Gatsby Index - Jim Cramer's High-End Index
Turns out that The Great Gatsby, a book many read in high school English class, contains lessons that extend to the stock market as well. Back on February 25th and on March 13th, we unveiled the "Gatsby Index" on Mad Money.
With the film based on F. Scott Fitzgerald's 1925 novel coming this spring, we couldn't resist creating an index to measure the strength of the high-end consumer. Especially with Leonardo DiCaprio playing Jay Gatsby, Carey Mulligan as Daisy Buchanan and Tobey Maguire as Nick Carraway.
The high end in particular has been front and center when it comes to the tax policy, but even as many have been fretting about higher income taxes for the rich, we have seen the consumer discretionary sector as a whole performing strongly year to date.
But in order to get a read on how the rich are feeling, stock style, we put together the Gatsby Index—because there's a whole tier of the economy devoted to making and selling things to the very wealthy, or at least people who want to feel like they're wealthy.
The names? These include the high-end food plays—Whole Foods (WFM), Starbucks (SBUX), and Panera (PNRA); the upscale department stores Nordstroms (JWN) and Saks (SKS); specialty retail Michael Kors (KORS), Lululemon (LULU), Ralph Lauren (RL), Coach (COH) and Tiffany's (TIF); cosmetic bellwether Estee Lauder (EL); boat company Brunswick (BC)—which also sells billiard tables, fancy fitness machine, bowling equipment; and lastly Toll Brothers (TOL) which represents the high end of the home builders.
Of course, many of these names are driven by company-specific execution issues (think: the yoga pants recall hurting high-multiple stock Lululemon, Coach merchandising misses causing them to suffer versus competitors like Michael Kors, Tiffany's bouncing back after low expectations) but their performance and trends do reflect the underlying pulse on the high end.
Since we rolled out the index on Feb 25th, the Gatsby index has lagged the market, up 2.1% on average vs 4.9% for the S&P—and it also, for good measure, lags year to date, up 6.5% versus 9.0% for the S&P.
We will keep watching these names to continue to get a read on the consumer so check back here for the performance.