By Brett Arends
Wall Street isn't wearing Prada - but you could buy a piece of it
You may not be the kind of person who spends thousands of dollars on a designer handbag, but you can probably afford a piece of the manufacturer.
If you want to tax the rich, don't turn up at the Met Gala in New York City wearing a &#34;tax the rich&#34; dress, like U.S. Rep. Alexandria Ocasio-Cortez did a few years ago.
Instead, just encourage all the rich people there to keep doing what they're already doing - namely spending ridiculous amounts of money on ridiculous designer clothes. It was Edward Gibbon, the great historian of ancient Rome, who first observed that luxury goods constituted a &#34;voluntary tax&#34; that the rich paid to the people who produced those goods.
But you don't produce them, you may argue.
True, but you can still get in on the action. One of the great things about capitalism and the stock market is that with a few dollars and the click of a mouse, anyone can make themselves the partial owner of a business.
Read: 'The Devil Wears Prada 2' is here - but the glory days of magazines like Vogue are long gone
Many of the world's most famous designer brands are traded on the stock market and are yours to buy a piece of. Even though many of the companies are European, ADRs - effectively a U.S. version of their shares - are freely traded on Wall Street.
And, as if on cue, those shares been falling in price lately.
Paris-based fashion house Prada (PRDSY) has fallen by a fifth so far this year. How good is the brand? Try launching a movie starring Meryl Streep and Anne Hathaway called &#34;The Devil Wears Gap.&#34; Or &#34;The Devil Wears Lands' End.&#34;
Good luck with that.
The sequel to &#34;The Devil Wears Prada&#34; just had a terrific opening weekend, taking in $77 million in the U.S. and $233 million globally, according to Variety.
This is 20 years after the original film came out. Go figure.
You may not be the kind of person who can pay as much as $300,000 for a Birkin handbag, but for $185 you can own a single share in the bag's manufacturer, Hermès (HESAY). The price has fallen by a quarter this year (the price of the stock, not the price of the handbag).
LVMH (LVMUY) owns a whole suite of luxury brands, among them Christian Dior, Guerlain, Givenchy, Tiffany, Fendi, Bulgari and TAG Heuer, along with the two - Louis Vuitton and Moet &amp; Hennessy - from which it derives its name. It also owns Sephora. It's the behemoth and the bellwether of the industry and was built, and is run, by the legendary Bernaud Arnault.
The stock has fallen 30% this year.
Kering (PPRUY), whose brands include Gucci, Saint Laurent and Balenciaga, is down 25%.
And Swiss-based Richemont (CFRUY), whose brands include Cartier, Piaget, Jaeger-LeCoultre, Dunhill and Montblanc, is down 14%.
So too, is Ferrari (RACE). At $336 per share, the stock isn't cheap, but it's a lot cheaper than the cars - which start, if you can believe it, at $250,000.
Actually, none of these stocks look desperately cheap in relation to their fundamentals. But they also don't look especially expensive, typically trading at around 20 to 30 times forecast earnings.
Prada is actually the cheapest, selling for a modest 12 times forecast earnings and offering a 4% dividend yield.
Why have these stocks been falling lately? You can blame it in part on the crisis in the Persian Gulf, says Joanna Sawicka, manager of the U.S. Global Investors Luxury Goods mutual fund USLUX. Stock-market sentiment around luxury goods often moves in line with sentiment around travel stocks, she says. That's not just because both industries try to capture the discretionary dollar, but also because luxury goods are so often bought by people while traveling. (The inner courtyards of the legendary Raffles hotel in Singapore, for example, are now effectively a shopping mall of luxury watch boutiques).
But these companies have also faced headwinds from the sluggish economy in China, which accounts for a big and growing share of global luxury sales, Sawicka says. &#34;The big question mark for me is what's going to happen in Asia,&#34; she says, adding that what would really set the stocks alight would be a recovery in Chinese travel numbers.
The crisis in the Persian Gulf will presumably be resolved at some point. Meanwhile, over the longer term, the number of millionaires and multimillionaires and billionaires in the world continues to rise, especially here in the U.S.
If you want to bet on growing inequality, bet on luxury.
-Brett Arends
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05-06-26 1410ET

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The article discusses the luxury goods market and suggests that encouraging the wealthy to continue spending on designer items could serve as a form of taxation. It highlights the decline in stock prices of major luxury brands like Prada, LVMH, and Kering, attributing this to economic factors such as the crisis in the Persian Gulf and a sluggish Chinese economy. Despite the downturn, the article notes the increasing number of wealthy individuals globally, indicating a potential for growth in the luxury sector.

Dow Jones

PRADA

Louis Vuitton

Kering

Kraneshares Global Luxury Index ETF

Tema Luxury ETF

Hermès

Richemont

Compagnie Financiere Richemont SA

Ferrari

U.S. Global Investors

Want to tax the rich? Encourage them to keep spending ridiculous amounts of money on designer clothes.