The 2024 Summer Olympics are underway in Paris, France. Your Survival Guy was recently in Paris, and the city didn’t seem quite prepared at the time. But it appears that progress is being made. Much of the progress and glamour of the Paris games will be attributed to France’s wealthiest man, Bernard Arnault, and his family, who control the world’s largest luxury conglomerate, LVMH.
Tom Lamont explains the intense support for the Paris Olympics by LVMH’s many luxury houses in GQ, writing:
Paris, that most presentable of capitals, is being polished before it hosts the Summer Games. Around the Champs-Élysées, where some of the benches date to the 1850s, the seats are getting a new layer of paint before an estimated 15 million visitors arrive to scuff them up again. High on the steps of the National Assembly, I watch as workers fuss with temporary statues of Olympians, lowering them into place with cranes. France no longer has a monarch or a royal family, but some say it gets close in the form of Bernard Arnault, owner of the luxury-goods conglomerate LVMH, and his five children, each of whom oversee a part of their father’s empire. The Arnaults and LVMH are closely involved in the coming Games, major sponsors who mean to tempt those millions of visitors (and upwards of 1 billion more viewing on TV) with fine handbags and belts, fragrances and jewels, a whiff of LVMH’s trademark savoir faire. A former editor of Vogue France, Carine Roitfeld, has agreed to collaborate with LVMH and the Arnaults, designing tuxedos for opening night. Just outside Paris, in a private workshop run by Louis Vuitton, one of LVMH’s luxury brands, artisans are making trunks to house the tournament’s medals.
A gentle bock-bock-bock of mallet on wood serves as a hypnotic soundtrack to the work. It’s late in March: less than four months to go before the Games begin. Despite the deadline, production is measured and stately. Wearing smocks or cardigans, wielding slide rules, chisels, scalpels, hairdryers, and rattling boxes of tacks, the artisans here have the cool of craftspeople who’ve been asked to respond to all sorts of whims over time. Vuitton became an immortal name in France through the manufacture of brass-cornered trunks, trunks adapted to meet the demands and dreams of wealthy customers, trunks designed to cradle: handbags, watch collections, writing desks, even the World Cup. During the tour, I’m told they won’t build anything for the storage of corpses (they’re sometimes asked to) or for weapons (except for the occasional hunting rifle), but there have been trunks designed to become walk-in golf lockers, trunks that contain foldaway beds.
On Your Survival Guy’s many trips to Paris over the last decade or so, visits to LVMH stores and locations have been associated with swarms of ultra-wealthy Chinese tourists eager to bring luxury goods back home with them. But on my most recent trip, they were conspicuously absent. I wrote to you then that it was a signal of the poor health of the Chinese economy.
Luxury brands have come to rely heavily on Chinese consumers. Despite China’s communism, or maybe because of it, the country has spawned an elite class of consumers who have inordinate wealth they’re willing to spend on conspicuous luxury. But as the economy sours, that’s changing. Luxury brands, reports Carol Ryan in The Wall Street Journal, are losing Chinese customers who “are spending less because their homes are falling in value.” Ryan also explains that luxury brands have ignored middle-class consumers, and now that is coming back to bite them. She writes:
Meanwhile, Americans earning less than $50,000 a year, who developed a taste for luxury during the pandemic, have pulled back most sharply, based on credit-card spending data from Bank of America. Middle-income consumers earning up to $125,000 have also tightened their belts as higher prices across the economy have left them with less money for luxuries.
The pullback is putting weaker luxury brands under strain. Last week, British trench coat maker Burberry scrapped its dividend, replaced its chief executive officer and issued a profit warning after sales slowed dramatically in the three months through June. Its shares have plunged to levels last seen in 2010.
Operating profit at watchmaker Swatch fell 70% in the first six months of the year compared with the same period of 2023 because of a “huge reduction in demand” in China. German designer Hugo Boss also issued a profit warning and said shoppers have deserted its stores in China.
The industry’s woes are partly self-inflicted. Brands have raised the price of their goods so high that they have become unaffordable for many middle-class shoppers. In a push to “elevate” the label, Burberry released new handbags that were 58% more expensive on average than older models, according to Bernstein analysis. The strategy alienated its traditional customers without a compensating lift from rich shoppers.
To lure shoppers back, some brands are quietly cutting prices. These aren’t end-of-season discounts, but a permanent reset of full-price items. Lowering prices this way used to be a no-no in the luxury industry, as it sends a signal that the brand misjudged the value of its goods.
The Paris Olympics are happening at a potential turning point for luxury, and perhaps it will reinvigorate the attention of the billions of middle-class shoppers who will be watching the games across the world. Keep your eye on the luxury of the games and what that means for the world’s economy with Your Survival Guy. Let me know what you think here.
Going for Broke Is No Way to Live
I don’t like debt, and I don’t want you to be in debt. When you are free from debt, you don’t feel the pressure of making payments, and the bank doesn’t own your home if you miss said payments. You’re in control.
On the other hand, if you’re loaded with debt in Your Retirement Life, you’re always looking over your shoulder. You’re trying to keep up and spend like it’s the last cent you have. Going for broke is no way to live.
Which brings us to spending. It’s a learned habit, just like saving is learned. But when you’re in savings mode for most of your adult life and you finally get to retirement debt free—it’s hard spending your savings. That’s OK. But understand why you’ve been saving all these years. Retirement life can be short. It’s the go-go years, the slow-go years, and the no-go years.
You don’t want to get to the no-go years, having missed the boat.
In retirement, it helps to have someone to rely upon. That’s why it’s important to work with an expert like Your Survival Guy, who’s been through all the stages of retirement’s “go years” with investors like you. It helps to have someone guide you through one of life’s more stressful times.
WARNING: Your Survival Guy and Gal in the Fog
Your Survival Guy and Gal were returning to Newport by boat recently and ran into some thick fog. Having spent the weekend seeing good friends for the passing of a father, it was a bittersweet reunion. At the celebration of his life, one of his sons reminded us of what his dad considered a pentathlon day: fishing, golf, tennis, hockey, and sailing. He taught us through example what it means to live life.
Sitting on my parents’ deck Sunday morning, talking about the weekend, and taking our last sips of coffee, it was time to get ready to head back to Newport. It was a typical hazy, hot, and humid New England morning. Once underway, we put the Mattapoisett lighthouse to stern and set our course.
When we ran into the first fog bank, we turned south toward Cuttyhunk, aiming for clearer air. But after a while, having done this trip dozens of times, we knew the fog was not going to lift, and we adjusted accordingly. With the radar spinning and the chart plotter overlay, we confirmed both were in synch with visual confirmation with red and green Bells (floating markers). Then, it got so thick portions of the fog bank appeared as rain on our radar.
When you’re in the fog, there’s times when there’s movement by other boats and ships where you’re not 100 percent clear of what’s going on. That’s when it’s better to keep your heading but power back until you know the situation. Keeping your heading allows for other boats to see your course, helping them adjust accordingly. You don’t want to be zigging and zagging like a stock trader.
Then, we passed the blob on the screen, which was a tugboat pulling a barge 50 yards off its stern. There are horror stories of boats getting caught up in between the two when both can’t be seen—not understanding there’s a cable ready to clothesline them.
What was unnerving on this trip, as usual, was the fog, plus merging current and wind right off Newport’s Brenton Point, which created the most challenging conditions—not to mention the increase in boat traffic. We couldn’t see other boats with the naked eye, but we could hear their engines. Then, we passed Castle Hill, exited the fog, and just looked at each other with raised eyebrows. Wow, that was crazy.
You want to get out there and live your life. To have your own pentathlon days. Some will be better than others. The fog comes and goes. You just need to be ready to navigate with the patience and skill it requires. When you’re ready to talk about living your best life, then let’s talk.
Survive and Thrive this month.
Warm regards,
“Your Survival Guy”
- If someone forwarded this to you, and you want to learn more about Your Survival Guy, read about me here.
- If you would like to contact me and receive a response, please email me at ejsmith@yoursurvivalguy.com.
- Would you like to receive an email alert letting you know when Survive and Thrive is published each month? You can subscribe to my free email here.
P.S. Your Survival Guy and Gal visited friends recently up in the north shore of Massachusetts. We cruised all through the area where many of the boats you see in the show Wicked Tuna are docked, including where they weigh their catch. We even had some luck of our own with this beautiful striper just under the size limit (slot) of 28-31 inches. Hope you’re getting out and about with your loved ones this holiday weekend.
P.P.S. Now that Your Survival Guy has made clear my concerns about Vanguard, why and how should you move to Fidelity?
First, the most important reason for moving to Fidelity Investments is because it is still a family run business. It’s run by the founder’s granddaughter, Abigail Johnson. It is not a publicly traded company like BlackRock, pressured to meet Wall Street’s quarterly earnings expectations.
Second, now that Vanguard is being run by a former prince of BlackRock, is it in play for a takeover? After all, when you’re in the business of growing assets under management, the easiest way is to buy them. But I remember the late great Jack Bogle vehemently disagreed with this approach. Bogle understood that this is a relationship business and always will be. In life, you don’t just buy your relationships. That’s ugly. The same is true with money. You can’t buy a personal connection. You can’t buy trust.
Third, my father-in-law Dick Young worked in Boston 50 years ago and remembers like it was yesterday calling on his client Fidelity Investments. That’s a lot of history. Don’t be fooled by investment advisers who add up their ages to tout their history. They probably weren’t even born yet when Dick was having lunch with Fidelity execs.
Fourth, when you move to Fidelity Investments on your own, you may be hounded like the new kid in school, befriended by them to use their investment adviser services. This is not my intent for you. My intent is self-serving. My intent is to be your classroom guide—to guide you through the process, to shepherd you through the rat’s nest of documents. I don’t want you picked on like a newbie.
Fifth, we will develop an investment plan to help you invest like a Prudent Man. In the September 2015 issue of Richard C. Young’s Intelligence Report, Dick Young wrote:
The Prudent Man Rule is based on common law stemming from the 1830 Massachusetts court formulation Harvard College v. Amory. The Prudent Man Rule directs trustees “to observe how men of prudence, discretion and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as the probable safety of the capital invested.”
Since I started our family investment management firm in 1989, I have operated under the assumption that the Prudent Man Rule to this day carries as much weight as it did in 1830. Common sense and prudence just don’t go out of style—ever.
Sixth, there is no initial cost for my counsel. Yes, once you’re on board, the red carpet will be rolled out for you, and you’ll become a client, getting what you paid for—help investing at Fidelity. Nice move.
P.P.P.S. If you’ve tried to find help getting some work done at your house, you know how hard it is to find anyone to do the work. You’re ready to pay. You know it will cost some dough. But there is no one around to answer your call, just crickets. It’s not a great feeling.
Which brings me to the robo-advisors touted by the big money managers like Vanguard. Do you like the sound of that? A robo-advisor? I don’t. But no one wants to work. That’s the world you invest in today.
Finding a trusted advisor, one you can actually speak to in person, is like finding help for your house project. They only want to talk to you if it’s a big job. The investment firms don’t have the resources to worry about Main Street. They are too big for that.
You deserve to speak with a live person, not a robo-advisor. When you’re ready to talk, let’s talk. I’d love to hear your story. But only if you’re serious.
Download this post as a PDF by clicking here.
