In New York’s Chelsea, I wandered into a Rolex store with a friend. It was packed with young customers, sipping coffee at the in-house bar while waiting for service. Rolex, like Hermès with its Birkin bags, is a brand where products are not simply sold to anyone; customers must build a track record of loyalty before being offered the most coveted pieces. It was a striking image of wealth, exclusivity and aspiration.
The idea of a watch being a long-term investment piqued my curiosity. Chatting about the buzz I experienced in the Rolex store, I discovered how many people are devoted collectors, eagerly swapping stories like traders exchanging stock tips.
For me, a watch has always been functional. But in that moment I realised that, for others, it’s an asset class, a passion, an investment portfolio. When it comes to luxury, I’ve always told clients to buy the shares, not the products. That sparked the thought: What if these luxury icons, from Birkin bags to Rolex timepieces, weren’t just indulgences but investments that rivalled the S&P 500, especially in the current climate where luxury companies have come under pressure from geopolitical instability, a slowing global economy and shifts in consumer demand to subsistence living.
Prestige, though, comes with headaches
I tested my thesis comparing the returns generated by the S&P 500 with a portfolio of four iconic pieces.
The Louis Vuitton steamer trunk — the grand voyage companion that is prized as a symbol of elegance and adventure. It’s the ultimate showcase of a bygone era when travel meant ocean liners, Orient Express journeys, and packing half your wardrobe into a monogrammed chest. Impractical today, but owning one once carted by Hemingway or seen in the movie Titanic is a story in itself.
The Hermès Birkin — the handbag that became a waiting-list legend. Retailing at $6,000 in 2005 and fetching $18,000–$22,000 now, Victoria Beckham amassed hundreds, while one episode of the popular television series Sex and the City made it the storyline. Scarcity turned into status; status into soaring value.
The Rolex Daytona — the motorsport chronograph that transformed into a cult timepiece. Retailing at $10,000 in 2010, now trading at between $25,000 and $40,000, Paul Newman’s sold for $17.8m, making it the most expensive watch ever auctioned. Today Jay-Z and David Beckham wear theirs proudly.
The Ferrari 250 GTO — a rare thoroughbred for well-heeled motor enthusiasts. Only 36 were built in the 1960s, each a masterpiece; now the ultimate trophy car sells like a fine painting. These racy items cost $10m-$15m in the early 2000s but now fetch between $48m and $70m. Raced by legends, owned by Ralph Lauren, they are described as “the most valuable car in the world”.
Twenty years ago, the S&P 500 index sat near 1270. Today it’s around 7000 — a handsome 700% gain if you include dividends. Solid, steady and liquid. Though it is difficult to uncover dependable auction results and standardised second-hand sale prices, the Birkin has tripled, the Daytona doubled or tripled, steamer trunks have doubled, and the GTO has multiplied several times over. The S&P may have outperformed most, but each asset comes with something no tracker fund can offer: the thrill of owning assets that carry bragging rights and embody romance and glamour.
Prestige, though, comes with headaches. Birkins need climate-controlled storage, Daytonas need servicing, trunks don’t fit in modern cupboards, and a GTO requires a museum-grade garage. Insurance, liquidity and authenticity are constant concerns.
So perhaps my old advice — buy the shares, not the products — needs a caveat. Shares offer liquidity, dividends and diversification. But the products have delivered enviable profits. Of course, that comes with inconveniences such as storage, insurance, and the occasional raised eyebrow at airport security.
Yet maybe that’s the point. Luxury isn’t just about financial return — it’s about status and scarcity. It’s about social standing and the stories you can tell. The index tracker compounds wealth; the icons compound glamour. And in the end, maybe that’s the return luxury owners seek.
David Shapiro is a stockbroking doyen and chief global equity strategist at Otto1890
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