The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage


By Charles Lewis Sizemore,



) --

Tiffany & Co.

(TIF) - Get Tiffany & Co. Report

made news Friday when it announced sales growth of 30% in the second quarter and earnings growth of 58%.

Adjusted for currency moves, same-store sales rose by 22%. But perhaps most impressively, the luxury jeweler managed to absorb enormous price hikes in its inputs -- precious metals and diamonds -- by raising its prices. And all of this during a quarter in which many believe the U.S. and Europe might have fallen back into recession.

Some of Tiffany's success was due to unprecedented demand from emerging Asia, where sales grew by 55%. But even in crisis-plagued North America, sales were up by 25%. Not bad, considering that Tiffany's sells nothing but superfluous and overpriced trinkets. It appears that, recession or not, wealthier Americans are willing and able to open their wallets.

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But on the other side of the tracks, we see a very different story.

Wal-Mart Stores

(WMT) - Get Walmart Inc. Report

, the epitome of Middle America, has seen nine consecutive quarters of falling domestic sales.

Wal-Mart is considered by friend and foe alike to be the most efficiently run retail business in the world, but it can't overcome weakness in its core demographics.

Bill Simon, CEO of Wal-Mart's U.S. business, got right to the point in a recent press release: "We remain concerned about the economic pressure on our customers and the uncertain impact it can have on their shopping behavior."

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In his failed presidential run, Sen. John Kerry (D., Mass.) spoke of "two Americas." I have little interest in the senator's politics, but his observation is largely true. Middle- and lower-income Americans, who are more likely to be unemployed and who tend to have more of their wealth in their primary residences, are suffering.

They likely owe far more on their mortgage than their homes are worth, and their 401(k) accounts have taken a beating. Reacting to their dire financial straits, they have done the only sensible thing and scaled back their spending. This has hurt the broader retail economy, and there is little sign that we've seen the end of the pain.

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Yet wealthier and better-educated Americans -- who have comparatively little of their wealth in their homes -- are doing just fine. Most still have jobs, even if their bonus checks are a little smaller. And they can still afford diamond rings in those instantly recognizable baby-blue Tiffany boxes.

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Warren Buffett, among others, has called for higher taxes on the wealthy. Mr. Buffett is, of course, entitled to his opinion. But given that the House of Representatives, the chamber most responsible for tax matters, is controlled by a group of Republicans that believes any tax increase to be anathema, I wouldn't expect higher taxes any time soon.

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The bottom line is that the world's wealthy should continue to have the disposable income to enjoy expensive luxury goods. Given that luxury goods firms tend to be highly profitable and tend to have rock-solid balance sheets with only modest amounts of debt, investors might consider putting together a basket of high-quality names. Tiffany would certainly be one to consider, as would be




LVMH Moet Hennessy Louis Vuitton

(Pink sheets: LVMUY).

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These three stocks all offer exposure to the Americans and Europeans least affected by the ongoing economic crisis, and they offer increasing exposure to the fast-growing emerging markets of Asia. Given the structural problems facing the U.S. and Europe, I can think of no place I would rather be.

Charles Lewis Sizemore, CFA is the editor of the Sizemore Investment Letter, and the chief investment officer of investment firm Sizemore Capital Management. Sign up for a free copy of his newest Special Report: "

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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.