An Study of Portfolio Selection Based on Luxury Goods

Abstract

Portfolio optimization is the process by which investors select various securities and other assets to form portfolios according to demand and then optimize those portfolios to achieve their investment objectives. Compared with other industries, the consumer industry is a typical non-cyclical industry, less affected by the fluctuations of the economic cycle and more stable. Because high-end consumer prices are less elastic to demand and industry barriers are high, their investment prospects are better, and growth rates are faster. This paper examines whether luxury goods stocks are worth investing in and screens for the best-performing stocks within their sectors. This paper uses stock selection methods: P/E, Payout, EPS, and Dividend Yield. Further, the findings from the four methods are combined to select the two best-performing stocks. This paper focuses on why luxury stocks are worth investing in and the most worthwhile stocks in recent years by analyzing the data, with the experimental data being daily data for seven years from 2016-2022, involving ten representative stocks in the luxury sector in OTCMT and NYSE. Finally, a comparison of the cumulative and annualized returns of each approach demonstrates the superiority of the portfolio selection model put out in this work. It is concluded that more affluent young consumers still drive luxury goods despite slowing global economic growth. The data presents KER and LVMUY as the two stocks with the best investment value. Combined with the great trend of luxury development in recent years, investors can make a choice for these two stocks.