A market miscellany

“IT’S AN INVESTMENT PIECE.” THIS WELL-WORN JUSTIFICATION FOR OUR MORE PRICEY SARTORIAL SELECTIONS MAY BE BECOMING MORE TRUTH THAN SELF-REASSURING FICTION.

Firstly, what makes a purchase an investment? The distinction between ‘consumption’ and ‘investment’ boils down to the buyer’s expectation of realising some future financial value from the purchase. We can think of it in terms of utility and expected future value. Your family home scores highly on both.

A KitKat only scores highly on the former, a share in a company only on the latter.

What about your winter coat? Or your handbag? Or even a pair of jeans?

Quickly we enter the realm of heuristics and mental accounting. We might think of the cost per wear or make back-of-an-envelope calculations about the depreciation of the alternatives we haven’t bought. A 2023 TikTok phenomenon dubbed this sort of mental accounting ‘girl math’. But there may be something more revealing to it than that.