Kicks vs. Picks: Has the sneaker-market outperformed the S&P?

Kicks vs. Picks: Has the sneaker-market outperformed the S&P?

Sneakers vs. the S&P: I entered my freshman year of college with two pairs of shoes. I had a pair of black and green Adidas Specialz and a dress shoe to wear to orientation events. It was there that I met my roommate who made note of my kicks.

“Specialz, those are cool, man”.

I found the response to be a bit underwhelming, as the pair of Adidas shoes was one of the “coolest” things I owned at the time. When we officially moved in a few days later, I realized that the sneaker- game had a “scene behind scenes” that was beginning to evolve beyond functionality and fashion-ability.

He had hoards of kicks, collectors shoes and even posters of shoes. The first shoe I was introduced to was the Playstation Nike Air Force 1 Low which ran him about $1500.00.

After staying close to capital markets for my years after university, I wondered what that shoe cost now, and how the sneaker-market as a whole has fared against a major benchmark like the S&P.

The S&P 500 is a conglomerating metric for 500 of the largest companies listed on the US stock exchange. Year over year, it has averaged returns a bit shy of 10% since its inception. The S&P over the last 5 years to date, not including dividends, has returned 38%.

After reviewing over 1,000 shoe drops over the same time-frame, the average Return on Investment in the sneaker-head market was 46%, which outpaced the S&P by a little over 8%. In the battle of the giants, Adidas’ returns of 49% beat out rival Nike and it’s Jordan brand, which featured returns of 44% and 40%, respectively. ASICS outperformed with gains on shoe-drops in the secondary market of 52%, while UnderArmour’s Curry line under-performed in secondary markets with gains of 33%.

46.28% Return on Invest over a 5 year period may represent more than just a fad or niche market. Sneaker collecting is estimated to become a $6 billion dollar secondary market by 2025.

Den what?

What you decide to do with this information is completely up to you. I’m sure there are polarizing stakes when positioning sneakers vs. the S&P 500. It’s apparent that both traditional capital markets and the sneakergame have ‘hit or miss’ components to them. You also need to consider that there is a post-purchase maintenance requirement when purchasing sneakers. A buyer is going expect that you maintained the pair according to his/her criteria, not yours. While there are secondary exchanges as well like StockX and GOAT, there will always be liquidity challenges in material goods. Things take time.

However, if you ever come across someone with hundreds of pairs of dated shoes in mint condition. Don’t jump to judgment. They may be a spendthrift, or a hoarder, or someone with compulsive tendencies. But, they could also be someone committed to a craft that they love and enjoy. If they are lucky, they may have even found clever ways to capitalize on their kicks. They may have put hours of work into research, releases, and the timing of secondary markets. And you may come to find that they are savvy, considerate and thoughtful investor.

Maybe even more so than yourself.

FYI: Link: Playstation Nike Air Force 1 Low on StockX. Bids ranging from $8,000 to $20,000.

This Post Has 4 Comments

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