Coach Handbag vs. Stock Investment Article

TygerKitty

~*~ addicted ~*~
O.G.
Feb 26, 2008
16,850
7
Colorado
On the yahoo homepage there was a link that said "New Fall Handbags" under an article about fashion... thinking, "Great! Some new eye candy to look at." I clicked on it... turns into a financial article. Interesting to read nonetheless....http://shine.yahoo.com/channel/mone...-the-better-buy-the-purse-or-the-stock-246716 (article below also)

Work + Money

Tuesday, September 2, 2008
New Fall Handbags: Which is the Better Buy, the Purse or the Stock




I noticed recently that a Shine blogger was asking about what her fellow Shine shoppers thought of the new fall line of Coach handbags. She particularly liked the new Bleecker Leather Patchwork Tote, which retails for $499, and she was thinking of buying one.

So let me play the Devil's advocate, for a minute. (Or should I say Devil-Wears-Prada advocate?) Let's say that she buys the new Coach bag for $499, instead of saving the money or investing it. It may cheer her up as she carries it to the office. But the thrill of new stuff does seem to wear off fairly soon, at least for me, and I start taking it for granted. Just another handbag.

But what if she had decided to invest the money instead, and spend $499 on Coach company stock? The shares of Coach closed at around $29 today (August 28 th ), so she'd be able to buy about 17 shares of Coach for the same price as the handbag.

Let's look ahead a year from now. The Coach bag is getting a little worn from use (that is, unless it winds up in the back of the closet). But what's happening to the stock? Let's say that it rises about 8%, which would be an average gain for a decent Blue Chip stock. So next year, instead of a fairly worn handbag, she'd have $540 worth of stock. And let's take it ahead to three years in the future, when the stock would be worth $630 if it continued that average 8% gain. And in five years, instead of the Coach bag, she'd have around $734, assuming again that average 8% gain.
Which would you rather own, a 5-year-old handbag, which you might be able to sell on ebay at a fraction of its value, or more than $700 worth of stock that you can sell?

Of course, stocks are never a sure thing. And when you look at a stock, you want to be sure you're getting a bargain, just the way you would when you're looking for handbags. So try taking a look at Coach stock by going to the Yahoo Finance site and typing in the stock ticker symbol, which is COH. You'll see all sorts of information, including what stock analysts think of the stock. Scroll down the left side of the screen and click on Analysts Opinions. Take a look at the numbers, and you'll see a target price for the stock, which is the price that analysts think the stock will reach within a certain period of time.

You'll see that the average target price for Coach is $35, with some target prices even higher. That would make it a 20% markdown at its current price of $29. So you might be looking at a bargain, if you think that Coach is going to continue to grow. And here's where your eye for trend-spotting comes in. Are your friends buying Coach handbags? How crowded is your local Coach store? My sister tells me that women in her town are knocking each other over to get to the counter when Coach bags go on sale.

So now you can see how easy it is to start stock-watching when you go shopping. And why you might enjoy looking for stock bargains for your portfolio as much as you do finding a fabulous purse that will accent an outfit.

Happy shopping! And remember, this is not a recommendation to buy or sell any stock, but rather a sample of trend-watching to get my fellow Shine members to think about investing.
 

sweetmelissa

But it was on sale!
Mar 9, 2007
2,781
2
50
South Jersey
Interesting article but some key words that jump out to me are "My sister tells me that women in her town are knocking each other over to get to the counter when Coach bags go on sale." So are people only interested when they go sale? Do they not want to buy full price? If not, why not? These are things I would be looking at in a company before thinking about buying the stock but I'm very cautious like that. I'm not saying Coach stock is a bad buy though.

The other thing is...well, I could make the same argument to talk myself out of buying shoes, a nice cardigan...etc. but you have to lug your junk around in something so imho it may as well be something that makes you happy. It's all about balance-you need a bag to carry and clothes to wear but you also need to put away $$ at the same time.
 

nekostar0412

Bitten by the CHANEL Bug
O.G.
Jul 28, 2007
2,438
153
Interesting article, but like sweetmelissa, I would rather be interested in how many people are rushing to buy retail?
 

Swanky

Admin
Admin
O.G.
Jan 12, 2006
86,953
8,000
Interesting article but some key words that jump out to me are "My sister tells me that women in her town are knocking each other over to get to the counter when Coach bags go on sale." So are people only interested when they go sale? Do they not want to buy full price? If not, why not? These are things I would be looking at in a company before thinking about buying the stock but I'm very cautious like that. I'm not saying Coach stock is a bad buy though.

The other thing is...well, I could make the same argument to talk myself out of buying shoes, a nice cardigan...etc. but you have to lug your junk around in something so imho it may as well be something that makes you happy. It's all about balance-you need a bag to carry and clothes to wear but you also need to put away $$ at the same time.

because they'll go on sale. No one wants to pay full price for anything they know they can get discounted in a couple of months. . . not at these prices.
 

kattykay

sofa king sexy!
Jun 8, 2008
4,467
0
new jersey
i think i would rather have the bag and get 5 years of enjoyment than having nothing and an extra $200. besides what happens if the stock crashes? then i have no handbag and no money
 

CoachJunkie1908

O Holy Grail...
O.G.
Jun 9, 2008
1,342
0
metro Detroit
i think i would rather have the bag and get 5 years of enjoyment than having nothing and an extra $200. besides what happens if the stock crashes? then i have no handbag and no money
Exactly. I have money set aside for investing and money set aside for fun stuff. When I start taking the investment money for fun stuff, that's a problem.
 

bagladie112

Member
Aug 2, 2008
1,950
3
very thought provoking...i can see things from many different angles because i am a professional financial planner...to be honest...a woman should be multi-dimensional...she should have her finances in order before she considers...hefting 500 big ones on the counter for a handbag. if she's not in a good place...then why is she buying an expensive purse in the first place....for me coach=happiness so i work hard to afford it....it's a matter of rewarding myself for my work....don't men buy plasma t.v's for thousands...and in 3 years when the next hot thing rolls around they want something else no one knocks them for being electronic junkies...lol
 

No Cute

cupcake butt
Aug 17, 2008
19,539
6
very thought provoking...i can see things from many different angles because i am a professional financial planner...to be honest...a woman should be multi-dimensional...she should have her finances in order before she considers...hefting 500 big ones on the counter for a handbag. if she's not in a good place...then why is she buying an expensive purse in the first place....for me coach=happiness so i work hard to afford it....it's a matter of rewarding myself for my work....don't men buy plasma t.v's for thousands...and in 3 years when the next hot thing rolls around they want something else no one knocks them for being electronic junkies...lol
Hey, you've met my husband? :roflmfao:

Both are important. A solid, divested portfolio is important for future security. A percent to charity, percent to savings, and a percent to fun. That's what a friend grew up hearing, and she is WAY better off in longterm finances because she did 10% savings from day one of her first job.
 

TygerKitty

~*~ addicted ~*~
O.G.
Feb 26, 2008
16,850
7
Colorado
very thought provoking...i can see things from many different angles because i am a professional financial planner...to be honest...a woman should be multi-dimensional...she should have her finances in order before she considers...hefting 500 big ones on the counter for a handbag. if she's not in a good place...then why is she buying an expensive purse in the first place....for me coach=happiness so i work hard to afford it....it's a matter of rewarding myself for my work....don't men buy plasma t.v's for thousands...and in 3 years when the next hot thing rolls around they want something else no one knocks them for being electronic junkies...lol
I give my coworker SO much crap for being an electronics junkie! He gives me crap for my purses... it works out nicely haha
 

CaptainPicard

Member
Oct 5, 2007
606
3
California
And I'm no prophet but if I were a bettin' woman I would not buy Coach stock anyway. With the econmy, people buying less, the continued quality issues with Coach bags, the flooding of the market which is devalueing the name.....I have a feeling in a year or two Coach stock may tumble.