The American Economy - Luxury and Degeneracy ...The Degenerate Luxurians!

Before I get started…

I will be attending and speaking at The TomorrowX Summit next month…

TomorrowX Summit · November 17–18 · Austin

iConnections, Atreides and Valor are bringing together the CEOs, investors and operators driving TMT for two days at the Moody Center. Main stage keynotes span public and private markets — Nvidia, Blackstone, Goldman Sachs, Databricks, Arm, Cerebras, Crusoe, Vercel, DoorDash, 8VC and more — with breakout tracks across labs, silicon, power and capital.

Howie Town readers get 20% off tickets with the link below. Come hang with my Social Leverage partners and I in Austin.

Onward…

Before my fascination with ‘the degenerate economy’ I was writing a lot about the 'luxury’ trend. The luxury trend has been an evergreen trend (I explained this in 2023), and coined ‘degenerate luxurian’ in 2024, but like any trend it has evolved.

I do not own any of the luxury public stocks but have been investing in ‘luxury’ startups (personally and with SPV’s for our friends) since 2021. Our Social Leverage seed funds are investing in wealthtech to capture this luxury/wealth trend.

Two companies that we have invested in and that I have written about here are The 1916 Company (Watchbox) and Dorsia. Both are growing incredibly fast, profitably and globally. I am a customer and huge fan of both.

Just a few years ago, LVMH founder Bernard Arnault was the richest man in the world with the company valued at $450 billion (scarves and bags baby) . Today, the stock and his net worth have fallen nearly 60 percent.

In the meantime (since 2024) , Elon has become a trillionaire, there are thousands of $NVDA ( ▼ 3.94% ) and $SPCX ( ▼ 6.36% ) millionaires and the semiconductor index has quadrupled! Let’s not forget that Open AI and Anthropic also struck gold post 2024 and tens of thousands of employees and investors are now insanely rich.

The luxury economy has been supercharged, while LVMH has plummeted.

What is happening?

One thesis I have is that we are all Larry David now!

What I mean is while there is only ONE Larry David, we have all seen Larry David. We secretly wish we could behave like Larry David. We all have a friend that reminds us of Larry David. Larry David could care less what people think about him, his looks, his style, his behavior.

That means price is no object and that labels/logos are for losers. Larry would not be caught dead in a ‘Gucci’ or ‘LVMH’ logo. I have never purchased an LVMH, Gucci or Hermes product myself.

So while LVMH, Hermes, Gucci et all continue to have great businesses, they are not appealing to the growth curve of the new wealth.

Watches, Four Seasons cruises, 7 star hotels, last minute bookings and once in a lifetime experiences are the new luxury for the growing 10 percent.

The fact that housing prices have surged has only created a further explosion of luxury spending from people that would have in the past been stretching to buy their first home.

Spending has evolved and the 10 percent are the new 1 percent.