First of all: I don't want to talk down anyone's investments here. Everyone has their own strategy - that is important and right. Nevertheless, I am sharing my personal assessment of luxury stocks such as LVMH, Christian Dior, Moncler, Prada, etc.

In the years 2020 to 2023 - during and after the pandemic - the luxury sector experienced a real boom. Restrictions in everyday life, no restaurant visits, canceled vacations - many people suddenly had more money in their bank accounts that they actually wanted to spend. And what happened? The luxury companies' marketing machines were running at full speed. Influencers, FOMO, exclusivity - luxury became the new must-have.

T-shirts that might cost 1 dollar to produce were sold for 500-1000 dollars. Bags without a logo were suddenly considered worthless. And champagne only Moët, please - nothing else. You either belonged - or you didn't. Clever hype, without question. The companies were delighted. Record sales, new stores, more staff.

But now? Inflation, price rises, economic headwinds. Official inflation may be 0.3-0.4 % - in reality, we are all feeling something completely different. Housing, food, travel - everything is becoming significantly more expensive. And this is having an impact: the middle class, which helped fuel the luxury boom, is slowly returning to its senses. A Gucci shirt for 1000 dollars? No longer bought. Many items end up on platforms second-hand at a 90% discount - in the hope of getting at least a fraction of the money back.

Of course, there is always a small target group that can and wants to afford real luxury - no question about it. But the mass hype? Over in my opinion. Similar to watches, Pokémon cards, expensive wine & whiskey - it was a trend. And trends pass.

The current economic and geopolitical outlook does not exactly point to a new boom in this sector. There is also a growing awareness: Paying $1,000 for a shirt that's already crumbling after seven washes doesn't exactly seem like a smart decision to many, looking back.

I don't want to make a blanket statement here: "Luxury is bad" - on the contrary, I love beautiful things just as much. But for me, it's not an investment, it's a desire, a pleasure - like a nice car or a good watch.

Conclusion: The current weakness of LVMH & Co. comes as no surprise to me. It will be interesting to see what happens next. But my capital is flowing into other sectors for the time being.

$MC (+0,4 %)
$MONC (+1,14 %)
$1913 (+2,75 %)
$BOSS (-4,3 %)
$RMS (+0,84 %)
$CDI (+0,7 %)
#luxus
#luxusmarken

$MC (+0,4 %) - Failed takeovers of LVMH

and activities of the children of Bernard

Arnault

Did you know the following:

In the late 90s, LVMH tried to take over Gucci, but CEO Domenico De Sole resisted.

He diluted the share price and gave employees a stake, weakening LVMH's control. Then Kering stepped in and secured Gucci.

He also tried Hermes:

In 2010, LVMH secretly acquired 17 percent of Hermès ($RMS (+0,84 %) ), triggering a storm of indignation. Hermès fought back with legal disputes and accused LVMH of insider trading and share manipulation.

After years of conflict, LVMH agreed to sell its 23% stake in 2014, ending the intense rivalry.

Who will be the next takeover candidate?

Thanks to all the successful takeovers, LVMH now has an extensive portfolio of 75 brands, which can be seen in the picture.

LVMH is the largest luxury company in the world.

The Arnault family:

Bernard will probably keep the company in the family. As he has five children who are already integrated into the company, these are the potential successors:

1. Delphine

2. Antoine

3. Alexandre

4. Frederic

5. Jean

Delphine (49) is Executive VP of Louis Vuitton.

Delphine has been with LVMH since 2001 and is in charge of brand development and strategy. She plays an important role in the success of LV.

Antoine (47) is CEO of Berluti and Chairman of Loro Piana.

Antoine focuses on expanding LVMH's presence in luxury fashion and plays a role in brand communication and acquisitions.

Alexandre Arnault (32) is CEO of Tiffany & Co.

Alexandre revitalized Tiffany by targeting younger audiences and improving its digital presence. As a result, profits doubled within a year.

Frédéric Arnault (29) is CEO of LVMH Watches. After being CEO of Tag Heuer.

Jean Arnault (26) is Director of Product & Communications at Louis Vuitton Watches.

Finally, a few examples of LVMH's pricing power and price trends:

$MC (+0,4 %)
$KER (+1,09 %)
$RMS (+0,84 %)
$MONC (+1,14 %)
$BRBY (+3,44 %)
$BOSS (-4,3 %)

Bought $MONC (+1,14 %) a 46.40€.

The rest of the portfolio 🚀

$MMM (+2,88 %) +40%

$SOLV WI (+1,84 %) und. (Demerger of 3M)

$PYPL (+0,75 %) +32%

$MCD (+1,05 %) +24%

$BTI (+2,7 %) +16%

Other ~ 4%

$VOW (-0,99 %) -28%

Moncler has reported very good quarterly figures. Sales have increased well and the outlook is also good. Business was particularly good in Asia.

In the long term, I see strong growth potential, especially through the "direct to consumer" channel. Geographically, the company can still achieve a lot of growth in America, where it is not yet so strong.

I am invested and will buy again if the opportunity arises.

I think the worst bets here are on LVMH, but Moncler is still smaller, more focused and the net margin is also somewhat higher than that of "Big Brother".

$MONC (+1,14 %)

A little luxury in the depot 😁✅

Has anyone $MONC (+1,14 %) on the watchlist and can say something about it here? How are the jackets so and why is the price trend so naja...?

Investment philosophy, "diversification" and dividends

Hi all, as this is my first slightly larger post I would generally appreciate some constructive feedback.

First something About Me

I'll be 22 in a month and I've been active in the stock market for about 2 years now. After a lot of back and forth, I can almost say that I have tried every strategy - but I never really felt comfortable. One learns from mistakes, and I have made many of them.

But what I have also done is to spend countless hours, days and weeks with books, videos, shareholder letters and internet research. I was particularly fascinated by the investment approaches of Terry Smith and the way of Joseph Carlson on Youtube.

My goal quickly became clear, I don't want to have thousands of companies in my portfolio that I don't know, understand or fully support. So an ETF focus was off the table.

Thereupon I built my own investment philosophy, which I would like to present to you in the following.

If you want to know more about me and my goals, there might be another article with a portfolio presentation soon :-)

First I would like to explain to you why I do not believe in diversification hold:

A quote from Warren Buffet is well known: "Diversification is protection against ignorance. It makes little sense if you know what you are doing."

However, a quote from one of the world's best investors alone is unlikely to convince everyone. Studies also support Buffet's view. The advantages of diversification decrease very fast and the gap between market risk and total portfolio becomes minimal from a portfolio size of 20-25 companies - 25 companies give you all the advantages of diversification, more positions only worsen your performance and overview. (Figure 1)

Because concentration delivers better performance. Fund managers who concentrate their knowledge in a few companies deliver better results than more diversified managers. (Figure 2)

Investment philosophy

I want to outperform the market, so I look for the best companies. What makes good companies?

Companies with competitive advantages (moats) outperform the market (Figure 3), and they do so because they have high returns on capital. My first metric for evaluating quality of a company and with a high value in my company analysis is ROIC (Return on Capital Invested). I look for companies with at least 10% ROIC. (Figure 4) Furthermore I want high ROCE (Return on capital employed) and high ROA (Return on Assets) figures.

This directly eliminates some companies and also whole sectors, namely exactly those in which it is not worth to invest anyway. Why is this so?

There are sectors that historically outperform the market (Software, Consumer, Healthcare) - on which my focus is -, and sectors that consistently underperform and are not considered in my investment approach (Banking, Energy, Insurance, Mining, Utilities, Airlines) - just compare the sectors with the main index ;-)

Consumer goods, healthcare and software companies perform better because they generate sustained profits, so they remain profitable even during economic downturns. This allows for consistently high returns on capital.

Next, a look at the margin here I would like to see high Gross Margins >60%, which are also a good indicator of a competitive advantage, and a high Profit Margin, which is an indicator of the efficiency of a company's value creation. However, the most important margin for assessing profitability is the FCF margin.

A company's focus should be maximally on Free Cash Flow, we should invest in companies that are as profitable as possible. In the long run, the share price follows the Fcf/Share.

Beyond that I don't want any debt, any company with Debt/EBITDA > 3 flies right out, preferably anything less than 2.

In terms of growth, I look for stable and good EPS and revenue growth, but FCF growth has the highest priority.

The higher the better, the more important the key performance indicators are.

My minimum benchmarks for the most important metrics:

• ROIC > 15%, ROCE > 15-0%
• Gross Margin > 60%
• Profit Margin > 20%
• FCF Margin > 20%
• Debt / EBITDA < 3, preferably < 1
• FCF 5Y CAGR > 10-15%

(Not all of my companies always meet every metric, but I have built my own score where a minimum score must be met and by score I set the "Conviction" to a company).

Buy & Hold and long-term investing outperforms

As long as a company continues to reinvest its capital at high returns there is no reason to sell. (Figure 5)

What about dividends?

Some of my companies pay a dividend, others don't - I don't put much emphasis on dividends, and will definitely not put bad companies in my portfolio just to get a payout in a given month ;) Dividends should be minimized if capital can be reinvested at high rates of return. At my young age and with a long term investment horizon the focus should be on yield, in old age I will also shift to dividends ;)

The most important thing to conclude: Invest in profitable companies that you UNDERSTAND

A few final tips:

• Don't chase trends, they fade away
• Do not be blinded by dividends
• Don't care about macroeconomics, invest in companies - not cycles
• Market timing is impossible
• Look for established companies, not one-hit wonders
• BUY GOOD COMPANIES - DON'T OVERPAY - DO NOTHING (Terry Smith)

My current investable universe:

$ADBE (+3,25 %)
$NVO (-1,95 %)
$CUV (-0,36 %)
$CDNS (+0,6 %)
$ASML (-1,43 %)
$VRTX (-0,05 %)
$V (+0,74 %)
$MA (+0,04 %)
$MSFT (+0,27 %)
$QLYS (+0,91 %)
$MKTX (+1,36 %)
$KLAC (-1,45 %)
$GOOGL (+1,27 %)
$REG1V (+0,26 %)
$TNE (+1,33 %)
$ENX (+1,82 %)
$EW (+1,76 %)
$VRSN (+0,99 %)
$FICO (+1,18 %)
$FTNT (+1,58 %)
$NEM (-1,95 %)
$MONC (+1,14 %)
$CSU (+0 %)
$6861 (+1,86 %)
$ENGH (-1,16 %)
$MC (+0,4 %)
$AAPL (-0,21 %)
$6857 (-1,6 %)
$7741 (-0,52 %)
$PAYX (+0,61 %)
$MTD (+1,44 %)
$TXN (+0,01 %)
$OR (-0,8 %)
$ZTS (+1,88 %) (Companies I watch, in my portfolio I have only 8 of them).

That's it from me for now. Please leave me some feedback and share the post if you like it :-)

What would you like to hear from me next? More about free cash flow? Portfolio presentation? Company presentation? My slightly different valuation approach, far away from P/E?

Some of the illustrations are from a slightly smaller fund ("Long Equity Investing" on Twitter - can only recommend you) or from Terry Smith's Shareholder Letter.

No investment advice