Before watching the following Bloomberg video, I'd never really considered the investment potential of fine timepieces and how a really nice watch today might be worth 7 figures 100 years from now. It was never a factor in my family - the nicest watch my dad ever owned was an $800 Bulova I bought him 20 years ago and he was buried with it. It's far from the $1.2 million this Patek Philippe fetched, but that's a new watch. The watch owned by Packard that he bought for $3,800 100 years ago went for even more. So would you buy a nice watch today with an eye towards what it might do for your family's estate 5 or 6 generations from now? It might make it a little easier to justify $20,000 on a timepiece...
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This is like people that buy wines and their great grandkids find a bottle in the wine cellar that has some really rare/unusual properties that make it incredibly sought after. Buy a watch because you like it, its high quality and you can justify the expenditure not because you think it will turn into an investment.
This analogy doesn't stop at wine. Think about all the baseball cards, pokemon cards, pogs, beanie babies, etc. that were insanely 'valuable' when you were younger and that plenty of adults sunk their hopes and dreams into in the hopes they would make a quick buck. Before anyone shits their pants, obviously watches and wine hold their value better than the other things listed but the same underlying principle is true; buy these things because you like them and find value in the item itself, not because you think it'll appreciate after you're dead.
Let's nto forget, too, that this was on the 'news' for a reason...its unusual (understatement).
I'm sure there's a case for it, but in the current environment I can't imagine a more illiquid asset. I agree with HPM, if you buy something that you really like, that's all the justification you need.
As far as Patek, I own one, and will never buy another one. My dad gave it to me. It's a finicky pain in the ass. I've had it repaired 4 times and don't even wear it anymore. I'd recommend durability when picking out a timepiece as well. What fun is a watch that you just leave in the winder.
The watch owned by Pakard returned 6.9% p.a. over 92 years or so... not bad at all.
I don't know how one would go about choosing a watch that would turn into a collectable.
I've never really understood the appeal of expensive watches. Any watch worth more than 2k is jewelry first, and a watch second. That said, if you want to get a Patek, by all means do so. But don't expect it to be a long-term investment. That kind of logic failed for my baseball cards, and will likely fail in this case as well.
don't talk to me about watches...
There is absolutely an investment opportunity in watches given you really know what you're getting into.
What you really need to factor in, especially in the long term, is the maintenance required to keep movements healthy. A full service, especially for vintage watches, can be really expensive. It's pretty much like a form of maintenance capex that you will have to incur every 5 or so years.
The other huge factor in the vintage watch world is who you know. I have heard crazy stories about how / where collectors find the one or two remaining examples of a given vintage Rolex, for example.
6.9% p.a. does not seem that impressive given the illiquidity, uncertainty, and the fact that watches are not an income-producing asset.
From Seth Klarman "Margin of Safety"
The value of collectibles, therefore, fluctuates solely with supply and demand. Collectibles have not historically been recognized as stores of value, thus their prices depend on the vagaries of taste, which are certainly subject to change. The apparent value of collectibles is based on circular reasoning: people buy because others have recently bought. This has the effect of bidding up prices, which attracts publicity and creates the illusion of attractive returns. Such logic can fail at any time.
Pretty much sums up my thoughts on investment like this, although people will be always making money.
6.9% p.a. over 92 years is phenomenal... What do you think equities or bonds have returned during that period?
I would not buy a watch as an investment. I would look at it as a consumer good/durable or jewellery. Only buy something you can afford and that you will enjoy using / wearing for decades... Make sure you treat it well.
The geometric average return on US equities from 1928-2011 was 9.23% per the following table from NYU Stern http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histret.html. The compounded return on $100 invested in equities in 1928 is $167K. That seems much better, much more liquid, and much more income producing than a watch to me.
Yeah, but its still an impressive return for what is a piece of man jewellery.
Dam these Patek watches are expensive, more expensive than Rolex..
Gold watches are going up, i hope..
Although I absolutely love watches and aspire to collect them when I have the means to, they are far from investments. 1. The watches referenced in this video are one offs, by no means is it an investment to go to your local jeweler and plunk down 6K for a mass produced entry level rolex sub. Watches that are "investment-grade" are rare and hard to obtain without significant knowledge of the industry. 2. I don't see demand growing, watches do not resonate with the young generation, therefore demand will decline soon.
Braverman you fucking gina stop jacking my recycled posts
side note: I actually copped one of those "is really 5K watches on ebay for about 8 bills and flipped it clean a week later...
for those to whom this sounds odd and implausible...it is what we referred to as "arbitrage" for the many eons preceding the 1980's.
MMM is right. A lot of the watches that you buy in stores can be had for a couple hundred by contacting a wholesaler. When I was in college I made a pretty penny arbitraging the Breitling and Tag Heuer watches.
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