This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

The Rich Return, But Spend More Wisely

NEW YORK ( TheStreet) -- In the past month, a 7.64-carat blue diamond sold for more than $8 million, a 48,000-square-foot home in Bel Air, Calif., went for $50 million and Picasso's "Nude, Green Leaves and Bust" painting brought in $106.5 million.

Somebody's spending again.

After hiding out for a year and a half during the recession, the rich have returned. In the first three months of 2010, luxury spending increased more than 20% after diving 20% last year. The American Express (AXP - Get Report) Travel Insights research found that luxury spending in December increased 7% from the same period two years earlier.

In May alone, wealthy patrons put up $40 million for a 1936 Bugatti Type 57SC Atlantic, $32 million for an Andy Warhol self-portrait, nearly $29.5 million for Conan O'Brien's co-op on Central Park West and $5.7 million for a 1944 Patek Philippe 18-karat gold chronograph.

"One thing that's fueling it is a great sense of relief among the high-end consumer that the worst is over," says Gregory Furman, chairman of the Luxury Marketing Council. "Couples in Greenwich, and Cartier, to name a luxury brand, are thinking: 'Phew, we made it through.' "

In the past three years, the nation's affluent and wealthy have grown less impressed with themselves and more happy. According to American Express' 2010 Survey of Affluence and Wealth in America -- which received input from 1,910 respondents with income among the top 10% of all Americans and a mean income of $520,000 a year -- 70% rate themselves as "very happy," compared with 40% in 2007.

Though 94% of affluent Americans believe we're still in a recession, with 60% expecting it to last another year, 75% of respondents say they're succeeding in this economy because of decisions they've made.

Instead of spending on just about everything, luxury consumers have decided to invest in their passions. Car lovers, for instance, make up just 14% of the affluent but comprise more than 40% of automotive spending.

The same holds true for the fashion-forward 9% who closet 39% of all high-end clothing purchases, or the jet-setting 9% who account for 42% of all travel spending. Shopping isn't a splurge to these buyers, but a value-based investment in the tradition and continued heritage of a durable product.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
SKS $0.00 0.00%
AXP $83.25 1.31%
TIF $88.70 -1.18%
MC $32.28 1.03%
AAPL $130.42 1.26%

Markets

DOW 18,214.42 -10.15 -0.06%
S&P 500 2,110.74 -3.12 -0.15%
NASDAQ 4,987.89 +20.7530 0.42%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs