10 Things To Consider Before You Start Investing In Watches
The most popular topic among watch enthusiasts today is how to make a fortune by trading specific models. Typically, novice watch collectors will consider both the pleasure of purchasing new timepieces and the profit they can make by selling them. Many people believe that any Swiss watch is a good investment that will pay off in the near future. Of course, this does not apply to all collectors; there are numerous reasons and motivations for purchasing watches, and watch enthusiasts can be classified into a variety of groups, but I believe you know who I am referring to here.
In most cases, watch brand marketing can pique this interest. The return on investment for luxury watches is twice that of the stock market, according to Luxe Watches, a British company. Luxe Watches discovered that Patek Philippe Watches performed better than the two largest stock market indices, the Standard & Poor's 500 and the FTSE 100, in terms of after-sales market performance. Rolex is the most popular watch brand on the market, and performing similarly sounds extremely profitable! "Keep your mouth shut, take my money," are you prepared to say? It's a little more complicated than that. The reality and myth of investment watches are very different. To help you understand this complex problem, we'll introduce some of the most important questions you should ask before investing.
Is it possible to make money by buying and selling watches?
In a nutshell, yes. But first, you must consider how you will purchase. There are several options. The first option, paying retail in a boutique, may be the most difficult. You may need to become a frequent visitor to the boutique for this, and popular models will not sell to any elderly person on the street. Second, you can buy from a store that sells antique watches, but the price will be exorbitant. The third option is to search for and purchase watches online, where you will find a wide variety of options, convenient search options, useful price comparisons, and a reputable online platform with years of experience.
To make money in the short term, you must be able to purchase the most popular models at retail prices and then sell them at a higher price. If you succeed in some way, the brand may accuse you of speculating, and you will be placed on the blacklist, preventing you from officially purchasing anything again. This strategy may be profitable, but it is primarily reserved for secondary market participants and investment firms, not individuals.
How long does it take to see a return on investment?
According to the Knight Frank Luxury Investment Index, the watch offers the highest long-term profitability (up to 108% in 10 years) if you get a very interesting model. In the short term, you can only profit from hype models like the MoonSwatch (recommended for $450 but with a secondary market price of $4,500) or the Patek Philippe Tiffany Nautilus (recommended for $52,000 but sold at a Christie’s auction for $3.3 million). Despite the price increase this year, the watch's value continues to rise.
When did secondary markets begin to thrive?
As long as watches exist, the collection of watches has always been a common practice for the rich. Collectors appreciate the watch's complexity, craftsmanship, attention to detail, physical labor, and uniqueness. For example, thanks to American banker and watch collector Henry Graves, the super-complex functional watch of Patek Philippe Henry Graves Supercomplication, which has been the most sophisticated watch for decades (sold in 2014 for $24 million at Sophia). However, the 1989 Patek Philippe auction coincided with a surge in interest in the secondary watch market. The growth of the Internet and social media has fueled this interest even more. In recent years, investment firms, auctions, and secondary market sellers have entered the fray, and the luxury sector has thrived as a result.
Which brands are the most profitable?
There is no secret here. If you look at the recent performance of the leading auction houses, you will notice that Patek Philippe and Rolex are the big winners. In recent years, Audemars Piguet has also joined them, and you will occasionally see massive amounts of data from A. Lange & Söhne, Vacheron Constantin, Cartier, and Omega. Several independent watchmakers, including market leaders F.P. Journe and Philippe Dufour (watches from both brands sold for more than $1 million), also had huge success at auctions.
Is it better to invest in a new watch or a pre-owned watch?
This is a difficult question that is heavily dependent on timing. For many watches, if you buy something brand new, you'll hit its value as soon as you walk out the door - just like a car - and it may take years, if not decades, to return to vintage condition. That is why it is best for modern watches to buy a lot of pre-owned ones, allowing others to eat their depreciated money. Purchasing a watch at this discounted price can reduce the amount of time it takes to see a return on investment.
While pre-owned and antique watches are very worth looking at when investing, they are not the only options. Modern watches such as Patek Philippe Nautilus, Audemars Piguet Royal Oak or almost all modern Rolex models are difficult to get in retail stores, so they will immediately increase in value after you buy one.
What factors influence the watch's value?
There are many factors that affect the performance of the watch. These five things are some of the most important considerations:
- The brand should be well-known.
- The model must be limited to a single release or series.
- The brand should be interested in supporting its watch's secondary market, such as by organizing and participating in auctions, opening its own museum, and so on.
- The watch must be intriguing in terms of design, materials, technology, and innovation.
- The economic environment must be favorable.
When should you sell your investment watch?
The standard investing rule is to buy low and sell high, but we don't always know the low and high prices for any given asset. However, if you keep an eye on the market and trends, you can use this information to help you decide when to sell. Keep an eye on your specific reference and monitor the value of the watch over time.
In general, if the value of a timepiece is increasing, it is a good time to sell. If you continue to wait for the peak in order to maximize your profits, you may not be able to pull the trigger quickly enough and end up leaving the bag behind. The only way to guarantee a profit is to sell the watch as soon as it is worth more than you paid for it. Spend your money wisely, my friends.
Why have the prices of some watches dropped in recent years?
Obviously, prices cannot continue to rise indefinitely. Furthermore, many believe it is time for the "secondary market bubble" to burst. to burst. However, unlike the securities, real estate, and precious metals markets, where price fluctuations can be explained by real factors. Watches are considered luxury items, emotions are central to buying decisions here, which are notoriously unpredictable. Watch prices began to fall after the cryptocurrency market crashed in March 2022. This is aided by the world's general insecurity. However, many models not only maintain their status, but also increase in value. Of course, we're talking about auction favorites. In general, if you follow the price curve of many watches over time, you will notice a steady increase in value, albeit a slight decrease.
What specifications must new watches meet in order to maintain their value?
First, you should consult with industry experts. This will assist you in comprehending the current state of the watch market. If you are purchasing a watch with the intention of reselling it, you should keep the original box, papers, receipt, and warranty card. If you intend to wear your watch during this period, keep it clean and in good working order. If you inherited a watch and the model is valued by industry experts, you should take it to an official service center for repair. NOTE: Polishing a precious metal watch can significantly reduce its price.
Are there any celebrities who invest in watches?
Nobody I know publicly admits to buying watches for the sole purpose of investing. However, there are prominent collectors who occasionally organize private exhibitions, the largest of which took place last year. Patrick Getreide presented his collection in London, displaying 168 of a total of more than 600 timepieces, all of which are rare creations from Patek Philippe, Rolex, and others, but this event was an exception. Collectors rarely display their treasures to the public. Is Patrick Gertrude a real investor? In a way, yes. His collection is priceless, but will Patrick sell it to make money? Probably not. It delineates the difference between a collector and an investor. Rather than openly supporting the hype surrounding its watches in the secondary market, brands prefer to encourage loyal collectors who are there for life, while investors walk away disappointed after a few failed purchases.
Thierry Stern, president of Patek Philippe, thought that It was irrational to buy a watch for the purpose of investing. If people dislike owning it and only pay attention to price fluctuations, when it runs out, their mood will suffer. So, why spoil your mood? You should only buy a watch if you love it and want to wear it every day.