What This Time-Tested Indicator Says About the Bull Market
Investors raise their glasses -- and open their wallets -- to the financial uptrend
by Bob Stokes
Updated: September 25, 2017
You've probably seen the picture of the self-satisfied, rich man burning dollar bills to light a cigar. But, gold eating? The signs of excess are sending one clear message. Pay attention to this time-tested stock market indicator.
[Editor's Note: The text version of the story is below.]
If you research the history of financial manias, you'll find that an excessive pursuit of luxury is a classic hallmark of an approaching top.
For example, in a section titled "The End Times for Luxury," our October 2007 Elliott Wave Financial Forecast said:
The $100 million sale of ["For the Love of God"] by Damian Hirst is the highest price ever paid for the work of a living artist. It may well mark a conspicuous end to the era of conspicuous spending.
The Dow Industrials reached a closing high less than two weeks later.
Going further back in time, some prosperous Japanese were sprinkling flakes of gold on their sushi and cereal just before the Nikkei topped in December 1989.
Our September Elliott Wave Financial Forecast provides an update on "gold munching":
Once again, gold is a hot menu item. One geographic focal point, Silicon Valley, may be significant. Noting that gold "doesn't have any flavor," the manager of the Hiroshi restaurant said the technology executives he caters to eat it "more for show." In an effort to explain the appeal of gold munching, one gourmand says "scarcity is the ultimate, defining quality of true luxury."
And the pursuit of what's rare can also be found in another luxury venue.
The Knight Frank Luxury Investment Index shows that fine wine is now the best-performing collectible among the rich.
This is from a Sept. 21 CNBC article:
Thanks to strength in Bordeaux, Burgundy and northern Italian wines, collectible wine prices surged 25 percent over the past year and are up 61 percent over the past five years.
And if wine isn't your cup of tea, a Sept. 24 Forbes article titled "How An Ultra Rare 58 Bottle Japanese Whiskey Collection Got A $500K Price Tag" notes:
Beyond auction and private collectors, savvy investors are also seeing the growing value in whisky as a financial vehicle. ... The Platinum Whisky Investment Fund launched three years ago in Hong Kong is a good example.
Let's conclude this brief luxury tour by visiting lower Manhattan (New York Post, Sept. 20):
Meet the city's latest trophy apartment -- a penthouse at the iconic Woolworth Building that is back on the market for an eye-popping $110 million.
"This is as close to having a castle in New York City as you can get," [the developer says]. ...
It first went on the market in 2014, but no buyers emerged.
The decision to bring this "castle in the air" back on the market at such a lofty price now is telling -- and so is the stock market's chart pattern.
Find out what our expert Elliott wave analysts are saying so you can prepare for what they see ahead.