You probably don’t make a habit of taking investment advice from a 37-year-old singer and dancer, a former East L.A. gangbanger who has struggled with addictions to ecstasy and crystal meth.
But in the case of Stacy Ann Ferguson, better known by her stage name Fergie, maybe you should make an exception.
Fergie is the female vocalist for the hip-hop group The Black Eyed Peas. She has achieved chart success worldwide and won no less than eight Grammies. I am not a fan of her music, quite frankly. (Although her recent performance at the Rock and Roll Hall of Fame with Mick Jagger and U2 will definitely raise your pulse… if not an eyebrow.)
However, aside from making a boatload in the music industry, Fergie has enjoyed extraordinary success as an investor.
How? By plunking her money in recession-resistant opportunities, especially in luxury industries.
Fergie, for example, owns a stake in the Miami Dolphins. She has a luxury shoe line, her own perfume brands, a stake in a low-calorie vodka called Voli, and a new vineyard that will soon be producing cases of Ferguson Crest.
I don’t know who is advising this woman, but she definitely knows what she’s doing. In fact, we’ve made many similar moves in The Oxford Club over the past few years.
One of our past winners, for example, was Tiffany (NYSE: TIF), the world’s premier jeweler. It owns and operates more than 200 stores worldwide, specializing in gemstones, sterling silver merchandise, crystal, glassware, china, writing instruments, stationery, eyewear, and fashion accessories.
Tiffany caters not to middle class consumers who are concerned about job security, but rather the rich, the newly affluent, and those who aspire to be. Unlike virtually every other retailer, Tiffany isn’t doing any discounting. Fergie seems to understand the luxury industry protects profit margins ferociously. And that, in turn, protects profits.
I also like her forays into the spirits industry. One of our top recommendations right now is Diageo (NYSE: DEO). It operates in more than 180 countries and offers a wide variety of famous international brands, including Smirnoff vodka, Johnnie Walker and J&B scotch, Guinness stout, Bailey’s Original Irish Crème, Jose Cuervo tequila, Captain Morgan rum and Tanqueray gin, among dozens of others.
History shows that Diageo’s customers are unlikely to substitute “Brand X” for their preferred liquor brands, even during tough economic times. Moreover, demographics favor its business. The number of consumers reaching legal drinking age has been on a steady upswing since 1999. And while the over-21 crowd is expanding, so is business with Baby Boomers. Studies show the over-55 group is increasingly reaching for spirits, not beer.
But the real bonanza with Diageo lies overseas, particularly in emerging markets. The population has been increasing much faster here than in the developed world. Fifty years ago, approximately two thirds of the world’s population was based in less developed countries. Today it is more than 80%. Millions more can now afford to enjoy a Guinness after work, or a scotch and water. That’s why Diageo has recently made major forays into China and Brazil.
In short, Fergie is clearly an astute investor, one you might be wise to emulate. Now if she would only drop the hip-hop and stick to rock and roll…