#98: Are Watches as Investments Legit?

Hey all, it’s MMV.

If you’re reading this, you’re probably interested in the normal investments like the stock market, real estate, cryptocurrency, etc. but I’ve never talked about alternative investments like collectibles.

Examples of collectibles is art, coins, cars, and watches.

As a watch enthusiast, I enjoy watching the videos of watch dealers in NYC’s Diamond District buying and selling watches, mainly Rolex watches. One dealer buys a watch from another dealer (at dealer price) and then sells it to a customer in the same video to show how much he made on the flip.

I don’t buy watches with the expectation of selling them for a profit - if I did, there are specific watches to buy, which I’ll go over.

If you’re a watch enthusiast or interested in learning about different watch brands, I found this awesome newsletter about watches:

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Like most things in a capitalistic economy, the value of watches is driven by supply and demand. The price of a watch goes up when demand outpaces supply.

Rolex, probably the most recognizable watch brand in the world, is notorious for having a waitlist for their popular watches.

Imagine you want to buy a new Rolex watch and you walk into an authorized dealer (AD), or a store that sells new Rolex watches, only to be told that the watch is not in stock and you’d have to be put on the waitlist. This waitlist is not a real waitlist where you’ll called when it’s your turn on the list. Instead, you’ll be interested into their database and maybe get a call one day (a year or two or never) that your watch came in.

ADs play this game to string customers along or to entice customers to buy other watches or jewelry so sales associates can get other sales from you. The bigger your spend history is, the higher likelihood you might be considered an allocation for this watch. This relationship is very much quid pro quo.

One of the most demanded Rolex watch is the Rolex Daytona.

Even people who spent $100,000 on other watches and jewelry for their spouse haven’t been offered this popular $16,000 watch. This watch is so popular that it sells for $32,000 in the secondary market! Most people will HAVE to buy it in the secondary market because they’ll never reach that level of spend history.

Technically, if you were lucky to buy this watch at retail price, you could sell it to a dealer for an instant profit. However, just because the brand is popular, does not guarantee appreciation over time.

Continue reading as I’ll go over some factors that influence watch values.

“If I hear bad news about the stock market one more time, I’m gonna be sick.”

We get it. Investors are rattled, costs keep rising, and the world keeps getting weirder.

So, who’s better at handling their money than the uber-rich?

Have 3 long-term investing tips UBS (Swiss bank) shared for shaky times:

The catch? Most alternatives aren’t open to everyday investors

That’s why Masterworks exists: 70,000+ members invest in shares of something that’s appreciated more overall than the S&P 500 over 30 years without moving in lockstep with it.*

Contemporary and post war art by legends like Banksy, Basquiat, and more.

Sounds crazy, but it’s real. One way to help reclaim control this week:

Skip waitlist.

_{*Past performance is not indicative of future returns. Investing involves risk. Reg A disclosures: masterworks.com/cd}

Demand and supply determines the value of watches. Why people want to buy certain watches and not others can be because of one or several reasons out of the endless possibilities:

A recent example that got non-watch enthusiasts going nuts over was Taylor Swift’s engagement photo:

This photo sparked a lot of interest on the watch she’s wearing. Taylor Swift is a global artist with a loyal following who want to know all her outfits and accessories. Not only is this the watch she wore for her engagement photo, but what makes this piece even more fascinating is that it’s a discontinued model too.

It should be no surprise that rarity plays a factor. Brand name alone is not enough. Even if a watch comes from a prestigious maker, that doesn’t guarantee appreciation. What matters is how many exist and how many buyers want one.

Watch brands periodically release a limited number of models, which can drive up its value in the secondary market because once they sold the last one, that’s it.

I purchased a Grand Seiko Kiku, which translates to chrysanthemum, during my trip to Japan earlier this year. This model was released in 2018 and only 1,000 units were manufactured so I obviously had to buy it in the secondary market.

I purchased this watch for about $7,800 at a pre-owned watch store. One seller has it listed for $16,095 online.

Just like classic cars, the condition of an older, desirable watch matters. This video of a veteran with a classic Rolex Daytona in mint condition, originally purchased for $345, was worth about $400,000 a few years ago.

A pristine, rare model could appreciate, but an over-produced luxury watch probably won’t.

Like a stock of a company with high expectations, there are no guarantees to the value of watches. The company could implode and a watch you plan to keep to sell for a profit later could just not be desirable. The value will change depending on consumer interest so personally, I would not think of watches as reliable investments. Even popular Rolex watch values fluctuate.

I personally only collect watches I will wear and appreciate. Yes, watches can be a store of value, but I don’t expect to make a profit off it unless it’s a watch I intend to sell right away.

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