Why are luxury brand stock shares less expensive than non-luxury brands/companies?
I get that less people can afford luxury items, but what does that mean for investors?
Answers | 2
One current factor that may contribute to your perception is the effect of a falling yuan on the world’s largest group of luxury shoppers, the Chinese. When their currency loses value, imported luxury goods become more expensive, so they buy less. U.S. based companies that cater to foreign buyers are hurt by the strong dollar.
It's not the category itself that is more/less, It is the intrinsic value of the firm itself that has meaning for investors. In the short run, the market acts like a voting machine. Over the long term, the market acts as a weighing machine. This works in both the macro & the micro.
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