INVESTING | Adding Sneakers to Your Investment Portfolio
A well-designed investment allocation should include equity, income, and alternatives. Most investors are familiar with equities, or stocks, and income, or bonds, but the alternative asset class is a bit more complicated. Alternative investments can include commodities, precious metals, foreign currency, and other non-traditional assets.
Not all non-traditional assets are created equally. In a recent research report, Cowen Equity Research argued that sneakers are an emerging alternative asset class. Cowen analysts recently explained:
“We propose the idea that sneakers are now an emerging alternative asset class that 1) earns illiquidity premiums; 2) provides diversification - non-correlated with traditional asset classes; and 3) earns favorable risk reward characteristics,”
Cowen analysts explained the U.S. sneaker market is valued at $21.2 billion, and the overall global sneaker market is nearing $100 billion. Online market places including Stock X, Stadium Goods, and GOAT group have dramatically increased the size of the global secondary market for collectible sneakers to over $6 billion.
We appreciate that most people own multiple pairs of sneakers, and we recognize that the most of those sneakers cost over $100, but we believe the best way to invest in sneakers is to buy stock in Nike, Under Armor, or one of the many other companies in the very competitive athletic footwear industry.
Some people might make money trading sneakers, but we believe they will be the exception and not the rule. However, unlike other alternative investments like Bitcoin, at least sneakers can still be worn. So, if you decide to include sneakers in your alternative sleeve, make sure and buy them in your size so you can always wear them.