I’ve long worried about the financialisation of everything. Every aspect of our lives seems connected to financial markets somehow.
These days, retailers seem to be selling financing rather than actual stuff. Car companies advertise their interest rates instead of their cars.
Automated retirement savings have created vast parasitic industries which claim to be managing your money, but really just sell you insurance you didn’t even know about. In Australia, where retirement savings are compulsory, the funds management companies that collect ever growing proportions of people’s paycheques spend money on advertising!
Stock markets are treated like exit strategies for unicorn founders instead of raising capital for companies to expand. During the Covid lockdowns, people turned to the stock market as an outright source of entertainment…
Walk through a mall and insurance companies, banks, foreign exchange and credit cards are what you see.
It’s all a bit depressing, if you ask me. But in 2022, once again, non-financial assets struck back at the financial blood suckers. From wine to sneakers, everything seems to have outperformed the stock market and bond market last year.
Investment-grade wine’s Liv-ex 1000 benchmark recorded a 13.6% increase through 2022 and a 44.6% rise over five years.
Rare whisky prices rose 21% in 2022, but that’s for a basket of holdings. There were some standout individual performers too. The Macallan 18-Year-Old Single Malt Scotch Whisky increased from $463 in 2020 to $1,209 in 2022.
Now, you can consider me sceptical about some of the statistics here. Whisky Stats has a level of detail that makes me a little suspicious. This from June last year is really pushing it, if you ask me:
From December 2019 to April 2022, our Islay index more than doubled as it moved from 200 to 400 points. This month though, the historically 100 most traded Islay whiskies lost -6,2% in value. We observed a similar setback last August and September when the index gave way by -6%.
But still, you get the idea. Consumption items with some sort of vintage performed well during a disastrous year for purely financial asset classes.
Gold also posted a small gain during the worst year ever for a 60/40 portfolio of US stocks and bonds. The gains were bigger in other currencies.
Going by the shortages and backlogs at gold and silver dealers around the world, sellers commanded quite a substantial premium this year too. Silver American Eagles sold at almost 100% above the corresponding metal price. One politician even demanded that the government make more to address the issue.
Gold, silver, wine, whisky and diamonds are topics I’ve covered several times in detail over the course of my career. But my old friend Sam Volkering added two angles I didn’t know much about in a recent issue of Exponential Investor.
I hope you enjoy his own take on the same topic below…
***
Watches and shoes beat the stock market
By Sam Volkering
Overnight, my publisher, Paolo Cabrelli, sent me a Barron’s article.
The headline read:
Over a decade, Rolex watches outperformed the stock market
The title itself most aptly describes the content of the article. Therefore, I won’t rehash it all. Instead I suggest you go and read the article yourself here.
However, there is a solid point to the article. Albeit I don’t believe the article itself quite unearths the prescient point.
As an investor, most often you will turn your mind to the stock market. I think for most people the minute you hear “invest” that’s where you tend to think.
Your mind turns to stocks and shares, iconic bourses around the world, and acronyms such as LSE, NASDAQ, ASX, etc. More recently, a progressive investor might also think about another asset class like crypto.
Of course, you may also be thinking about commodities, precious metals, property, bonds and yes, … quite possibly something like watches.
In fact, the very fame of stock markets may produce a bias that leads investors astray from thinking about the real aim of investing – buying something at a price and selling it for a higher price, and hence turning a profit.
In the most simple terms, the aim of investing is to generate a superior real return.
Thinking of investment like that opens the door to opportunities – and a certain amount of fun – in a huge variety of different markets.
Big gains from… shoes
On market I think is overlooked because it’s widely misunderstood is the sneaker market. But I think if you do a bit of research, and have a bit of “love for the game”, you can make it work for you.
On 16 February 2021 I bought some shoes.
Not just any old shoes though. They were golf shoes.
Not just any old golf shoes though. They were Jordan 4 Retro Golf shoes in “White Cement”.
I bought these for £169.95 through the Nike “SNKRS” app. This is an app where you can get onto limited release and special edition sneakers from the shoe and apparel giant, Nike.
My original plan for buying these (rather expensive) sneakers-come-golf shoes was to one day actually wear them. As it stands though, I also knew in the back of my mind there was a good possibility that over time these might actually appreciate in value.
There were three reasons for this:
- This particular version of the Jordan sneaker was iconic from the late 1980s, as Michael Jordan was fast becoming the most famous athlete on earth.
- This particular colour combination was the original colour combination used in the original catalogue advert also back in the late 1980s.
- Being golf shoes, these were even more unique, rare and potentially valuable.
Hence, since they were delivered to me in late February, they have not been worn, but have remained in their box in a footstool in my office.
As I say, I do still have intention to wear these (one day) for a special round of golf, perhaps if I ever get to go around Augusta National or St. Andrews.
But, after seeing the article this morning about appreciating Rolex watches, I started to wonder what my Jordan 4 Golf Shoes are currently fetching in the market.
Yes, that’s right, in the “market”.
In case you’re unaware of it, the market for sneakers is red hot. If you’ve got the right kind of sneaker in the right colour combination you can fetch thousands of pounds for the best of the best.
Crucial, however, to this market is that the shoes are unworn, in their original box. So… it does pay to be a bit of a hoarder.
For example, if you’re a real sneaker-head and happen to have an original pair of Jordan 1 sneakers in the “Chicago” colour set from 1985, unworn and in original box, you can fetch as much as £27,000 (US$32,500) for them – that’s the current lowest ask price for a pair on StockX.
For some perspective, in 1985 the shoes were $65. That’s a spectacular 49,900% return in 37 years.
And you don’t even need original ones to have made a pretty penny. Nike realise they can release these shoes over time, same edition, same design, and make a mint from them. There is an opportunity for savvy investors, too.
The current asking price for a 1994 pair of Jordan 1 sneakers in “Chicago” colours is £3,947 (US$4,750) – with the original cost having been $80. That’s a healthy 5,837% return in 27 years.
The current ask for a 2015 pair of Jordan 1 sneakers in “Chicago” colours is £911 (US$1,100) – against the original cost of $160. That’s a 587% return in seven years.
So you can see that even the newer shoes can fetch a pretty penny.
Not life changing, but could be life boosting
Sadly there was a release in late November last year of Jordan 1 sneakers in the “Chicago Lost and Found” colour scheme. I missed that drop; I think I just missed my alarm as I was changing my son’s nappy – but that cost me.
These were retailing at US$180 in November. There was a sale this morning at US$500. That’s a 177% return in two months. For a pair of sneakers.
As for my Jordan 4 golf shoes in White Cement… the good news is that the last sale of a pair in the size I’ve got was at £399. So while it’s not quite the coin I’d get from a good pair of Jordan 1 sneakers, I’m still up around 134% on a pair of sneakers – and that is in less than two years.
Sure, this isn’t life-changing money. But perhaps it’s not a bad market to look at for a number of smaller wins.
If the stock market isn’t getting you up and excited about something, there’s plenty of other markets you can look to in order turn a profit. Rolex watches might be a bit out of reach for buying and selling as an investment. But sneakers? Well, I reckon most people could participate in that market with the right mindset and approach.
The worst-case scenario is that you’ll at least have a comfy pair of sneakers to wear one day.
***
Nick Hubble
Editor, Fortune & Freedom
