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A New Index Tracks The 1% Of Luxury Stocks

April 20, 2023
minute read

There is a luxury stock bubble, and it is pulling away from 99% of the market.  It sees an opportunity at Birinyi Associates. 

LVMH is the world's largest luxury company.  Stock prices have broken out to historic highs following its recent earnings report. 

LVMH Revenue

Clothing/leather goods:  +18%

Jewelry/watches:             +11%

Exclusive Retail:               +30%

Globally, sales increased by 24%, with Japan leading by 34%. 

A number of other brands reported strong results as well, including Christian Dior, Moncler, Richemont, and Hermes. 

Wall Street has taken note of the "1%" crowd's continued spending power. 

Jeff Rubin at Birinyi Associates said in a note to clients Wednesday that inflation has taken a significant toll on all consumers over the past year, from rising egg prices to sky-high apartment rents. 

The one-percenters have been relatively immune to inflation, however.

A couple of new indexes have been created by Rubin and Birinyi to monitor all this money: the 1% Index, which includes 16 luxury stocks, and the 99% Index, which includes 18 stocks that are more relevant to the average person. The local currency market cap is used to weigh the indexes. 

The index based on the 1%:

  • LVMH
  • Ferrari
  • Moncler
  • Brunello Cucinelli
  • Burberry
  • Hugo Boss
  • Richemont
  • Tapestry
  • EssilorLuxottica
  • Kering
  • Christian Dior
  • Mercedes-Benz
  • Porsche
  • Hermes
  • BMW

The index based on the 99%:

  • Levi Strauss
  • Big Lots
  • Fast Retailing
  • Walmart
  • Hershey
  • Bath & Body Works
  • Gap
  • Hormel Foods
  • H&M
  • Target
  • Anheuser-Busch
  • Hanesbrands
  • Ford
  • Ralph Lauren
  • Gildan
  • General Motors
  • Foot Locker
  • Dollar Tree

 It's no surprise that luxury has outperformed:

Comparing the 1% vs. the 99%

1% index:      + 34%

99% index:   + 20%

The 99%, however, had underperformed in the first half of April, rising only 8%. There has been a comeback for the 99% since the start of April: 

Comparing the 1% vs. the 99%

1% index:      + 3%

99% index:   + 12%

What's going on? Despite slow but steady inflation progress, Rubin believes consumers are benefiting. 

As a result of lower inflation, Rubin suggested that the dollar could go a little further in stores. 

Obviously, the next logical step is to monetize the index through an ETF and collect index fees. 

The plan hasn't been decided yet, but Rubin wouldn't rule out doing so. 

Bryan Curtis
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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