Are Birkins and Booze the New Gold Standard?

Stocks are for rubes. Turns out the world's hottest handbag is a great place to stash your cash

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Feb 06, 2016 at 8:01 AM ET

Sporting an Hermès Birkin Bag may be the ultimate status symbol for a certain type of woman, but it’s more than just an accessory—it also seems to be a very lucrative investment. A recent study by luxury handbag retailer Baghunter found that the Birkin delivered a better return over the past 35 years than both gold and the S&P 500. Rejoice, all ye who are desperately seeking justification to splurge on one.

On the surface it certainly does seem that a Birkin bag is a less risky, more rewarding investment than either a portfolio that mimics a major stock market index or solid gold. But you’ve also got to consider that, unlike stock and gold, the value of a particular Birkin depends on its finishes (the more exotic, the more valuable) and its condition. So, in that sense, it’s probably more productive to compare it to other luxury goods. A Vocativ analysis stacked it up against a well-regarded bottle of 1996 Chateau Lafite Rothschild and found the two had almost exactly the same average rate of return.

The annual rate of return since 2000 for the wine is 14.05 percent—a similarly solid number, but investor beware: at one point the 1996 Chateau Lafite Rothschild, along with many other exceedingly valuable bottles, experienced a large price bubble that burst in rather spectacular fashion after Asia’s interest in collectible wines waned.

Stocks and gold are, of course, subject to similarly unpredictable fluctuations. According to Baghunter’s study, between 1980 and 2015 the S&P (which represents the performance of the 500 largest companies traded on the stock market) had an average real return of 8.65 percent. In its best year it had a return of 37.2 percent, but it’s low was -36.55 percent (during the financial crisis of 2008). Gold’s average was significantly lower, at just 1.9 percent. Its rate of return fluctuated between 14.3 percent at its peak and -7.9 at its low point.

The Birkin bag, on the other hand, had a large average return at 14.2 percent, but it was also a far less risky holding. While its value fluctuated over time, it always increased—with its highest annual return at 25 percent and it’s lowest at just 2.1 percent (as a result of the recession in the early 1980s).

Before you run to your nearest Hermès store and hand over all your hard-earned cash, it’s important to consider a few things. For one, very few people buy gold or a stock and hold it steady over the course of 30 years. So, depending on your timing, you could have reaped far greater gains playing the market or trading gold than buying handbags.

Another crucial point is that while people may love its elegant lines and striking finishes, much of the Birkin’s appeal is that it’s in such astonishingly limited supply. Almost any old person can hop online and buy stock, but not so for the elusive Birkin. There can be a wait list of up to six years to score a new model—and that’s if you have a connection at Hermès. The other hurdle is that the most basic version starts at about $12,000 (and can soar to more than $200,000), making the bag out of reach for many mere mortals.

For all of these reasons, it’s unlikely to that hoards of investors are going to suddenly pad their portfolios with Birkins based on this news. But, at the very least, these numbers will please bag-hungry buyers who are eager to justify such a sizable purchase—though anything can happen. Just because they’ve proved solid as a rock for the past 30 years doesn’t mean Birkins are bubble-proof. So your most foolproof option is probably to buy a Birkin and fill it with bars of solid gold.

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