury goods are not investments,” said the author of the new book The Supermodel and the Brillo Box: Back Stories and Peculiar Economics from the World of Contemporary Art.
While some may call a Birkin an art piece, it isn’t. In the art world pieces of actual art, such as Pablo Picasso’s Les Femmes d’Alger sell for hundreds of millions of dollars because there is only of them in the world. In comparison, while there are a limited number of Birkins and Lambos made and sold every year they don’t hold the same value as a truly one-of-a-kind piece of art by a famous artist, explains Thompson.
Eric Kirzner, the John H. Watson Chair in Value Investing at the University of Toronto’s Rotman School of Management is also quite skeptical of Baghunter’s claims.
“These comparisons are always highly suspicious,” said Kirzner in a phone interview.
When it comes to collectibles, ranging from baseball cards to stamps to Birkins, it’s the dealers selling these goods that are usually the ones making a good profit, said the finance professor.
While a pink crocodile-skin Hermès Birkin bag did sell at auction last year for a record $223,000 USD, that doesn’t necessarily mean if you bought a fairly run-of-the-mill black leather Birkin you would get a similar return on investment, point out both experts.
In response to criticisms regarding the study, a spokesperson for Baghunter said they stand behind their analysis and data. Shea Robinson, director of press relations for Baghunter, also said via an emailed statement that since Thompson and Kirzner are professors and “not experts in the luxury market, they are unaware of the investment potential of Birkin bags and as such their opinion should be taken with a pinch of salt.”
Iconic handbags
The handmade Birkins inspired by British singer/actress Jane Birkin start at about $12,000 USD and some have a waiting list of up to six years, according to Forbes. The bags have built a cult following over the years with everyone from Victoria Beckham to Kim Kardashian West popping up in paparazzi shots with these bags dangling off their arms. Kanye West infamously gifted his wife with a Birkin featuring a painting by artist George Condo back in 2013.
Now that Birkin, with a hand-painted surrealist nude on it, will likely only grow in value over time. For us mere mortals who covet a less ostentatious Birkin bag a more prudent investment strategy might be wise.
While investing decisions are based on several individual factors, such as risk tolerance, Kirzner said he personally would not buy a Birkin as a literal investment piece.
“If I had $20,000 to invest I’d put in a balanced portfolio of stocks and bonds,” he said.
