3 Luxury Stocks to Sell Now

I never like to sell stocks when there is fear in the streets as there is
today. The market plunge Thursday increased the fear in the market to
apocalyptic levels. For the most part, I would be a buyer in this environment.
Some really good stocks with quality earnings like Apple (NASDAQ: AAPL ), Google
(NASDAQ: GOOG ) and others trade for very reasonable prices. Corporate earnings
are strong and growing. Guidance for the future is positive. Companies are
buying back stock and paying huge dividends. Despite the agreement to lower
spending in return for a debt ceiling increase, government dollars continue to
flow into the economy. More is likely on the way. The same is true with the
Federal Reserve. The effects of QE2 have yet to fully hit the economy. Given the
potential for a double-dip recession, the odds for QE3 have increased greatly.
The outlook might not be rosy, but it is not as gloomy as the market is
currently projecting. I fully expect a strong rebound in stocks before the end
of the year. That said, there is one category of stocks that I am bearish on at
the moment: the luxury category, which has enjoyed a run that, frankly, has
defied gravity. At a time when most budgets are constrained, spending on luxury
goods has continued to grow. So too have the profits for many companies selling
luxury goods. As the profits have grown, stocks of luxury companies have been
strong performers in this market. What I find odd about the whole luxury sector
is subtle. During the last economic expansion, the story on luxury stocks was
that these companies were pushing their goods downstream. The ability to
increase sales by selling to the middle class was the investment thesis for
buying luxury stocks. Now, with the middle class evaporating before our eyes,
the story has changed. The investment thesis today is that the rich are
nonplussed by the economic events around the globe. The wealthy class is
expanding, and it continues to spend. Perhaps the rich are spending even more.
Luxury stocks then will be insulated from any recessionary pressures in the
market. I don't like it when stories change. A shift in investment thesis is
altogether too convenient. Given that it is Wall Street that promotes these
investment stories, I am even more skeptical. You simply cannot have it both
ways with luxury stocks. While I would have preferred selling these stocks
before the collapse, there is more room for them to fall. Wall Street may defend
these names, claiming that they can avoid the double dip, but I would not buy
that line. The growth story for luxury required a strong middle class and we are
far and falling further away from having that. Here are three luxury stocks to
sell now: