Welcome to the Blingdex

By
Managing Real Estate Broker with San Diego Previews Real Estate CA BRE# 01101958

Bling in RedLuxury is booming and Wall Street is keeping a keen eye on how the rich are spending their wealth. And what better way to measure that hedonism than by creating a variety of indexes that track the shopping of the ultra-rich?  The demand for four-figure handbags, five-figure baubles, six-figure cars, seven and eight-figure homes, luxury resorts and travel,  insurable art and heady wines has created a new and trackable economy for the very wealthy.

What intrigues many investors is how well the carriage trade merchants are faring. This is mostly due to the fact that the rich are getting richer and their numbers on a global basis are growing-along with their spending habits.  A look at some of these uber-wealth tracking indexes reveals more than a little about the favored products and shopping stops of the rich. For example, sales at Saks Fifth Avenue and Barney's New York are increasing at twice the level of the retail sector as a whole. Some of the indexes and the luxury companies they track include:

  • .Merrill Lynch tracks a basket of companies including BMW, Porsche, Bulgari, Coach, Tiffany Jewelers, auctioneer Sotheby's and the private banking firm Julius Baer. The performance? Up 23 percent in 2005 and 12.5 percent in 2006. This compares to the respective 14 and 7 percent for global consumer stock during the same periods.
  • Citibank's Plutonomy Index tracks world spending of the world's growing class of plutocrats. This index mirrors much of Merrill's, but also includes Japan's highly regarded Shinwa Art Auction and Hong Kong's Mandarin Oriental Hotel Group. We might call this one the "ruler of wealth."
  • Deutsche Borse introduced its own World Luxury Index earlier this year. It tracks Bulgari, Sotheby's, Hermes International and requires that the companies it tracks generate at least 50 percent of its income from luxury spending.

What is the appeal of these indexes? Some surmise that those who can't afford the lifestyle of the ultra-wealthy can still be "in the money" by investing in so-called luxury stocks. Finding true luxury stocks can be a difficult task, though. Many of these high end brands are now part of larger conglomerates. And because publicly-traded pure luxe companies are becoming so rare, many of the indexes are including brands such as Nike, Puma, Gap Stores, Harley Davidson and other popular products in their mix.

The reason for this interest is obvious. The rich are getting richer-and are far more numerous. The number of millionaires in the US has more than doubled since 1995 and total wealth held by the top 1 percent has increased by more than 50 percent since 1998 (much due to real estate appreciation, I'm sure). It should come as no surprise that luxury spending has kept pace with the soaring incomes and wealth at the top rung of of the economic ladder.  And according to a Citigroup study, the top 20 percent of American earners are responsible for between 37 and 70 percent of total consumption.

And what is fueling this consumption? It's the desire to have the finest in homes, travel, dining, dress, art and social connections, according to Margaret Mager with Goldman Sach's High-End Consumer Index. "Today the good life is defined by the assets you have," she said.

Tip of the top hat to Robert Frank and The Wall Street Journal Wealth Report

Search San Diego Real Estate and MLS

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Location:
California San Diego County San Diego
Groups:
Everything California
Tags:
luxury
tiffany
bling
wealthy
ultrawealthy
world luxury index

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Ambassador
3,919,395
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Fascinating post, Roberta. We've broken the 9 figure barrier for homes (a few times), and of course there are some recent arts sales in that range as well. It's intriguing not only to watch the spending patterns themselves and the creation of products and services upon money can be spent, but also the businesses that have sprung up to track it, count it, predict it, encourage it and, of course, make money off of it. Enjoyable reading. You are such a good writer - your journalism background shows...well.

Jeff

Apr 22, 2007 12:17 PM #1
Rainmaker
197,711
Roberta Murphy
San Diego Previews Real Estate - Carlsbad, CA
Carlsbad Real Estate and Homes
Jeff: Thank you! There is one other informal indicator: I was speaking with a local plastic surgeon about this very subject. He said that when real estate business drops off, so does his business. 
Apr 22, 2007 04:35 PM #2
Rainmaker
3,049,971
Tony and Suzanne Marriott, Associate Brokers
BVO Luxury Group @ Keller Williams Arizona Realty - Scottsdale, AZ
Serving Scottsdale, Phoenix and Maricopa County AZ

Now - if we could only get the contact info for the clientele at this level - what a demographic farm that would be!

Apr 22, 2007 11:35 PM #3
Ambassador
2,286,945
1~Judi Barrett
Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745 - Idabel, OK
BS Ed, Integrity Real Estate Services -IDABEL OK

Interesting post. Knowing how and where the money is spent can be a very worthwhile thing to accomplish.

Apr 22, 2007 11:48 PM #4
Rainer
225,598
Diane Bell, Hilton Head Real Estate, Bluffton
Charter 1 Real Estate, Hilton Head, Bluffton, SC - Hilton Head Island, SC
I thought I had heard it all until I read an article in a recent Entrepreneur magazing that detailed a gal who is selling ultra bling bling high end cosmetics.  Her mascara product sells for upwards of $550.  Now who in the world would pay that price?  Well, guess what?  She's selling the product!
Apr 22, 2007 11:58 PM #5
Rainmaker
197,711
Roberta Murphy
San Diego Previews Real Estate - Carlsbad, CA
Carlsbad Real Estate and Homes

Tony: Absollutely!

Judi: That's what luxey stockpickers think, too! 

Diane: I'd hate to drop that one out of my bag....

Apr 23, 2007 01:03 AM #6
Rainer
248,927
Desiree Daniels
RE/MAX Tri County - Robbinsville, NJ
Great headline... very catchy... thanks for the information and congrats on the feature post.
Apr 23, 2007 01:28 AM #7
Rainer
23,647
Daniel Gates
Insure Consulting - Palm Bay, FL
And people think we have a weak economy, hogwash.
Apr 23, 2007 01:32 PM #8
Rainmaker
246,926
Gena Riede
Riede Real Estate, Lic. 01310792 - Sacramento, CA
Real Estate Broker - Sacramento CA Real Estate (916) 417-2699

Roberta, great information. Just the other day when I was at "Cats," someone was saying that it seems the rich are getting richer and the poor, poorer with no middle class.

I second the request for the farm and definitely wouldn't want that mascara...I'd be using it for years and you know what happens when you use OLD mascara.

Featured in Everything California

Apr 23, 2007 02:04 PM #9
Rainmaker
197,711
Roberta Murphy
San Diego Previews Real Estate - Carlsbad, CA
Carlsbad Real Estate and Homes

Desiree: A thousand blings!

Daniel: I agree 1000 percent.

Gena: It might be a return to the way societies have been for thousands of years. Still, it would be fun to try the mascara, yes?;-)

Apr 23, 2007 04:50 PM #10
Rainer
22,791
Sandra Williams
Rancon Real Estate - Temecula, CA

I think it is easy to look around and immediately see how all of our two income families are stretched to the max just to give their families nice homes---not amazing homes, just nice homes. We forget the wealth that is all around us. Sometimes it is just nice to sit back and enjoy!

Come see great homes at www.AtHomeinTemecula.com

Apr 24, 2007 10:01 AM #11
Rainmaker
147,071
Kaye Thomas
Real Estate West - Manhattan Beach, CA
e-PRO, Manhattan Beach CA

Roberta- We are seeing 8 figures on property along the Strand  in MB and a few  have sold between $8,000,000- $9,500,000 that will be torn down so you can guess what prices will be put on homes when built out.. there is a lot of money in these little beach towns and people are willing to spend it on prime locations...

Do you suppose the mascara is one coat?

Apr 25, 2007 12:33 PM #12
Rainmaker
197,711
Roberta Murphy
San Diego Previews Real Estate - Carlsbad, CA
Carlsbad Real Estate and Homes

Sandra: We do lose sight of that at times!

Kaye:  Ditto for beach areas in San Diego County. As for the mascara, I'd just like to peek at their secret formula! Better hope it's one coat...;-)

Apr 25, 2007 04:29 PM #13
Rainmaker
147,071
Kaye Thomas
Real Estate West - Manhattan Beach, CA
e-PRO, Manhattan Beach CA
Roberta- About  the mascara.. I started thinking.. if you can afford  $500 per tube.. it doesn't how many coats.. Sometimes people have too much time and money on their hands.. just think what you could do for the price of a few tubes of mascara..
Apr 25, 2007 06:35 PM #14
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
197,711

Roberta Murphy

Carlsbad Real Estate and Homes
Ask me a question
*
*
*
*
Spam prevention

Additional Information