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If luxury stocks are a good inflation hedge, why isn’t anyone buying?


For trinkets bought by the wealthy, inflation is much higher than for everyday groceries. Even with this attractive hedge, luxury stocks are unlikely to take off.

Luxury products have an advantage over other consumer products: when high-end brands charge more, their designs can become more appealing to status-conscious shoppers. This gives the industry a reputation for providing investors with inflation protection. Over the past four decades or so, the extremely well Forbes Cost of Living Index, which tracks the price of goods and services such as luxury handbags, expensive watches and property management fees, has risen by 5% per year, compared to 3% gains in the Consumer Price Index in the United States.

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