December 23, 2021

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TOGETHER WITH

This is our final edition of 2021, but we'll be back in full swing on January 4th.

We wish you all a joyful and restful holiday and a very Happy New Year!

Before we jump in, here's the opening trivia for the day: What is the world's most valuable luxury brand in 2021? a. Hermès, b. Chanel, c. Louis Vuitton. Follow the wave 🌊 below for the answer.

And a few notable trending investing topics to close out the year:

Trending with young investors—bet on people, not stocks
Creative cyber-sleuths pirate 'MetaBirkin' NFTs
The strength of luxury brands

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INVESTING

Trending with young investors—bet on people, not stocks

by Katka Opocenska

Elon Musk is known for his ability to move the markets with a single tweet, thanks to his large followership of mostly Millennial and Gen Z investors. Last week, Dogecoin gained over 20% after Elon Musk tweeted that Tesla would accept it as payment for some of its merchandise. This wasn't the first time the self-proclaimed "dogefather" sent the popular coin "to the moon."

However, Elon Musk isn't the only celebrity young investors enjoy tracking and copying. High-profile investors like Wall Street veteran Cathie Wood (CEO and CIO of ARK Invest) and venture capitalist Chamath Palihapithya (CEO of Social Capital) each have well over 1 million Twitter followers who are frequently inspired by their narratives and actions.

Cathie is admired by the young generation for her bold predictions and unapologetic bets on innovative technologies such as genome sequencing, AI, and blockchain. Chamath, called the "King of SPACs" by Bloomberg, gained a lot of popularity after openly siding with retail investors in the GameStop drama earlier this year.

The rise of the social investor

Recently, some young techies have taken things even further and purposefully designed their whole allocation strategies around popular business leaders. For example, this 26-year old San Francisco entrepreneur allocated more than half of his entire portfolio into funds and stocks backed by the above-mentioned names. On top of that, he also copies mutual fund manager Ron Baron and allocates 10% of his portfolio to Ethereum and his visionary founder Vitalik Buterin.

The investor says the approach of betting on people rather than stocks is not only aligned with his values but also has historically over-performed the market. While he's aware of the lack of diversification, he—just like many other young investors—doesn't seem to be too worried about it.

The takeaway

Following the strategy of proven celebrities may produce superior returns in the near term, but by the time you've replicated one of their trades, you may be days, if not weeks or months behind them. Don't let starry-eyes blind you from the basics like diversification, downside protection, and minimizing fees and taxes.

Putting things in perspective may also help you size your bets. Celebrities may be talking up securities that represent a tiny sliver of their portfolio. If that's the case, your copy-paste trade should also be weighted accordingly.

Katka Opocenska is co-founder of Assetclass.app, a modern portfolio tracker that helps retail investors connect and manage all their stock + crypto accounts in one place.

CRYPTO ASSETS

Creative cyber-sleuths pirate 'MetaBirkin' NFTs

'Not Your Mother's Birkin' by Mason Rothschild

ICYMI, 'Not Your Mother's Birkin' is the tagline of New York-based digital artist Mason Rothschild's highly successful NFT line that features fur-laden designs of Hermes' classic Birkin handbags. The line saw sky-rocketing bids—some even close to the price of an actual Birkin bag (which ranges from $40K to $500K for a single bag)—until Hermes publicly came out to confirm that these aren't, in fact, your mother's Birkins.

"Hermès did not authorize nor consent to the commercialization or creation of our Birkin bag by Mason Rothschild in the metaverse" is what the Parisian fashion powerhouse said in its official statement to Financial Times.

To add insult to injury for Rothschild, the artist recently discovered that his Meta Birkins were being pirated and sold on the internet. A gang of cyber sleuths decides to serve vigilante justice by knocking off Rothschild's knock-offs.

What this says about NFTs and online retail

While NFTs are a relatively secure method of online retail, they are far from being as bulletproof as previously thought. Retail crime worldwide is on the rise, and e-commerce, while safer than its physical counterpart, does not offer a viable solution to the complex issues of copyright infringement, piracy and customer data privacy.

Retail crime in numbers:

A whopping 92% of all US consumers have completed at least one online transaction to date. The country currently boasts over 230 million e-commerce patrons. These numbers suggest that safety in e-retail is an issue that affects many more people than we'd like to believe.
21 retail CEOs have recently asked for congressional assistance with theft. Many of these cases have been related to online data theft and forgery. C-suite executives and other retail top dogs coming out in the open about the issue suggest it requires immediate attention.

Our take. You might or might not be interested in your mother's Birkin, but you should take an avid interest in following her advice: The internet can be a scary place. Only buy original, trademarked products from verified retailers online.

🖼️ New to NFTs? Take this bite-sized quiz on the basics. (Every correct answer earns you 10 Dibs or gold coins on Finny, and then redeem them for rewards.)

NFT Basics

Crypto & NFTs

7 mins

MARKETS

The strength of luxury brands

Speaking of luxury bags...

One might expect that the global pandemic we've been grappling with for the last couple years would take a notable toll on discretionary sectors of the economy, right? Well, it would be an astute assumption after all, especially if Americans were enduring recession-esque financial hardships, but this economic blip caused by Covid hasn't been quite so uniform.

As a result, some of the niches you might expect to suffer the most have actually become increasingly prosperous throughout this time.

Luxury brands have shown a surprising level of resilience and their global sales figures have handily beat out the sales of their more mundane retail counterparts. Going into 2022, luxury goods sales in the US and Europe are expected to grow as much as 25% next year (vs. '19), while non-luxury goods should see a flat to 5% increase. Here are a few reasons why:

E-commerce: Luxury brands have traditionally leaned more so on physical locations to sell their products, usually preferring and assuming that a real-world experience would be the most suitable way to exemplify their products' craftsmanship. The pandemic taught them a lesson though: that consumers are more than willing to buy luxury items online. 23% of luxury sales happened online in 2020, up 12% from 2019 and expected to touch 30% in the next 5 to 10 years.
VR and the metaverse: Luxury brands are also beginning to take advantage of opportunities in the virtual world, where they can sell augmented products that users can apply to their online avatars. Gucci sold digital versions of one of its popular bags on Roblox for about $4.75; they got so popular they were resold on the platform for thousands of dollars (more than the price of the physical bag). Yep, there's a market for things like this, it's growing rapidly and brands are getting ready.
Domestic-specific strategies: With a lack of tourism in both US and Europe, and potentially for the foreseeable future, luxury brands have had to reduce their reliance on tourists, such as from China, buying their goods in these markets. Rather, they brought their stores to these tourists' domestic markets which have shown great results, particularly in China, Korea and other Asian markets. And in the US, more stores are being opened in overlooked areas on shorter-term leases as these brands continue to test their domestic strategies.

Related luxury goods brands & funds: Hermès, LVMH Moet Hennessy Louis Vuitton, Bally, Emles Luxury Goods ETF (US-listed), Amundi IS S&P Global Luxury ETF (UK and Italy listed)

ASHU'S CORPORATE CORNER

Today's Movers & Shakers

Novavax (-4%) even as it reported that its 2-dose vaccine showed a strong immune response against the omicron variant
Macau gaming stocks are up after fears of new regulations declined; Las Vegas Sands (+4.2%), Wynn Resorts (+3.4%), Melco Resorts (+5.2%), and MGM +1.1%
Tesla (+4%) rose after Mr. Musk contracted himself from an earlier tweet (that he's done selling stock to meet his tax liability) with a new one that he "almost done"
JD.com (-7.8%) after Tencent will sharply reduce its stake in the Chinese e-commerce company
Nikola (+20%) said the company delivers its first EV truck with more on the way
Mission Produce (-9%), the producer of fresh produce, missed on revenues and profit estimates
Crocs (-11%) will purchase a private rival Heydude for $2.5 bn
Ortho Clinical Diagnostics (+16%) will be bought by Quidel (-7.2%) for $6 bn in a cash and stock deal
SciPlay (-18%) ended talks to sell itself to Scientific Games (+8%)

This commentary is as of 9:03 am PST.

🌊 BY THE WAY

Answer: The top spot goes to Louis Vuitton. Next is Chanel, then Hermès at a close third. See the list of the world's most valuable luxury brands in 2021 (Statista)
👜 Wait, what do luxury handbags have to do with investing? South Korean shoppers are lining up at dawn for the 'open run' on $9,500 Chanel bags (Bloomberg)
My journey to managing my own money—an investing perspective from a recent retiree, Maria McDaniel (Finny Member Stories)
🙋 In your opinion, what was the craziest thing that happened in the financial markets this year? Share your thoughts and we'll then publish the top 7 responses in the first edition of The Gist in 2022 (Email us here!)
Has estate planning been on your mind this year? If so, check out Trust & Will*—they make the process of setting up your will, trust, or nomination of guardianship as simple as possible (Trust & Will)
Finny lesson of the day: If you're new to investing and looking to get an insight or two on how to value stocks as you look to invest, look no further. Every correct answer earns you 10 Dibs or gold coins on Finny, and then redeem them for rewards.

Valuing Stocks

Investing Basics

6 mins

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The Gist is Finny's twice a week (Tues & Thurs) newsletter covering personal finance & investing insights and money trends. Finny does not offer investment and stock advice. The editorial team: Chihee Kim, Austin Payne. Ashu's Corporate Corner is brought to you by Ashu Singh.

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