For decades, investors have been seeking ways to diversify their holdings away from traditional stock and bond portfolios by including other asset classes.
As a result, alternative investments have become a standard slice of the allocation pie.
Alternative investments is a term often used when portfolio allocations include assets diverse as precious metals, agricultural futures, private equity, venture capital, hedge funds, real property, commodities, and tangible assets, such as vintage wine and works of art. In the latter category, timepieces (i.e., high end wrist watches) have attracted a wider and wider following.
Of course, as the timepiece following grows, great investment-class pieces get harder to find, and the thinner supplies push up the price tags, simple supply and demand being the rule of the day. Before the trend began, bargains were still available, but building your knowledge base and doing your homework can still lead you to hidden gems.
An added benefit is that a beautiful watch is an investment that you can wear, even though you may not want to, considering the very high prices they can command.
So if you think investing in timepieces is right for you, where do you start?
As with every other type of investing, the internet will probably be your first stop.
Hodinkee offers two great podcast, Hodinkee Radio and The Gray NATO. Well over a hundred episodes and counting for an enjoyable education on the ever-growing appreciation of horology.
Chrono24 recently posted Are watches really a good investment?, by post author Jorg Weppelink. “Overall, it’s important to have realistic expectations when you are looking to invest in watches,” he writes. “Be prepared to not only invest money, but also a lot of time familiarizing yourself with the brands, watches, and their stories. Making a smart purchase means finding a great watch that will retain its value (should you decide to sell it one day), while also enjoying it for yourself for years to come.” This article may be your best starting point to help you determine if watch investing is right for you.
…doing your homework can still lead you to hidden gems…
You will get a solid education by spending time on both Hodinkee and Chrono24. And in doing so, you should be able to answer the question you should be asking yourself first: Do I have an interest in watches? Not only as an investment, but in the watches themselves.
Perusing both sites and spending some time window shopping on eBay can give you a general understanding of the market, prices and price trends. But be careful: Photos of watches are as appetizing as food to collectors and aficionados. Salivating is not uncommon. The metals, colors, shapes, features, strap variations. This is all eye candy to the watch geek.
Plan to spend a minimum of three to six months doing this online research, but you need to visit local bricks-and-mortar shops before you ever plunk down a wad of hard earned dollars. Online education is fun and efficient, but you will need to handle the merchandise. Nothing could possibly persuade or dissuade you more than slapping $10,000 on your wrist.
Everyone knows Rolex. Patek Phillipe not so much.
The most expensive watch ever sold at auction was the Patek Phillipe Grandmaster Chime Ref. 6300A-010, a pocket watch that sold for $31.9 million and the transaction was handled by Christie’s.
The most expensive wristwatch ever sold at auction was Paul Newman’s Rolex Daytona, reference 6239, the actor’s beloved “daily wear” watch. It fetched $17.75 million.
His wife, actress Joanne Woodward, purchased the stainless steel watch for him in 1984. It’s likely she paid the going price of the day: $210. It wasn’t an investment, just a nice gift for her hubby. The caseback is inscribed, “Drive Safe, Me.” The Oscar-winning legend was also a race car driver.
As in mutual funds, past performance is not indicative of future returns! For instance, you can buy a new stainless steel Rolex Daytona today for $15000, give or take, given the exact model and features.. The difference? Paul Newman, of course.
Vintage pieces gain status in the investing world based on their horological pedigree and, less often, whose wrists they adorned.
But watches, not unlike stocks and bonds, are often bought for the purpose of enjoying them and then passing them down.
But there is one foolproof way that you can ensure a watch becomes priceless.
Anyone who’s been handed down dad’s or grandad’s heirloom watch can attest to that. The watch, whether it is a $10 drug store Timex or a five-figure Rolex, will attain priceless status through an emotional connection that endures time. It was dad’s watch.
“The Gold Watch” scene from Pulp Fiction dramatizes this point, albeit in a darkly humorous and horrifying way. Bruce Willis’ character, Butch, is willing to risk his life for the “uncomfortable hunk of metal” that made it through the war hidden in some pretty interesting places, testament to the significance of a legacy.
High-end watch investing takes time, research and patience, but if you merely want a good everyday workhorse watch, there are some very obvious choices: Seiko, Hamilton, Bulova, Citizen. Any of these iconic brands can be had for as little as a few hundred dollars. And when you’re done with them, you can pass them down.
And that makes them a pretty good investment.