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0 Are Watches Really a Good Investment?
When you’re shopping for a watch, you really want to know that you’re getting excellent value for your money. Let me start off by saying that typically watches are not a good investment vehicle. However, if you enjoy the hobby, planning to invest in watches, and are willing to take a chance to possibly make money, then this guide should help you avoid making a bad deal.
If many of you have already looked on the secondary market, you can clearly see the huge difference in the sale price and the used/gray market prices. What you gain in price difference, you lose in warranty especially with modern watches. I highly recommend that shopping at an authorized dealer, even if it costs a little more, is the best way to go for many modern watches because the authenticity shouldn’t ever be questioned. As an added bonus, you get a warranty which many times offsets the ongoing cost of maintenance.
Gray Market and Secondary Market Prices
If one of the questions you ask yourself is why is there such a big difference in the prices? Well, first it helps to define what a gray market watch is and a used watch. Typically gray market watches are sold by an unauthorized watch “dealer.” This means that these sites often source their watches from smaller merchants or stores skipping the many of the markups associated with buying from a traditional retailer or boutique. The trade off is that often the warranty is not accepted by the manufacturer and if you shop around, you’ll find many third party dealers with their own warranties.
Used watches are typically purchased by a consumer and are looking to resell on the secondary market. Often the prices they offer will be very competitive, but you may have to deal with some imperfections or lack of warranty. When purchasing from an individual, I highly recommend that you shop the seller. This means, if something feels strange or off about the deal or what the seller says, then it’s not worth investing your hard earned money.
Some key tips when purchasing from an individual:
- If you can try to have a conversation with the seller, preferably over the phone or in person if possible.
- Ask for extra pictures and compare them to known pictures of the watch in question online.
- Look for any imperfections and inquire about them if you see them.
- Many times, individual sellers won’t know the service history, so keep that in mind if you intend to wear the watch. Some may need more investment to fix or repair the watch into working order.
- Compare the price online.
Brands that Hold Value
As many of you may well know, both Rolex and Patek Phillipe have notoriously held their value or increased in value over time. Many by many thousands of percents. Keep in mind, not every line of Rolex has seen such dramatic increases in value like the “Paul Newman” Daytona. In fact, many watches that were popular in the 1950-1970s just didn’t grow in value at a comparable rate. However, almost all have increased in value, especially if you buy right. If you happen to get lucky and buy a bunch of steel Rolex sports watches in the 1950s and 1960s, then you’ve made a mint. If you bought the more popular (at the time) dress watches, you would have done better buying stocks. You just can’t predict the trends of the time with trends of the future. However, there is one caveat…
Comparing Rolex to Patek Phillipe: Investment Value
As I mentioned above, both Patek Philippe and Rolex offer serious investment value for the money, but which one is really better? The short answer is that it really depends on the model you purchased. Buying a steel sports daytona in 1960, would yield you phenomenal return on investment versus a Patek Philippe Calatrava or Ellipse. However, if you look closely and compare the average gain of each brand, Patek wins hands down. The cheapest Calatravas in moderately good conditions can be had around $6,000+. Thee cheapest Rolexes of comparable quality tick in around $1,000. Basically, if you were just investing and not focusing on a particular model, the Pateks offer great value and will most like continue to gain in value over time.
What Makes and Investment Worthy Watch
First first rule to investing is to buy what you like and research, research, research. When you research look out for telltale signs that the watch has been modified or redialed. Most of the value of the watch is always the dial. Getting as close to all original with as few imperfections as possible can really skyrocket the value. In Part 2 I’ll go into more detail about things to avoid when purchasing vintage watches, but for now, I’ll say just compare pictures with known watches sold online. Other factors include rarity. Is the watch made from a precious metal? Did they make under 1000, 250, 10 of them? The rarity factor can play a huge role in the pricing. Keep in mind, many watch brands offer a limited edition it seems every 3-4 months. *Cough* Panerai. I would shy away from those as investment unless you just love the watch. The last thing that really boosts the value is having paperwork, documentation and original boxes. If you find a watch you love in a complete set, I would consider grabbing that especially if the watch is over 30-40 years old. It’s much rarer to find complete sets.
For the TLDR (Too Long Didn’t Read) Crowd:
- Research pictures and compare to known watches
- Buy what you like
- Get as close to original as possible. The dial is especially important
- Avoid too many imperfections or restored dials
- Consider rarity or limited editions (unless there’s a limited edition every few months)
- Look for Box and Papers
Should I Buy Modern Watches or Vintage?
If you haven’t noticed lately, the Swiss watch industry is on a downward spiral, while there been huge uptick in vintage offerings. Part of this is the abundance of smart technology, consumer income has stayed moderately the same, and all the price increases may have finally hit the new watch industry. However, the vintage market is thriving. You’ll find B and C class brands fetching far more than their value is worth. Many people are trying to capitalize on the vintage market. If you buy vintage, be sure to do you homework or wait for Part 2 of this article. You can lose a lot of money buying in vintage. The modern watch market is more stable and pricing data is more widely available for many brands and models. I recommend you start with some modern watches that you enjoy before you ever consider vintage. Comparatively, it’s immensely safer.
How Much Money Should I Invest?
This is where it gets tricky. You never want to put yourself in a financial bind to make a purchase. I think you should only invest with extra cash and never with a credit card. You should do whats comfortable in your range. Many great watches can be had undervalued at $500 and equally overvalued at $5,000. This is why the “buy what you like” motto is important. That being said, I would avoid purchasing watches with over-inflated MSRPs or boutique/fashion brands. These will never hold their value or gain in value. When I’m buying a watch to resell eventually, I don’t buy anything where is can’t make $250 on the sale. (Sometimes I do lose money.) I set that as my limit, because it’s not worth the time, any possible fees, shipping etc to resell the watch. I started investing with about $500 many years ago. Now, I wouldn’t start with less than $1,000.
