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| By Tony Sagami |
I’m not young anymore. Even when I was, I never embraced the yuppie lifestyle.
You remember the yuppies, don’t you? “Yuppie” was a derogatory title for young, educated, arrogant Baby Boomers who wore expensive designer labels, drove BMWs, danced at Studio 54 and behaved like entitled brats.
I’ve always been a simple son of a vegetable farmer who drives a pickup truck, wears ratty old jeans, shops at Walmart Inc. (NYSE: WMT) and Costco Wholesale Corp. (Nasdaq: COST) stores and wears a Timex.
I don’t golf, and my idea of a high time is hiking around Glacier National Park. Add that all up … and I’m not exactly what you’d label a yuppie at all.
The yuppies, however, represented a powerful consumer trend, and they had a great impact on both the economy and the stock market. Investors who bought stock in those yuppie-catering companies made huge profits.
As powerful as the yuppie phenomenon was in the 1980s and ’90s, it’s a mosquito bite compared to monumental shopping spree put on by a new breed of yuppie.
Chuppies: The Chinese Version of Yuppies
“Chuppies” are the rapidly growing upper-middle class created by the booming Chinese economy. Like the yuppies, chuppies are well educated, ambitious and have money burning holes in their pockets.
The chuppies, however, are spending money at a pace that would make an American yuppie faint with jealousy. The concept of “face” is extremely powerful in China, so only the top brands will do.
Chinese consumers spent $5.6 trillion last year, and JPMorgan Chase & Co. (NYSE: JMP) expects that to more than double in 10 years to $12.7 trillion.
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Just like with the American yuppies, you can make a lot of money by identifying how chuppies spend their money and investing in the companies that cater to them.
The Clothes They Wear
When it comes to apparel, the Chinese are just like the rest of Asia in that they crave designer labels. The more expensive, the better.
The chuppies are trapped with clothes from Ralph Lauren Corp. (NYSE: RL), Prada S.p.A. (OTC: PRDSY), Gucci, Michael Kors, Hermes, Zara, Chanel and Burberry.
What They Put into Their Mouths
When it comes to food, the chuppies are surprisingly fond of American fast food, and there are few things more American than the hamburger. That’s why McDonald’s Corp. (NYSE: MCD) has opened more than 2,000 stores in the Middle Kingdom.
However, I seldom see lines at McDonald’s because Chinese citizens typically prefer chicken to beef. That’s why Yum! Brands, Inc.’s (NYSE: YUM) KFC stores are almost always jam-packed with customers.
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| Source: Turner.com |
In fact, Yum! derives more than 50% of its revenue from outside the United States.
Finally, Starbucks Corp. (Nasdaq: SBUX) is one of the most popular places for young Chinese couples to go out on a date.
The Status Symbols They Flaunt
Successful chuppies are eager to show their success and are conspicuous consumers, which is why the stores at Tiffany, Coach and Louis Vuitton (OTCPK: LVMHF) are doing gangbuster business.
What They Drive
I see more Bentleys, Rolls Royces, BMWs and Porsches in Shanghai than I do in Seattle.
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Tesla, Inc. (Nasdaq: TSLA), for example, just reported a home-run quarter of sales, mostly thanks to booming China sales.
While keeping these crucial trends in mind, let’s certainly not treat this as a “buy” list.
We’ve simply itemized the names, luxurious and otherwise, that chuppies are chasing.
One possible way to play this trend is with the U.S. Global Investors Global Luxury Goods Fund (Nasdaq: USLUX) mutual fund. It holds many of the stocks mentioned above.
I was never the flashiest consumer or a yuppie … but you can bet that my frugality and market savviness helped my investment strategy in the long run.
I hope you use it to your advantage too.
Best,
Tony Sagami
