Molson Hart

admits, he was already a has-been in the hyper-trend-conscious world of luxury fashion. Chanel developed similarly: The brand DNA you recognize as "Chanel," and that's now among the most valuable brands on earth, developed after World War II, when Coco Chanel was in her 60s...

...and something of a laughingstock for just churning out the same dress year after year for rich matrons. It's an interesting paradox, but you see things differently when you look at industries through the eyes of a value investor.

I don't have a good sense of the stability of these brands. "Buy a business that an idiot could run, because eventually one will." Is luxury a business that an idiot could run?

That's a good point, but there are a couple of, seemingly talented, families like the Arnault's who snap up luxury brands when they fall on hard times. If the Arnault's weren't so talented, how many of these businesses would be sustainable? I don't know.

Then again, there does seem to be a formula to these businesses (which you mentioned): - limited supply - invest in the brand image - what you don't do is as important as what you do The brand does not just attract customers. It also attracts talent. This sustains it.