The Lap Of Luxury

Audrey Hepburn had Breakfast at Tiffany's in the 1961 film. But Tiffany & Co. doesn't just do breakfast; its main concern is luxury goods, specifically jewellery and silver items. There are many types of luxury goods on sale worldwide from Cartier watches to Aston Martin cars and all have one factor in common; each represents an expensive alternative to other goods which perform the same function.

The luxury goods business thrives when incomes are rising because, as any economist will tell you, peoples' spending upon luxury goods increases by a greater proportion than any increases in their income.

Whilst billionaires will keep on buying yachts and football clubs even in the teeth of a global recession, the high-earning part of the population does suffer a bit and thus the sales of luxury goods have taken a bashing during the global recession. Importantly for investors, luxury goods are sold all over the world so their manufacturers are not particularly exposed to the economy of any one country.