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2015/05/28

How to Bag Easy Gains from the "Mass Affluent"

The most difficult trends in the world...
Rude Awakening
May 28, 2015
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How to Bag Easy Gains from the "Mass Affluent"

  • The most difficult trends in the world
  • Betting on luxury brands
  • Plus: Burgers and beer

Greg Guenthner coming to you from Baltimore, MD...

Greg GuenthnerFickle fashion trends are damn near impossible to figure out.

But today, you've got a chance to bag an easy 15% gain off the rapidly changing tastes of the "mass affluent" - but you have to pounce on this thing now before they change their minds...

So who are these "mass affluent" types? They're the people rich enough to demand premium products and services--but not rich enough to be considered wealthy. They're more like the 11% than the 1%. So they don't get hit as hard as your typical middle-class family when recession hits. And they love to spend money.

Everyone wants a piece of the mass affluent market these days. And why not?

I mean, who doesn't want an overpriced soy latte to go with the overpriced leather handbag? So these upwardly mobile types (and their offspring) are the primary targets of nose-in-the-air brands like Starbucks and Coach.

But these mass affluent sorts have the loyalty of a hooker. They'll dump one high-end brand for another at the first whiff of a better deal. And a company's profits can go poof if it doesn't figure out in advance what the hell this bunch wants next season.

So some of these luxury stocks can be captains of the market at any given moment--while others get stuck scrubbing the toilets. And that's exactly what the market is showing us right now...

This earnings season has been Christmas morning for some luxury retailers and a total bust for others. For a tale of two brands, just take a look at Tiffany and Co. (NYSE:TIF) and Michael Kors (NYSE:KORS).

Tiffany reported a big earnings beat yesterday, easily topping first quarter estimates. Its shares hadn't done much this year, but now it looks like the iconic jeweler is serious about a comeback. Shares popped more than 10% Wednesday. Here, see for yourself:

Then there's Michael Kors. That's the sad line on the chart today. Shares of this high-end handbag maker plummeted to 52-week lows after missing earnings estimates. And it didn't help that its second quarter outlook painted a dark picture.

Look, I can't tell you the first thing about fashion except that most runway models are so skinny they can hang glide off a Dorito. But I can sure as heck tell the difference between a crashing chart and a popping chart. KORS is tossing its cookies going down the drop tower right now while TIF is clearly on the jump.

The choice here is obvious. If you you're looking for a hot stock to trade in this sector, Tiffany could be a solid bet heading into the summer.

PS: I will be on the road tomorrow, so you will not receive your regularly scheduled Rude issue. But fear not! I will return bright and early Monday morning...


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A 12-month investigation by our military expert -- Byron King -- has uncovered an official government document that's remained virtually hidden for over 50 years.

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Click here for the full shocking story.


Rude Numbers

When to Buy... When to Sell
73

points were added to the Nasdaq Wednesday. That's good enough for a gain of about 1.5%

$57.53

buys a barrel of crude today. Oil continues to retreat from $60 as we get closer to finishing out the trading week...

$2.81

is the price of natural gas this morning. Natty has settled lower six of the past seven trading sessions...

$1,186
is where you'll find gold futures this morning. The yellow metal is hanging in there for now. It's down less than $1 to start the trading day...
2,116

marks the spot for S&P futures just before the morning bell. Stocks are looking to open slightly below Wednesday's close...


Rude Trends

When to Buy... When to Sell

My inbox is crammed full of your note about sour beer once again this morning...

"Loving any craft beer doesn't make you a snob, it just means you like things that have flavor, as opposed to tasteless and bland food and drink," a reader assures me. "And by the way, I can't even smell some of these new sour beers without gagging."

Well there you have it. I think that puts the issue to bed, wouldn't you agree?

What else ya got?

"It's interesting that you discuss the relative un-nutritious offerings of fast food places like KFC and McDonalds, while at the same time extolling the value of other unhealthy restaurants," an international reader says. "I made a rare trip back to the USSA [sic] recently and, having heard much about Chipotle, I decided to give it a try. To say that I was extremely disappointed in the variety offered on the menu, is an understatement. One thing appears to becoming standard in America. Restaurants offer either unhealthy food or limited menus, or both."

Don't confuse my interest in some of these newer fast casual chains as an endorsement of healthier options. Sure, Chipotle touts hormone-free meat. But a 1,500-calorie burrito isn't exactly health food. It's just becoming more popular than your standard McDonalds burger-bomb.

[Ed. Note: Send your feedback here: rude@agorafinancial.com - and follow me on Twitter: @GregGuenthner]


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