Watches as an Investment
Watches as an Investment
Written by Anthony Tyme on December 12, 2018
Though we cannot recommend investing all your savings in watches, those who have followed the rise of interest in vintage watches evidenced that these watches have the potential of generating compelling passive returns. The vintage watch market can be volatile, with changing trends in watch sizes and case materials. Also rumors of new releases can be leading to a substantial run-up in prices and consequently in investment returns. That being said, its important to be aware of the general trends in the watch market and to commit to monitor and follow these trends on a constant basis.
Alternative investment asset classes have held an important place in diversified portfolios. Intelligent investors tend to allocate some of their assets to art, classic automobiles, wine, and jewelry instead of “gold, stocks, and real estate only”. Watches, unlike the assets listed above, offer more than just the intangible pleasure of knowing that they can be a viable store of value if appropriately taken care of. They can also give day-to-day pleasure as they accompany you through life on your wrist.
When it comes to investing in watches, the three crucial pieces of advice that cannot be stressed enough are as follows:
- First and foremost, only buy what you love, not what someone tells you should love or that someone tells you to buy. This is a watch you will be wearing day in and day out, and you should buy it with the primary intent of wearing it and enjoying it as a timepiece. If the timepiece appreciates, it is an added bonus. Making price appreciation the raison d’être is a rather easy way to experience buyer’s remorse when the price appreciation fails to materialise.
- Secondly, buy the seller: whenever you are spending any amount of money on a watch online, buying from a reputable dealer is part of making an informed decision. A good watch dealership will offer a wide product range you can choose from in addition to a number of warranties along with your purchase, with a warranty on the proper functioning of the watch and a lifetime warranty on its authenticity being the most important. You should avoid dealers that sell their watches “as they are” or with a time-limited warranty on authenticity. Dealers should also offer an option to upgrade your model at a later date, trading in your previous purchase against a more expensive watch as you move on in life.
- Third, if you are not sure which watch to buy, stick to the icons. Generally speaking, they are a lot easier to liquidate than exotic models, should you decide to sell your watch.
These are three tells that point to a high likelihood of price appreciation:
What follows are examples of watch investments over the last four years which went very well. Please not that even though these are real examples from our own watch database and bookkeeping data, there is no guaranteed margin when reselling watches and not each purchase will end up in a 7-plus % annual return. That being said, these examples should show the kinds of returns you can expect over time if you are lucky in choosing the right model at the right time for the right price. There is, of course, as in every other investment, the possibility of loss. (From our experience advising clients, investment losses are most often incurred when clients maneuver themselves to positions where they need money quickly – because of a divorce, for instance. Instead of making a rational decision, and shopping around for a fair offer, they sell their watch at completely underpriced valuations – e.g. at a pawn shop. So keep in mind that selling a watch often requires the patience to wait until the right buyer appears.
Again, please note, that this is real-life data. “2014 Vintage Portfolio’s sales price: 3.500 Euro to 2018 Vintage Portfolio’s sales price: 5.000 Euro” means that we actually sold such a model to a client in 2014 for the stated price and that we have sold a very similar model this year (in 2018) to another client for its stated 2018 price. The client who decided to purchased in 2014 from us has experienced a wonderful return on his investment, assuming that they still have the watch.
1. Iconic design: The Speedmaster, the Seamaster, the Submariner, the GMT Master, the Daytona, the Nautilus, and the Royal Oak will always continue to be in high demand because of their provenance and historical importance that makes them design icons of the watch world.
Omega Seamaster 300 Vintage Wide Bezel:
2014 Vintage Portfolio’s sales price: 3.500 Euro
to 2018 Vintage Portfolio’s sales price: 5.000 Euro
Sales price appreciation : +7.4% annually
The evolution of the Seamaster is a testament to the human spirit that pushes us higher, faster, and most importantly deeper. The age of exploration gave birth to watches built for specific purposes and for specific professions. The ‘50s saw the creation of the dive watch, the racing watch, the engineer’s watch, and the pilot’s watch (e.g. Univérsal Genève Polerouter). Omega capitalized on this trend by releasing a set of three “Professional” watches in 1957, with each dedicated to a specific target group of individuals: Seamaster, Speedmaster, and Railmaster. The Seamaster 300, CK 2913, was Omega’s first dedicated dive watch and featured a rotating dive bezel, and in a bit of a misnomer, water resistance of up to 200 meters. Omega felt that measurement technology was insufficiently advanced to measure the watch’s true capabilities and insisted that the watch’s true water resistance exceeded the “official” depth rating. If you want to read more about the history of the Omega Seamaster, click here.
Omega Constellation Pie-Pan Steel:
2014 Vintage Portfolio’s sales price: 500 Euro
to 2018 Vintage Portfolio’s sales price: 1.100+ Euro
Compounded sales price appreciation: +17.1% annually
Omega Constellation Solid Gold:
2014 Vintage Portfolio’s sales price: 1.000 Euro
to 2018 Vintage Portfolio’s sales price: 2.000 Euro
Compounded sales price appreciation: +14.9% annually
The Constellation was born in 1952, essentially a successor to Omega’s first automatic chronometer-grade watch, the Centenry of 1948, that was designed to commemorate the 100th anniversary of the company’s Biel watch factory. The Constellation was designed to be a flagship model and a true test of Omega’s engineering and watchmaking prowess. If you want to read more about the history of the Omega Constellation, click here.
Rolex GMT Master 1 Full Set:
2014 Vintage Portfolio’s sales price: 4.500 Euro
to 2018 Vintage Portfolio’s sales price: 8.000 Euro
Compounded sales price appreciation: +12.2% annually
Rolex Datejust Steel:
2014 Vintage Portfolio’s sales price: 2.500 Euro
to 2018 Vintage Portfolio’s sales price: 3.400 Euro
Compounded sales price appreciation:+9.0% annually
The Datejust was the first watch with an instantaneously changing date display. The design language of the Datejust has remained true to its origins, and though the model has continued to evolve technologically, it retains its original pedigree as a dressy but capable sports watch and remains one of the cornerstones of the brand. Feel free to read further here.
2. Low-production watches: This is simple economics and ties into the basic idea of supply and demand. Watches that had very short production runs (provided that they were manufactured by a respected brand) will likely always face robust demand, even if they do not experience stratospheric price appreciation as in the case of the first category of watches.
2014 Vintage Portfolio’s sales price: 2.000 Euro
to 2018 Vintage Portfolio’s sales price: 4.000 Euro
Compounded sales price appreciation: +14.9% annually
1957 was a year that changed Omega’s fortunes, a year in which the company released a trio of tool watches that have become perennial favorites at auctions and that continue to be bedrocks of the Omega lineup: The Speedmaster, the Seamaster, and the Railmaster. The 35mm Ranchero was first manufactured in 1958, as Omega tried to capitalize on the popularity of its tool watch trilogy by selling a more economical but similarly-styled manual wind watch. The Ranchero was not designed for a specific profession in mind as were the other three. It was more of an everyday watch, suited both for work-related needs as well as for more genteel occasions. Call it Omega’s answer to the Rolex Explorer I in terms of styling. What makes the Ranchero a fantastic investment opportunity is its relative rarity. The watch was a spectacular failure, due to the Spanish-speaking world’s resistance to the model’s name, which translates to “ranch hand”, leading production to be cut after a mere two years.
3. Certain Limited edition watches: By having a limited production run, watch companies try to strengthen brand equity and the image of an illustrious past by calling attention to technological feats or other noteworthy achievements. Omega in particular is notorious for frequently releasing Speedmaster (Apollo anniversary-themed) and Seamaster (007-themed) limited editions. Especially the Speedmaster Limited Editions tend to perform well on the secondary market because they inherent collectability of the Speedmaster line. Please note, that investment success in Limited Editions can be significantly enhanced if you purchase these watches a couple of years after their release on the pre-owned market for a much lower price than their initial sales price. This is very important and can be compared to the price-value effect of a car when purchased brand new vs purchased pre owned, 1-2 years later.
Omega Speedmaster Professional Alaska Project:
2014 Vintage Portfolio’s sales price: 5.500 Euro
to 2018 Vintage Portfolio’s sales price: 12.000 Euro
Compounded sales price appreciation: +16.9% annually
Omega’s Alaska project refers to the company’s code name for watches expressly designed for the future of manned space flight, specifically, as watches to be worn during EVAs. The 2008 LE shipped with a bright red aluminum housing meant to shield the watch from extreme temperatures. This unique accessory and the model’s unique stark-white dial have made it stand out among Speedmaster LEs, as evidenced by its steady price appreciation!
These are pictures of an Alaska Project Speedmaster that we just delivered to its lucky new owner!
In most of the examples above, I used the timeframe of January 2014 – December 2018 to calculate the anual compounded returns. For comparison, the S&P 500 returned a 7.6% annual rate of return during this same period. Vintage watches frequently have lifespans that extend past that of their original owners. Like books, their lives are composed of a number of chapters written over time by their owners. Each watch tells a story and that, I think, is what draws us to vintage watch collecting in the first place. If you buy your timepieces knowing you might be able to sell them for more than you bought them, well, that might just be the cherry on top!
exclusively for Vintage Portfolio