A walk through the Forum
shops
at Caesars Palace in Las Vegas brings one dominant message. This is the Mecca
of Luxury Branding. For jewelry and "signature" watches, it's Bulgari, Chopard,
and Tourneau. For clothing it's Armani,
Bernini, and Escada. And don't forget the three V's--- Versace, Valentino, and
Vasari.
Walking
by one shop, a familiar watch catches my eye. It's a Patek Philippe,
the understated, simple Calatrava
model that I have coveted since learning about them more than thirty years ago.
They are still hand built, still mechanical, and still stunningly
accurate---even when passed to a second generation. Today, it can be mine for
about $13,000, due to a recent 20 percent price increase.
I blink in
amazement. That's more than double the price I remembered.
Back in
Dallas, I visit deBoulle,
the high end Highland Park jewelry store. Owner Denis J. Boulle confirms the
price. It's $13,850. This is a Trophy watch, a watch distinguished by its
quality and relative rarity.
History
shows that the Patek Philippes made in very small numbers have enjoyed
astounding appreciation. Indeed, 80 of the 100 most expensive watches ever sold
in auction sales have been Patek Philippes. From the early 80's to now, for instance, prices have multiplied about 60
times.
Yes, you read that right. Sixty
times. That's an annualized increase of about 22 percent.
Call it
Trophy Inflation.
While different trophies have risen in price at
different rates, one thing is certain. They had risen much faster than the
conventional Consumer Price Index. Whatever the monthly ups and downs of food
and energy, whatever the constant increases in medical care costs, the broad
increase in consumer prices was only 3 percent a year over the same 20 year
period.
Needless to say, the Bureau of
Labor Statistics doesn't track Trophy Inflation. But it isn't difficult to find
in the usual places. Start with art auctions. Prices continue to reach new
highs and appreciation rates dwarf what most investors have found in the stock
market. A recent listing of the top 100 American auction prices
on www.askart.com showed a top price of
$27 million (for a George Wesley Bellows). The lowest price in the top 100 was
a bit under $4 million. The list includes works by relatively recent artists
such as Frank Stella, Jasper Johns, Jackson Pollock, and Roy Lichtenstein.
Whatever the current price, we're looking at gigantic multiples from original
sale prices.
Nor is Trophy Inflation limited to
mechanical or artistic works of art. Consider Trophy houses. Check the Friday
real estate listings in the Weekend section of the Wall Street Journal.
The Sunday San Francisco Chronicle real estate listings will serve
equally well. And there are always those nifty listings at the end of the New
York Times Sunday magazine. Multi-million dollar homes, once rare, are now
amazingly common. Many are offered for sums that would have purchased an entire
NASDAQ company only 20 or 30 years ago.
Whatever the Trophy object--- art,
jewelry, watches, houses, cars, or yachts---its price has risen much faster
than anything in the world of common objects and everyday living.
And that may include common stocks.
Quality--- real quality--- may
always be our best investment.
This article contains the opinions of the author but not necessarily the opinions of AssetBuilder Inc. The opinion of the author is subject to change without notice. All materials presented are compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This article is distributed for educational puposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, or service.
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