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Every Woman Should Own a Stash of High Quality Jewelry

Every Woman Should Own a Stash of High Quality Jewelry

I read an interesting comment on the internet the other day that really got me thinking.  An anonymous woman remarked that high quality jewelry is now a luxury that many women can no longer afford.  In addition, she observed that fewer women are wearing fine jewelry on a regular basis.  I've reproduced her comment here for reference:

"Jewelry is now the great divide between the have and have-nots of the female variety.  I still own some silver jewelry, because it wasn’t worth selling when we needed the money.  I get noticed when I wear it because most women don’t have real jewelry anymore.  Even women who can afford jewelry are not wearing it out anymore, but they still have their wedding and engagement rings."

Unfortunately, I must agree with this woman's assessment.  It seems that fewer and fewer women are buying or wearing high quality jewelry anymore.  I think the persistently weak economy is the obvious culprit here.  Sluggish wage growth, coupled with continuously rising housing, food and insurance costs, has squeezed discretionary spending.  High quality jewelry has been one of the many unfortunate victims of this economic trend.

As a result, a lot of budget constrained women have reallocated their precious jewelry dollars from fine jewelry to costume jewelry.  This has been a reasonable reaction to economic pressure because costume jewelry is so much better looking now than it used to be.  As recently as the 1980s and even the early 1990s, costume jewelry was consistently low quality.  It looked cheap and would quickly tarnish or even turn green when exposed to body oils or perspiration.

However, the advent of inexpensive, but alluring, synthetic stones and simulants, coupled with an industry-wide effort to raise the quality of costume jewelry, has made it a much more palatable choice.  This is especially the case when a "real" piece of high quality jewelry might cost several thousand dollars while a similar piece of "fake", but still attractive, costume jewelry might be just a couple hundred dollars.

The trend toward buying and wearing less high quality jewelry is most noticeable among younger women in their 20s and 30s.  An insightful Pacific Standard article titled "Has Technology Killed the Jewelry Industry?" provocatively lays the blame squarely at the feet of smartphones and other portable technology.

There is certainly an element of truth to this accusation.  Samsung, LG, Sony and Motorola all produce covetable smartphones, tablets and laptops.  However, it is Apple, with its insanely popular trio of the iPhone, iPad and MacBook series, that has had the most success.  In fact, I am of the opinion that Apple isn't really a technology company at all, but a luxury technology retailer - a vitally important distinction.  Young Millennial women have, as a group, redirected a significant portion of their discretionary spending into these must-have tech gadgets.  Of course, money spent on smartphones or tablets has to come from somewhere.  And that place is often the high quality jewelry budget.

There has also been a tendency for younger generations to spend money on travel, dining, concerts and other "experiential" activities rather than physical goods.  And once spent on an experience, regardless of how compelling, those limited discretionary dollars cannot be spent on high quality jewelry.

Now that I've discussed why women aren't buying as much high quality jewelry anymore, I'd like to explain why every woman should own a stash of fine jewelry.  The first reason is purely economic.  For centuries, high quality jewelry has been considered a store of value - a savings account specifically for women.  This tradition is still strong in some parts of the world.  For instance, owning a sizable stash of high-karat gold jewelry is considered a necessity for any well-to-do Indian, Southeast Asian or Middle Eastern woman.

The reason for jewelry's persistence over the centuries as a savings vehicle is multi-fold.  Historically, patriarchal laws in many countries prohibited women from officially inheriting property.  High quality jewelry, often received as gifts from family members or spouses, was usually considered to be a woman's property from a legal standpoint.  If her marriage ended in divorce, a woman could confidently walk away from her former husband knowing her valuable hoard of high quality jewelry was all hers.

While the modern world is much more amenable to female inheritance and ownership of property, there is still a vital investment argument for every woman to own a collection of gemstone-studded, high quality jewelry.  Antique, estate, designer or hand-crafted jewelry, made from karat gold, platinum or sterling silver and set with sparkling precious stones, is the glittering epitome of wealth.  Fine jewelry often has a significant intrinsic value that can range from hundreds of dollars for more modest pieces to millions of dollars for legendary jewels.

But the real value of high quality jewelry is the fact that they are miniature works of art.  As a result, well designed and executed fine jewelry is always worth more than the sum of its parts.  And the stylistic choices available are nearly endless.  The flowing, naturalistic forms of Art Nouveau jewelry are nothing like the jagged shapes and sharp angles of Brutalist jewelry.  There is a style of high quality jewelry that will appeal to every woman.

Affordable High Quality Vintage & Estate Jewelry For Sale

Estate Diamond 180ct Sapphire Emerald 14K Gold Panther Bracelet 177 Grams NR
$438.00 (19 Bids)
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18k Handmade Antique Edwardian Era Sapphire Diamond Halo Engagement Ring 42 ct
Ends: 6d 10h 47m
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Antique Diamond 1311ct Aquamarine 18K White Gold Earrings 109 Grams NR
$510.00 (27 Bids)
Ends: 2d 20h 13m

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14k Handmade Edwardian Sapphire Diamond Old Mine Cushion Cut 3 Stone Ring 65 ct
Ends: 6d 20h 2m
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Antique Diamond 325ct Aquamarine Platinum Gold Earrings 98 Grams NR
$430.00 (18 Bids)
Ends: 2d 18h 20m

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Perhaps most importantly, nothing highlights the beauty of a woman like fine jewelry.  Whether it is a luscious strand of Tahitian black pearls, a gold cocktail ring set with a glistening blue tourmaline or a pair of simple platinum and diamond stud earrings, high quality jewelry accentuates the best features of a woman in a way no other accessory can.  A woman who wears fine jewelry knows she looks beautiful and, therefore, naturally exudes confidence.  And confidence is priceless.

I understand that many women may not feel comfortable wearing incredibly expensive, high quality jewelry every day.  Less expensive costume or mass-produced silver jewelry works well in these situations.  However, there are certain times in life - weddings, holidays or the occasional night on the town - when a woman just wants to look and feel her best.  For those times, there is no substitute for high quality jewelry.

The Long, Slow Death of Stamp Collecting

The Long, Slow Death of Stamp Collecting

A few weeks ago I helped clean out my grandmother-in-law's house.  My wife's grandma, now aged 90, had started to experience failing health and found she could no longer care for her modest house.  As a result, grandma departed for a long-term care facility while her relatives were left with the unenviable task of emptying her home of decade's worth of accumulation.

Because of my experience with antiques and the Pareto principle, I was aware that about 80% of the dollar value of a home's contents are normally concentrated in 20% of its objects.  My expectations were tempered by the fact that my grandmother-in-law liked gambling in Atlantic City, sewing, costume jewelry and crystal, more or less in that order.  Still, I went into the situation with an open mind because you never know exactly what you're going to find.  However, as expected, we discovered very little of value in her home.

But one thing of interest I did find was a couple of old, unused Canadian stamps with the portrait of a young Queen Elizabeth II on them.  Now, I'm no expert on stamp collecting, but I know enough about the topic to understand that vanishingly few specimens are worth significant money.  But I liked the classic Mid-Century styling of these stamps and decided to take them with me on a whim.  After a bit of research I discovered that they were Canadian 4 cent stamps in carmine color from 1963 (Scott catalogue #404).  They were certainly interesting, but not worth more than face value.  They are best used for their originally intended purpose - sending mail in Canada.

This entire episode got me thinking.  Over the last two decades the more desirable investment grade antiques market has definitively split from the less desirable collectibles niche.  High quality antiques have increased anywhere from 2 to 4 times in price over that time while glass, memorabilia and countless other collectible categories have simultaneously collapsed in value.  But which side of this divide did stamps fall on?

It didn't take me long to find the answer: stamp collecting, also known as philately, is dying, albeit a long, slow death.  Prices for most vintage stamps have plummeted; many now sell for only 5% to 20% of stated catalogue value.  EBay has exacerbated this tendency, revealing that many issues of old stamps formerly thought to be rare or uncommon have actually survived in healthy numbers.  Stamp collectors looking to sell their collections to dealers have suffered similar pricing trauma.  Many dealers simply aren't willing to buy at all as they are already swimming in inventory that they can't clear.

Some stamp collectors deny the terminal decline of their hobby by pointing to the record prices that a few ultra-rare, ultra-desirable stamps have garnered at auction.  For instance, the 1856 One-Cent Magenta issued by British Guiana sold at Sotheby's auction house for a jaw-dropping $9.5 million in 2017.  An example of the world famous U.S. "Inverted Jenny" error stamp, accidentally issued in 1918 with an upside-down biplane on it, recently went for a princely $1.175 million at a 2016 auction.

However, record prices for the world's rarest stamps actually reflect the rise of the super rich in modern society.  A handful of ultra-rare stamps get caught up in bidding wars between Russian oligarchs, Chinese billionaires or Silicon Valley technology CEOs, each of whom is intent on fulfilling his boyhood dream of owning the rarest fill-in-the-blank (stamp in this case) in the world.  It only takes two obscenely rich bidders competing against each other to send the price of a truly rare stamp into the stratosphere.  Ultra-rare and desirable stamps have effectively become trophies for the super-rich.

But this phenomenon doesn't do much to reverse the slow death of the broader hobby of stamp collecting.  Every year stamp prices slowly drift inexorably downward while the collector base continues to age.  In fact, the average age of a stamp collector is now over 60 years old.  Rising prices for a few super expensive stamps does not reflect healthy demand for more pedestrian stamps from middle-class stamp collectors.

The grim outlook for stamp collecting is not helped by national post offices' widespread abuse of commemorative stamps and first day covers.  The tendency to blatantly over-issue modern stamps has contributed significantly to the decline of the hobby.  Treating stamp collectors as a profit center may boost government revenue in the short term, but malignantly erodes the hobby in the long term.  In this aspect, stamp collecting shares parallels with the over-issuance of poorly conceived and designed modern commemorative coins by national mints.

As if postal abuse wasn't bad enough for stamp collecting, a precipitous decline in the volume of physical mail means that many younger people only encounter stamps with shocking infrequency.  According to the U.S. postal service, when measured from its peak in 2001, estimated first class mail volume has collapsed by over 40% through 2016.  And this trend shows no sign of abating in the near term.  Of the physical mail that is still sent, a significant amount is either metered or uses perpetually unchanging "Forever stamps" (at least in the U.S.).  Combine this with the ubiquitous rise of email, texting and online bill pay and it is easy to see that stamp usage, along with stamp collecting, is gradually dying out.

All of these trends contribute to a distinct lack of youth interest in stamp collecting.  And children who do not collect stamps eventually become adults who do not collect stamps.  Many stamp collectors have traditionally started as children who then abandon the hobby in their teenage years when other pursuits became more enticing.  However, those exposed to stamp collecting early in life often circle back to philately again once they reach middle age or retirement.  That circle of life in the stamp collecting community is now in terminal decline.

Now, let me be clear here; I don't think that stamp collecting is going to completely disappear.  Yes, the numbers of active philatelists will probably decline dramatically in the future.  And if you are hoping to make money by investing in stamps or selling your existing collection, you should probably reconsider.  However, there is a silver lining here.  If you love stamps just for the pure joy of collecting them, then your chosen hobby is likely to become significantly less expensive in the future.  Just don't expect a lucrative financial return from your vintage stamp collection.

Dead Malls and the Future of the U.S. Economy

Dead Malls and the Future of the U.S. Economy

I recently stumbled across (and promptly binge-watched) a YouTube series by Dan Bell on dead malls.  These shopping complexes are in danger of failing due to high vacancy rates, low foot traffic and high crime rates.

Ever since I watched the Dan Bell series, I have been fascinated by the idea of dead malls.  I think I find them so mesmerizing because in the 1980s and 1990s malls were the physical embodiment of the apogee of the cult of consumerism in post World War II America.  So it is both frightening and captivating to watch the systematic decline of such a culturally important U.S. institution.

Of course it wasn't always this way.  The concept of the mall, a collection of stores connected by pedestrian walkways and fully enclosed for protection against the weather, only developed gradually during the early to mid 20th century.  It wasn't until 1956 that the first true fully enclosed, climate-controlled shopping mall opened - Southdale Center in a suburb of Minneapolis-St. Paul.  After this revelation, malls grew rapidly in popularity in the U.S. throughout the remainder of the 20th century.

In the 1980s and 1990s, malls were the place to be.  They took on a cultural significance that is difficult to convey to those who came of age after their greatness had already begun to fade.  In a time before social media or even the internet, malls were the hot hangout spot for teenagers and young adults looking to meet friends and have fun.  Adults loved malls too; in the age before e-commerce they were the best way - and often the only way - to experience almost unlimited shopping choice.

But nothing in this world lasts forever, including the dominance of American retail.  For the last two decades, the U.S. consumer has been relentlessly buffeted by regular financial crises, a perennially weak job market and excessive debt loads.  Given these economic realities, the rise of dead malls was inevitable.

It also didn't help that retail space, often in the form of malls, was horribly overbuilt in the U.S. from the 1970s until the present.  It is estimated that the U.S. currently has approximately six times the retail square footage per capita of Western European countries like France and the United Kingdom.  American retail culture was bound to face a reckoning eventually and dead malls are just a symptom of that comeuppance.

But there were other powerful secular trends at work in the rise of dead malls as well.  For one, the Great Recession of 2008-2009 permanently changed shopping habits for a wide range of people.  Consumers who had been happy to splurge at the mall before the economic crisis now found themselves pinching pennies wherever they could.

The growth in internet shopping giants like Amazon, Overstock and Newegg also went hand-in-hand with more frugal consumers.  Shoppers can use the internet to compare prices quickly and easily across a range of products.  As a result, it has been said that the internet is the single greatest margin destroying invention in the history of mankind.  Dead malls are a haunting testament to the truthfulness of this statement.

But perhaps the most intriguing thing about the phenomenon of dead malls is the implication for our economic future.  In my opinion, dead malls signal the beginning of the end of rampant, unthinking consumerism.  For decades the unspoken rule that everybody followed was "more stuff is better".

I think modern society has fully explored the limits of that philosophy.  Unrestrained consumerism is abhorrent, and all too often ends in hoarding, monetary destitution and spiritual impoverishment.  However, I don't believe this means the end of shopping, or that we will all live as ascetic monks.

Instead, I believe a trend toward luxury minimalism is taking hold.  Luxury minimalism is a philosophy of buying few things, but making certain that what you do buy is of the highest quality.  One of the areas that should disproportionately benefit from this trend is quality antique and vintage goods.

Did you know that it is possible to purchase a stylish vintage Mid-Century fountain pen for less than $100?  Or that you can buy a 1960s era, solid 14K gold retro mechanical wristwatch for around $500?  If other cultures excite you, then fine, handmade antique Japanese lacquerware can be acquired for only a few hundred dollars or less.  There are almost limitless choices, and the best part is that these high quality heirlooms can double as investments as well.

Investing Simplicity Is the Wave of the Future

Investing Simplicity Is the Wave of the Future

I suspect that the concept of simplicity will become increasingly popular in the coming years.  This may take many forms, including simplicity in eating, working and living.  But one of the most important aspects of this trend will be investing simplicity.

As it stands now, most of the world's investment vehicles are ridiculously byzantine.  Against a more benign economic backdrop, this financial complexity might not be a big drawback.  Unfortunately, we live in an era rife with excess, corruption and incompetence.  All of this means that investing complexity, a trend that has grown exponentially over the last four decades, is rapidly becoming a global headwind.  Your financial future will be much, much more secure if you get a head start on the trend toward investing simplicity.

Most of today's popular financial vehicles, including mutual funds, ETFs and pensions, are not actually assets themselves.  Instead, they are best described as empty shells that are filled with assets - usually stocks, bonds or real estate.  Notice that most retail investors (that's you and me) don't own any assets directly, only these shell vehicles filled with assets.  This layout exposes average investors to a host of risks that are omnipresent, yet poorly recognized at the present.

Pensions, for example, are at the mercy of a board of trustees.  These board members may or may not know anything about investing.  They may also be motivated to approve or deny pension investments based on peer pressure, political leanings or even outright bribery.  This can cause pension funds to be stuffed with complex derivatives or illiquid, poorly vetted venture capital positions.

These situations can easily lead to rapid investment losses that can quickly drive a pension fund into insolvency.  Indeed, pension funds are so underfunded at the present that they are experiencing an existential crisis.  The Pension Benefit Guarantee Corporation, a Federal agency that insures corporate pensions, may go bankrupt within the next decade due to the number of insolvent corporate pensions it must bail out.

Unfortunately for pension holders, a pension's board members all get to drive home in their German luxury cars to their gated communities regardless of how poor their decisions may have been.  Meanwhile, average people like you and me are left to pick up the pieces of our shattered retirement dreams.

"Actively managed" mutual funds are another financial vehicle in dire need of investing simplicity.  "Actively managed" simply means that a professional money manager makes the decisions about what individual securities will be held in a mutual fund.  It could range from shares of Proctor and Gamble to mortgage bonds to anything in between.

Now, you might be wondering what the problem is.  After all, the money managers making these decisions are "professionals", right?  Unfortunately, most money managers are subject to a psychological force known as "performance anxiety".  This is a fancy way of saying that they are under a lot of pressure to match the returns of their performance benchmark.  This is important because a money manager who underperforms his benchmark for a year or two is at great risk of being fired.

The major effect of performance anxiety on money managers is to force them to buy assets that are similar to those contained in their benchmark index.  This phenomenon is known as "closet indexing" and it is a bad thing.

Why?  Well, closet indexing is terrible because you are theoretically paying for the seasoned opinion of an experienced financial professional.  But what you are actually getting is the opinion of an index.  Even if your money manager thinks investing like the index is a bad idea, he really can't deviate from it very far if he wants to keep his job.  And your money manager really, really wants to keep his job.

Of course, when the benchmark index inevitably plummets later in the economic cycle, your mutual fund will also plummet.  However, as the famous British economist John Maynard Keynes once wrote, "…it is better for reputation to fail conventionally than to succeed unconventionally."  And your mutual fund's money manager wholeheartedly agrees.

But perhaps the biggest reason to pursue investing simplicity is because all of these complex investment vehicles cost money.  Mutual funds, ETFs, 401-Ks and pensions all charge fees.  Worse than that, sometimes these investment shell vehicles hold other shell vehicles within them.  For instance, an actively managed mutual fund might hold some ETFs or a pension might hold a hedge fund.  In these cases, you will be charged double fees, usually without even knowing it!

I think the argument for investing simplicity is self-evident.  Complex corporate or investment structures are never created for the benefit of average investors.  Instead, they are always intended to either obfuscate risk or suck extra fees out of the unsuspecting.

This is one of the reasons I like precious metals, gemstones and fine art and antiques as investment vehicles.  They are items you take direct physical possession of.  And they are tangible, meaning they can't be squandered by an inept board of directors or plundered by a self-interested money manager or lost in a market crash.  Art and antiques are the very embodiment of investing simplicity.  And that is something we desperately need more of today.