Investment Idea #28
Let's talk more about the GLUX ETF and how it relates to activism.
This post builds on an earlier post discussing luxury goods.
This substack discussed QYLP, a covered call ETF for Nasdaq which was an interesting idea but unfortunately it has yet to generate strong positive returns although if we add back the 11% dividend, it is not underwater. Today we shall discuss the second ETF which was touched upon briefly (see post below).
What Exactly are Luxury Goods?
I spent quite some time puzzling over this question after a couple of recent encounters and I thought it might be worthwhile to write this out. These encounters prompted me to think deeply about the above - What exactly are luxury goods?
Since we discovered that activists have targeted Swatch and Diageo, perhaps learning more about the GLUX ETF would be a way to better study and understand luxury names. The following two links provide some good data on GLUX:
The second link from tradingview provides details about the basket of stock holdings that serve to replicate the index and not the actual index constituents. We shall touch upon this technical aspect later in the post.
1. Fundamentals
Luxury names have always fascinated me because they can generated outsized profits by charging an arm and a leg for things are pretty cheap to make. Like bags and shoes. I thought humankind already invented these stuff during pre-historic times. Shouldn’t competition just wipe out any possibility to make good money? It is also one of those weird industries that supply-demand vs price relationship doesn’t follow the laws of economics. Demand doesn’t really come down when producers raise prices. Demand goes up when producers raise prices!
Keep reading with a 7-day free trial
Subscribe to 8% Value Investhink to keep reading this post and get 7 days of free access to the full post archives.