Does Eartha Kitt’s ‘Santa Baby’ offer a winning investment strategy?

In the 1953 festive hit Santa Baby, Eartha Kitt asks her suitor to get Santa Claus to leave a whole range of valuable gifts under her Christmas tree. This included a sable fur coat, convertible car – and even deeds to platinum mine. If you attempted to purchase these items today, they would set you back somewhere in the region of £605,114,820.

But what would a more realistic investment portfolio based on the long-lived Christmas hit look like today – and would it be worth owning? We've taken a, not entirely serious, festive look.

Santa Baby

Santa baby, just slip a sable under the tree for me;
Been an awful good girl, Santa baby
and hurry down the chimney tonight

Santa baby, a '54 convertible too, light blue
I'll wait up for you dear, Santa baby
and hurry down the chimney tonight

Think of all the fun I've missed
Think of all the fellas that I haven't kissed
Next year I could be just as good...
if you'd check off my Christmas list

Santa baby, I want a yacht and really that's not a lot
Been an angel all year; Santa baby,
so hurry down the chimney tonight

Santa honey, there's one thing I really do need,
the deed - To a platinum mine, Santa baby
so hurry down the chimney tonight

Santa baby, I'm filling my stocking with the duplex, and checks
Sign your 'X' on the line, Santa cutie,
and hurry down the chimney tonight

Come and trim my Christmas tree
With some decorations bought at Tiffany;
I really do believe in you
Let's see if you believe in me

Santa baby, forgot to mention one little thing, a ring
I don't mean a phone, Santa baby,
so hurry down the chimney tonight

Hurry down the chimney tonight
Hurry tonight

Sable coat

While coats made from sable fur may have been all the rage when Eartha Kitt was sashaying around New York in the 1950s, tastes have since changed significantly. Designer coats are less likely to contain real animal fur – but they are still desirable and glamorous. One of the most famous British producers of designer coats is Burberry – and fashionistas will love to wear one of the traditional trench coats. Burberry will be hoping Santa brings many of its desirable designer goods down the chimney this year, as the Covid-19 pandemic has hit its sales dramatically. Stores in travel destinations and airport hubs made up a significant proportion of its sales before the pandemic, but new space and the power of the brand means sales have now recovered to near pre-pandemic levels.

Burberry trench coat: £1,690

Decorations from Tiffany

Tiffany & Co has been one of the world's premier jewellers and America's main house of design since 1837. A tree trimmed with Tiffany decorations will lighten up any festive scene – and shares from its parent company have certainly been sparkling of late. Tiffany, credited with inventing the modern engagement ring and immortalised in the Breakfast at Tiffany's film starring Audrey Hepburn, is now owned by luxury goods group LVMH, me to brands including Fendi, Louis Vuitton and Veuve Clicquot champagne. The French luxury behemoth paid $15.8bn for the group in January this year.

Tiffany Christmas decoration: £130

Deed to a platinum mine

Platinum is so rare that all the platinum ever mined would fit into an average-sized living room. But all of this means the deeds to platinum mine have now become a bargain. Shares in Anglo American Platinum – or Amplats as it is known – have been weak this year as the world has seen a surplus of the precious metal, but many observers think the supply/demand dynamics are now set for a change that boost the platinum price. However, few people have deep-enough pockets to buy this business as a gift. The miner is currently valued at about £23bn. More affordable would be Aim-listed producer Sylvania Platinum, which retreats chrome tailings to produce the metal. You can buy the whole company and grab the “deeds” for a mere £255m, although it may be more practical to buy a few shares in the business instead, which are currently priced at 89.3p each.

Deeds to a platinum mine: £255m

Yacht

A yacht may be “not a lot” if you are Eartha Kitt – but prices are astronomical for more everyday folks. Earlier this year Jeff Bezos bought his latest 417-foot-long superyacht, which is said to have cost up to $500m (£350m); and that doesn’t include the running costs. However, a few shares in US-listed MCBC Holdings may be a more practical gift. The company designs, manufactures, and markets recreational performance sport boats in its MasterCraft branded portfolio. It may be just the ticket – and there are no mooring fees to pay either. The shares are currently priced at $27.98 a share, around £21.20 each.

Luxury yacht: £350m

Ring

Gold rings are excellent gifts, but are they good investments? Scrooge would advocate a high allocation to gold, but for the optimists among us it should only be viewed as a form of insurance against extreme events. The gold investor is faced with a perennial dilemma: when gold rallies it’s often in a world of market turbulence where fear trumps greed and holders are reluctant to sell. When markets perform well, gold tends to fall and holders can be reluctant to sell at a loss. With US interest rates set to rise from historic lows, the outlook for the price of the precious metal may be downbeat. The price has fallen from around $1,887 an ounce at the start of the year to $1,786 today. However, crafted rings from quality jeweller such as Graff would meet Ms Kitt’s requirements perfectly.

Graff Gateway Classic white gold and diamond ring: £110,000

Convertible ’54

Financial market convertibles are a little less glamorous than the average Thunderbird Roadster. But convertible bonds offer convertibility at a significantly lower cost. These are bonds issued by a company which gives the buyer the ability to convert into that company’s equity at a predetermined price. In essence, if you are a fixed-income investor optimistic on equities then this might be the asset class for you. The trade-off is taking a lower fixed coupon for some equity upside capture. If you want to get a convertible, however, it’s probably better to buy it through a fund such as the RWC Global Convertibles, currently priced at 924.8p per unit.

Investment amount: £1,000

Duplex

A Duplex in central London could set you back around £2.5m, but a property fund accessed via unit trusts or investment trusts are much more affordable options to invest in property markets. Despite the uncertainty surrounding Brexit, decent demand and strong yields should provide something of a backstop for UK property funds, even allowing for any property void periods and sluggish growth in rents. Standard Life Property Income Trust, yielding 4.1% with shares trading at a 20% discount to their net asset value.

Investment amount: £1,000

Checks/cheques (Cash)

Although often overlooked as an asset class, Eartha Kitt was wise to include cash as a potential gift. Overall, it lowers the risk of a portfolio, and more active investors sometimes like to keep some cash aside ready for opportunities as they arise, perhaps when markets take a tumble. It is also worth noting that in the event of deflation, where both the cost of living and asset prices fall, cash can represent a good investment.

Cash: £1,000

But is this a balanced investment portfolio?

While Ms Kitt would relish an investment portfolio such as the one above left under her tree, it’s an investment portfolio only for the brave.

This is actually a very risky portfolio, with little diversification and a number of assets such as cars, yachts and diamond rings – which actually depreciate in value once purchased. The father of Modern portfolio Theory, Harry Markowitz famously called diversification ‘the only free lunch in finance’. The concept behind the ‘free lunch’ is correlation – or lack of it.

When markets are experiencing a difficult period, it is important to have a good mix of asset classes which are uncorrelated to each other help mitigate risk. Internationally diversified investment across numerous of sectors and asset classes is the best way to generate risk-adjusted returns. Buying assets that fall in value once purchased is not.