Caitlin's Corner

Let's Call it What it Is: Shopping

It might be sunburn, but I’m still glowing from a girls’ backpacking trip I got to take last week. Complete with giggles, real-talk, leveled-up charcuterie, and alpine lake skinny-dipping, it was the trip every woman’s soul needs from time to time. To top it off, I took a self-indulgent shopping stop on my way home.

My driving route to the backpacking trip had led me through a mountain town I hadn’t visited in over a decade. The town is home to a clothing store called Melanzana. For 20 years, this company has been handmaking micro fleece hoodies- cute, warmish layers that those in the know affectionately call “Mellies”. The two-toned fleece became trendy when Melanzana’s owner doubled down on his refusal to mass-produce or sell to a big firm. Since they only sew a few hundred thousand of these each year, each one put into production is coveted by those who know about the brand. You can’t buy their inventory online, so I decided to park my car in Leadville and see what sort of inventory Melanzana had for a shopper who didn’t have an appointment. I was thrilled to find a hoodie in my size, with a color combination I like, and in the dress version. I bought it for $88.

I’m not a huge shopper, so dropping $88 on a garment that doesn’t function above what I already have in my closet felt a little shameful. But- I was smitten with my new Mellie. I reassured myself that I had a piece of history, a sort of relic- and tried to get this to alleviate some of my spending guilt. But my brain understood: what I had just done was made a purchase- not an investment. Which brings me to a $10.1 million story that illustrates why this distinction matters.

While I was on my trip, Hermès was stealing the spotlight from politics and market conditions when its original Birkin bag, designed for and owned by Jane Birkin, sold at auction for $10.1 million. This story highlights a lot of interesting points as it relates to personal finance, so whether you’re into luxury fashion or totally not (like me- if you haven’t already noticed 😜), I hope you can glean some insights about it.

A couple of weeks before this auction happened, I received a newsletter from a finance author, whose audience is predominantly women. In her newsletter, she advertised a webinar she was hosting about “investing in fashion”. I was intrigued, so I read the description. My understanding, based on the header, was that the webinar would present information about investing in the fashion industry through VC, angel, or crowdfunding. Instead, the webinar promised to dive into different fashion brands and items that have the potential to be resold at a higher price. An interesting use of the word “investing”.

I’m not here to judge anyone for buying luxury, designer apparel. I am here to clarify that if you’re making a luxury designer purchase, you should be doing it simply because you love the idea of having that item, or gifting it to someone, and because you can absolutely afford to do it (after already having invested in your financial future). What you should NOT do is justify the purchase as an investment.

It's not enough that our culture already demands women spend significantly more on clothing and cosmetics just to look 'acceptable'—a gender tax that directly contributes to the wealth gap. Now we're being told that the 'smart' way to close that gap is to buy $30,000 handbags?

The truth is that most designer brands do not appreciate. The Birkin bag is an exception, with 90% of bags reselling for more than their original purchase price (the average return is not 14% as many resellers claim, but closer to 5%). But is this a reason to buy the handbag? I would argue no. Let’s say you’re in the market for a Birkin. Only certain colors and materials have been known to resell for significantly higher than their original price. If you want to bet on one of those colors and materials, you’d be shelling out many thousands of dollars for a bag. You’d then have to keep the bag in pristine condition (it’s even recommended that owners purchase a raincoat for the bag since it’s never supposed to get wet). You’d need to keep all plastic coverings for the hardware on the bag if you want to ensure your best chances of reselling it. Then, you’d need to find a reseller, pay a lot of fees, and hope and wait for your bag to sell for the price tag you’re asking.

While having a physical "asset" in your hand may sound like it puts you in the driver seat as an investor, there are far more factors that the success of your investment depend on than are within your control. Trends in the fashion industry are even more volatile than the stock market; production patterns of fashion companies are likely to change, and have a direct impact on supply and demand of replacement products when they do. On top of this, desire is driven highly by trends that move so quickly now thanks to social media, future desire is unpredictable at best. When you add these up, there’s really no comparison between the Birkin and a traditional stock market investment. This is all not even to spell out the obvious flaws of a Birkin “investment” compared to traditional investing:

A diversified index fund has returned an average of 10% over decades.

Most of the hype you hear about Birkin resale value is based on the unicorns; the actual 40-year compound annual growth rate is 5%.

You can start with $1, not $10,000.

While an individual investor can open up a brokerage account for free, and start buying shares of a low-cost index fund for dollars at a time, buyers have to spend thousands on a Birkin at resale. To buy a new Birkin, one must be a long-time Hermès customer with a lot of purchase history, and if invited to purchase a new bag, can only do so up to twice per year.

You can sell instantly during market hours, not wait months hoping for a buyer.

You want better liquidity than having to rely solely on your funds in the stock market, but if you really had to withdraw your stock portfolio, you still could, and most likely, you wouldn’t do it for a total loss. If you want to cash in on your Birkin, you have to go through all the hoops to try and sell it for the best price, and even still, you’re likely waiting months to get the price you want (if you ever do).

“I like my money right where I can see it… hanging in my closet.”

Love you, Carrie Bradshaw, but… no. With “closet assets”, you can’t deduct taxes on your losses, use your asset value to qualify for lending, or leverage your equity to further grow your wealth.
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Why luxury fashion "investing" is bad advice:

• It's pure speculation, not investing - Values depend entirely on unpredictable fashion trends that can shift overnight due to celebrity endorsements or viral videos, making it impossible to predict if items will hold value.
• You can't even use what you "invest" in - Since condition is everything, you'd have to let expensive items sit unused in your closet, defeating the purpose of owning luxury goods.
• The buying process is rigged against you - You can't just walk into stores and buy; you must cultivate relationships with sales staff, forcing most buyers into the more expensive resale market.
• Companies push dangerous financing - Sites like Rebag prominently advertise buy-now-pay-later options for items costing over $30,000, encouraging people to go into debt for speculative purchases.

How this messaging specifically targets and harms women:

• Repackages shopping as financial empowerment - Takes women's existing interest in fashion and reframes compulsive luxury spending as "savvy investing" and "portfolio diversification."
• Exploits economic anxiety - Preys on women's financial insecurities by positioning handbags as "recession-proof" assets during "uncertain economic times."
• Normalizes luxury debt - Encourages women to finance purchases they can't afford by framing expensive bags as "investment pieces" rather than discretionary spending.
• Creates FOMO around financial advice - Uses social media influence to make women feel like they're missing out on a "cheat code" to wealth building.

Let’s call it what it is.

It's shopping. By doing so, we can stop hurting women by advertising this behavior as investing. Here's what I wish that finance author had said instead when she held her “Invest in Fashion” webinar: 'Want to invest in fashion? Buy index funds that include apparel companies. Want a Birkin? Buy one because you love it, after you've already invested in your actual financial future.'

What I'm Reading

📕 Melanzana: Colorado's Most Reclusive Clothing Line​

Want to hear more about the Melanzana brand? Personally, I think this would be a brand more worthy of my investments than Hermès. But that's just me ;)

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