The modern marketplace has presented a litany of options for the average investor to get involved in.
More than just stocks, you can now invest in stocks, bonds, derivatives, futures, options, and so much more.
This expands the ways someone can make a profit but can be a bit jarring for newer market players to get involved.
Case in point, with the recent surge in collectible memorabilia taking the marketplace by storm (rare shoes, accessories, and even NFTs), there is now the question of whether the stock market remains the best investment option or if its alternatives can present a better opportunity.
To better illustrate, we will look at the stock market versus the highly sought-after Hermes Birkin bag to see how each one stacks up as a profitable investment vehicle.
The History of the Hermes Birkin Bag
For those who may not be aware, the Hermes Birkin bag is one of the most expensive handbags available in the market today.
Launched by the French fashion house in 1984, the Hermes Birkin bag (named after the culture icon, actress, and singer Jane Birkin) has climbed the ranks of fashion mythology to be regarded as one of the premier symbols of wealth, due to its sky-high prices and near consistent exclusivity in terms of release waitlists.
Hermes is keenly aware of the excessive demand that is fueling such high prices for its signature bag, with some rarer versions fetching auction prices upwards of $200,000-$300,000.
With reports indicating that Hermes only produces roughly 70,000 bags annually, a 2016 study further elaborated on its investment potential by indicating that the Birkin bag had an average annual return of 14.2%, beating out the S&P 500 over the same period of observation.
A Birkin bag is an investment and the actual purchasing of said bag is easier said than done.
First off, due to the sheer exclusivity, most of those average investors looking to get into these gains are priced out completely.
Moreover, the exclusivity also causes a long waiting list for even those with the funds to purchase the bag retail, with waitlists ranging from 6 months up to 6 years.
Those who end up purchasing these bags will either need to have a great contact within the Hermes boutiques themselves or acquire them for an often exaggerated mark-up at auction.
The Argument for the Stock Market
Now the stock market is likely the first thing on people’s minds when it comes to investing.
While the returns aren’t as good as the Birkin bag’s annual return (the S&P 500 averages roughly 10% per annum), the ease of availability of these various index funds in the market makes it not only easy to enter the market but also easy to cash out of when the investor needs liquidity.
The stock market also provides different possible financial products that can help create more pathways toward investing in specific assets.
While the Birkin bag will require direct ownership in order to profit from its price appreciation, stocks and other similar securities often have derivatives through futures and options that can allow investors to benefit from price changes without needing to own the underlying asset itself.
Moreover, those investors with a higher risk appetite can opt to invest in promising individual securities that have shown strong performance in the past few years.
While it may be more volatile than investing in the overall index of any particular market, it can pay off greatly in the form of stock from Amazon, Tesla, Apple, and the like.
At the end of the day, what you choose to invest in will boil down to your prerogative.
While we’ve listed the different characteristics of each investment in the market, there also exist people’s natural tendencies towards ownership of a particular good.
If the Birkin bag is something an individual sees value in, then the argument for stock market investment will likely not be as powerful.
For the average investor, we still suggest the stock market as the go-to investment choice for those looking for security, flexibility, and growth in the long term.
Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only