Friendly Reminder, Watches Are Not A Sound Investment Strategy
Every now and then we hear the amazing story of someone who bought a Rolex, put it away because they were afraid to wear it, and then found out it is now worth a small fortune. There is the great example of the the gentleman on Antiques Roadshow who had a rare unworn Paul Newman Daytona with the sticker still on it that he stashed away. Paid $374 in 1974 and the "expert" said it could potentially fetch upwards of $800K at auction. This is not talking about those rare models, or unique stored away untouched circumstances. I am also not talking about going in and buying a hot piece at MSRP and immediately flipping it.
This is about the watch one buys, wears, and holds onto to pass it down, or worst case have to sell. I am talking about at least a decade-long play. For the sake of ease, I will use the Daytona.
Let's say in 1974, one purchased a Daytona for $374, wore it, likely had it serviced a few times, but simply enjoyed it for almost 50 years.
Here is what an example one traditionally attempts to sell for today (live listing from C24):
What happens if you put that same money in the S&P in 1974:
You would have about $67K. Assuming a few services, perhaps insurance, etc, at best break even. In this case, you'd have 50 years of experience with a watch for almost no cost. That is pretty cool. Then again, most folks lose stuff, have it stolen, etc. so there is that to deal with.
Let's fast forward 14 years to 1988. The MSRP was $2350. Here is an average 16520 Daytona listing:
If you invested that same amount in 1988, that would be about $87K today.
Let's do one more, bringing us to the year 2010. If you were lucky to buy one at retail for $10,400, it would be worth about $25K today.
Had you invested that same amount in the S&P, almost $53K.
I am not saying there are not individual circumstances one can point to where a unique watch wins, there are many, but for the most part, over the long term, traditional investments outperform collectible hard assets. Is the S&P as fun? No. Can you wear an investment statement? No. However, I would advocate enjoying your watches and not worrying about whether they will be good investments or not. Experiences and smiles have no price.
This holds especially true in a market saturated with products, which is why the trend is not as good for modern watches as the older, rarer pieces that were never intended to be collected.
Have fun friends.
Watch enthusiast who insists on the next watch being the last.
I worry about people who think of watches as investments.
I worry about people who think of watches as investments.
Agreed. People hear an overnight success story and think that could be me, when in reality most millionaires did it slowly, wisely, investing over time.
Watches are a luxury Veblen purchase. A watch in a safe for 40 years collects zero interest, dividends, rent etc. You can't sell options on the watch etc. At best you get more than you paid for a watch. The S&P example set is telling. Watches are jewelry from a $30 Casio to a $1 Million Richard Mille. IMO wear what is in your personal budget and never consider a watch an investment.
Maybe I was taught to be fiscally conservative because growing up we didn’t have much but there are very few items in the world where you buy it and expect it to gain value. By and large the majority of watches are not investments.
The brands, ADs and the grey market are spewing this non-sense. All it does it affects the general market, now people are afraid to buy a watch they like in fear of loosing money thinking a GS, TAG or Panerai are suppose to keep "value retention".
I worked in financial services for 20 years advising clients on investments, retirement planning etc. In that time you meet all kinds of people & most do not look beyond standard investment & savings products. You do however meet the odd person that looks beyond the products that are available to consumers.
Over the 20 years I met many people that invested in precious metals, vintage cars, art etc. I never once met a person that said they had invested in watches. Never once was there even a nod to the gold Submariner they were wearing now being worth XXXXXX.
I really don't believe that investing in watches has been a serious concern for anyone other than the odd person over recent decades. What we have seen over a short period is a fad & a belief that watches make money. This was fueled by the covid lockdowns & was never going to last. People having too much time on their hands & greed, fueled the rapid rise in certain watch values.
Over the years what I have witnessed is that the faster an asset rises, the faster the asset falls when interest dies or the asset simply becomes overpriced. It happened with Tulip bulbs & it's happening with watches. When the general public at large are investing in something because they've heard there's money to be made. I'm afraid that ship has sailed already & you're not on it.
Sobering reminder not to get carried away, unless you have money to burn, or you really know what you are doing investing in a very high value piece and can take the risk on.
Watches are a luxury Veblen purchase. A watch in a safe for 40 years collects zero interest, dividends, rent etc. You can't sell options on the watch etc. At best you get more than you paid for a watch. The S&P example set is telling. Watches are jewelry from a $30 Casio to a $1 Million Richard Mille. IMO wear what is in your personal budget and never consider a watch an investment.
Pure wisdom. 💯
Yes yes yes !
I see watches as a luxury period. A luxury is not an investment. If you have money to invest put it towards your retirement. If you don't have a retirement get one before you start buying watches.
Watches are a great investment if and only if you have a reliable crystal ball that tells you which watch will blow up next. The numbers, as you show, don't support it otherwise.
Another thing to maybe add is that the "average" watch (ie the market) did way worse than the Daytona whereas the index is quite representative of the market and requires no guessing what will work. Daytona vs something like a cherry picked such as Apple is perhaps a "better" comparison in that regard.
I bought a steel nautilus new from the Ad after a 5 year wait. Let’s just say it’s was one heck of an investment. Don’t tell PP 😉
This post should be required reading...
A watch is akin to an art piece.
When the price of a watch rises beyond the manufacturing cost, (materials used, advertising & PR fees, manpower costs etc) has absolutely no relevance to how it is traded. It became an investment because of the 'perceived value' through deliberate marketing. This forms a general opinion that certain 'models' should be traded at an 'X' amount of value.
It becomes even more of a self fulfilling prophecy when 'data driven researchers' put the transaction amount across time, value into a visual graph. I agreed with many fellow crunchers here. Watches are purely for enjoyment. It is not an investment. It is important to realize this early on so you would not be despair when you finally part your watch/watches at a loss.
Of course, It is still possible have monetary gains but that's not the discussion here.
This post needed to be done so the younger fella’s and gals can make better decisions with their savings . Good post 🙂 I am retired at 62 and have been retired since I was 57 so not rich but doing ok . My most valuable asset these days is time with the granddaughter:)
Watches are not an investment vehicle lol!
Wealth is gained over time. My father taught me this one thing about finances.
First bill you pay is yourself! Thanks dad!
The younger you are and fully embrace this you will easily get there. The older you get, it will take more to save.
I also recommend multi revenue streams and pay off all debt are very important before you retire.
I retired 6 years ago at 56. My wife and I worked hard to obtain this while raising 2 boys. Take advantage of employers matching retirement systems and other opportunities offered by companies. Max these out and use Roth IRAs.
Doing this has paid off for us. Only a fool places all his assets in one basket. We are fortunate to be able to keep up with inflation. We are well off because of financial discipline. Our boys one 30 and the other 26 are dept free and have their savings happening. They listened to him and yes a little bit of me.
So I buy watches I like and wear them. I don't finance them. Fools do that. Sorry if this may offend some of you. Get over it! Be responsible to yourself. You buy a 25k watch you better be that person who can afford it. Don't try to impress someone under false pretenses. Most Americans will not retire with enough saved. It's a fact. Don't keep up with the Jones it will bite you in that butt of yours.
We'll I hope you get lol.
Enjoy your watch!
A watch is akin to an art piece.
When the price of a watch rises beyond the manufacturing cost, (materials used, advertising & PR fees, manpower costs etc) has absolutely no relevance to how it is traded. It became an investment because of the 'perceived value' through deliberate marketing. This forms a general opinion that certain 'models' should be traded at an 'X' amount of value.
It becomes even more of a self fulfilling prophecy when 'data driven researchers' put the transaction amount across time, value into a visual graph. I agreed with many fellow crunchers here. Watches are purely for enjoyment. It is not an investment. It is important to realize this early on so you would not be despair when you finally part your watch/watches at a loss.
Of course, It is still possible have monetary gains but that's not the discussion here.
Good art is hard to come by not only that the artist must continue to produce pieces that push the envelope in their medium, majority of watches are just watches, do we need a piece of art as a tool no! Do we need a watch as a tool yes, and some watches are works of art, people get lucky with some collections, I’m just watch fan and like to read about how people bought sold or stole a deal from someone lol
Great post. I guess it seems I'm preaching to the choir here. I hope younger people understand that time is on their side now than later to invest in their future. I hope there is at least one who reads your post and gets it.
Thanks
To me, it is simple. If the value goes up, I am an investor. If the value goes down, I am a collector. My investment is quickly turning into a collection now.😂
Good art is hard to come by not only that the artist must continue to produce pieces that push the envelope in their medium, majority of watches are just watches, do we need a piece of art as a tool no! Do we need a watch as a tool yes, and some watches are works of art, people get lucky with some collections, I’m just watch fan and like to read about how people bought sold or stole a deal from someone lol
Arts are subjective. Watches are subjective too. It becomes desirable not only the function, artistic beauty in these mechanical engineering and also because of the portrayed images from the media standpoint. I simply illustrated the fact that watches are considered a form of an art if beyond a certain price point.
Everything else becomes irrelevant.
Why would anyone pay in an auction for 10,20 or even 50 millions for a watch that is simply replaceable with a digital quartz or modern days smartphone.
Just think about that.
Arts are subjective. Watches are subjective too. It becomes desirable not only the function, artistic beauty in these mechanical engineering and also because of the portrayed images from the media standpoint. I simply illustrated the fact that watches are considered a form of an art if beyond a certain price point.
Everything else becomes irrelevant.
Why would anyone pay in an auction for 10,20 or even 50 millions for a watch that is simply replaceable with a digital quartz or modern days smartphone.
Just think about that.
I don’t know why anyone would pay millions for a watch an obsession maybe, or to please a crowd, I’m a retired artist and at times I felt guilty for changing high prices for my work, but people that know what they are paying for and that it will have value in the future , but a watch is a watch a luxury item, don’t get me wrong I love the higher end watches but I won’t pay for a Rolex like other collectors, I’m just a watch enthusiasts with no budget to buy an expensive watch, I did buy myself a Tissot seastar 1000 last year, even that was hard for me to justify the price as you probably know Tissot watches aren’t expensive but it’s a tool to me, we live in the north sometimes keeping track of time is important our cell service is spotty at best and my home internet not reliable, and thank you for commenting we need dialogue to learn from each other without politics and without judgement
I don’t know why anyone would pay millions for a watch an obsession maybe, or to please a crowd, I’m a retired artist and at times I felt guilty for changing high prices for my work, but people that know what they are paying for and that it will have value in the future , but a watch is a watch a luxury item, don’t get me wrong I love the higher end watches but I won’t pay for a Rolex like other collectors, I’m just a watch enthusiasts with no budget to buy an expensive watch, I did buy myself a Tissot seastar 1000 last year, even that was hard for me to justify the price as you probably know Tissot watches aren’t expensive but it’s a tool to me, we live in the north sometimes keeping track of time is important our cell service is spotty at best and my home internet not reliable, and thank you for commenting we need dialogue to learn from each other without politics and without judgement
I agreed with you on the majority part that a watch is a tool in it's simplest form - to tell time. Beyond that, it's an artistic expression from a watch maker's perspective, and the people that are associated with a collective mindset.
Below is an example of an artwork piece by F.P. Journe.
This chronometer A Resonance cost between S$290K-S$550K+.
My question is: who are the ones who determine these prices?
To a normal watch enthusiast, the price point is certainly beyond reach. However, there are some collectors who can afford to pick up this piece and treat it as a piece of an art.
This is the biggest distinction between those who treat watches as an investment, and those who viewed it as a form of a collective art pieces.
Only time will tell whether there are rooms for appreciation in years to come.
https://robbreport.com/style/watch-collector/glen-de-vries-watch-auction-1234899907/amp/
This article is a great example that there are some collectors with economic might would scoop up these timepieces without a blink of an eye at an auction.
Clearly, they don't see them as 'tool' watches anymore than some sort of a 'art' collection.
I agreed with you on the majority part that a watch is a tool in it's simplest form - to tell time. Beyond that, it's an artistic expression from a watch maker's perspective, and the people that are associated with a collective mindset.
Below is an example of an artwork piece by F.P. Journe.
This chronometer A Resonance cost between S$290K-S$550K+.
My question is: who are the ones who determine these prices?
To a normal watch enthusiast, the price point is certainly beyond reach. However, there are some collectors who can afford to pick up this piece and treat it as a piece of an art.
This is the biggest distinction between those who treat watches as an investment, and those who viewed it as a form of a collective art pieces.
Only time will tell whether there are rooms for appreciation in years to come.
Yup, but wow
Someone in this app told me stop buying watches under 1k and just focus on rolex after I posted a few pics because they're shitters and rolex is an investments.
Lmao. Great post. 👍
I think one of the hardest thing about watch as an investment trying to find a buyer whom is willing to buy at the asked price.
Most of the watches are selling at below retail and already that is a lose to most of us.
I guess there still some watches that goes above retail but it is usually from the 3 brand that we know and is difficult to obtain.
To me anyway, I don't think I have enough capital to buy such premium watches as investment and worst I don't really know where to sell this to make sure I get the profit as well.
But that does not bother too much if I know it is my hobby, and I get something I love. Just like my food or clothes or shoes.
Watches are not an investment vehicle lol!
Wealth is gained over time. My father taught me this one thing about finances.
First bill you pay is yourself! Thanks dad!
The younger you are and fully embrace this you will easily get there. The older you get, it will take more to save.
I also recommend multi revenue streams and pay off all debt are very important before you retire.
I retired 6 years ago at 56. My wife and I worked hard to obtain this while raising 2 boys. Take advantage of employers matching retirement systems and other opportunities offered by companies. Max these out and use Roth IRAs.
Doing this has paid off for us. Only a fool places all his assets in one basket. We are fortunate to be able to keep up with inflation. We are well off because of financial discipline. Our boys one 30 and the other 26 are dept free and have their savings happening. They listened to him and yes a little bit of me.
So I buy watches I like and wear them. I don't finance them. Fools do that. Sorry if this may offend some of you. Get over it! Be responsible to yourself. You buy a 25k watch you better be that person who can afford it. Don't try to impress someone under false pretenses. Most Americans will not retire with enough saved. It's a fact. Don't keep up with the Jones it will bite you in that butt of yours.
We'll I hope you get lol.
Enjoy your watch!
Well said. Best thing my parents did for me financially is pretty much force me to open a Roth IRA when I was 19. Haha. I didn't understand why it was so good then, but later in life, I learned just WHY a Roth is so great as an investment vehicle (and learned how great/easy Index investing was). Unfortunately, neither my wife or I have access to a 401K as we are self employed, but we make sure to max out the Roth and throw extra investing beyond that into a taxable brokerage account. Building up those assets is much more important to me than watches.
Watches are not investments true. But there are safer brands to put your money than others. There are also worse hobbies to throw your money into.
Watches are not investments true. But there are safer brands to put your money than others. There are also worse hobbies to throw your money into.
Absolutely. Value retention and getting allocation models certainly helps.
Being a finance guy in the investment management industry, I wholeheartedly endorse this post.
Invest in a well balanced combination of equities and fixed income securities preferably in low cost active investment strategies, and you will be able to enjoy a number of beautiful watches in your retirement.
However, if you decide to spend those funds on cars, boats, and other depreciable assets, then you will be trying to live on your Social Security payments and working somewhere in your 70s to pay the bills. You will have collected all the experiences of having spent that money in your youth, but those experiences will not have any residual financial value.
All depends on your priorities...