Amazon.com Inc (NASDAQ: AMZN) founder Jeff Bezos got into a bit of a Twitter spat last month with President Joe Biden over who’s to blame for the record-high inflation.
In one tweet, Bezos said, “Inflation is a regressive tax that most hurts the least affluent.”, pointing out that inflation has more of an impact on lower-income households than it does those in higher-income classes.
This is one reason consumer discretionary stocks tend to perform poorly during periods of high inflation, while investments in assets that are more exclusive to wealthy buyers produce massive gains.
The S&P 500 Consumer Discretionary constituents are down 29.2% since the beginning of 2022, compared to the S&P 500, which is down 18.7%.
The Liv-Ex Fine Wine 1000 is up 10.3% YTD, while the regional Burgundy 150 index is up 22.3% for the year.
Wine is a unique asset class in that each vintage has a diminishing supply, with the demand for certain bottles increasing as they approach maturity.
The art market is also having an impressive run, with the Artprice Contemporary Art Index being up 22.3% over the past six months. In fact, 2021 was a record-breaking year in the global art market in terms of total auction turnover and the number of lots sold.
While there are several factors contributing to the growth in these markets, one reason is that the wealthy individuals purchasing these assets aren’t nearly as impacted by inflation or even a recession.
So while many Americans are struggling to pay for a tank of gas or to fill their refrigerator, the world’s billionaires aren’t slowing down on their blue-chip art and fine wine purchases.
The problem that most individuals face is that investment-grade art and wine haven’t been easily accessible asset classes for retail investors. However, the fractional investment model has opened up securitized shares of fine wine collections and even multi-million dollar paintings.
Photo by lev radin on Shutterstock
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