By Konstantin Startsev
The hottest topic among watch fans today is how to make big money buying and selling select models. Note: This article does not constitute investment advice; it’s for educational purposes only.
Watch collectors who are starting out often don’t just think about the pleasure of owning a new watch, but also about the money they will earn by selling the watch down the line. Many feel certain that any Swiss watch is a good investment that will earn them income in the near future. Of course, this doesn’t apply to all collectors; there are many different reasons and motives for buying watches, and watch lovers can be divided into numerous categories, but I’m sure you know who I’m talking about here.
Oftentimes, watch brand marketing fuels this interest. British company Luxe Watches was happy to share that the return on investment of luxury watches is twice that of the stock market. Comparing the aftermarket performance of luxury watches to stocks, Luxe Watches found that Patek Philippe watches outperformed two of the largest stock market indices, the S&P 500 and FTSE 100. Rolex, the most popular watch brand out there, performed roughly the same – sounds very profitable indeed! Feeling ready to say, “shut up and take my money”? Well, it’s a bit more complicated than that. When it comes to investing in watches, the reality is very different from the myth. We’ll present some of the most important questions you need to grapple with before investing to help you understand this complex issue.
1. Can you make money buying and selling watches?
In short, yes. But first, you need to ask yourself the question, how are you buying? There are several ways. The first, buying in a boutique at retail price, is probably the most difficult. For this, you’ll likely need to be a regular client of the boutique; popular models aren’t sold to any old person off the street. Alternatively, you could buy from a store that sells used watches, but prices will be very high. The third way is to find and buy watches online, where you’ll find a wide selection, convenient search options, helpful price comparisons, and reputable online platforms with many years of experience.
To make money in the short run, you’ll need to be able to buy the most popular models at retail price and then sell them on at a higher price. If you somehow manage to do this, the brand will probably accuse you of speculation, and you will be blacklisted, preventing you from ever being able to officially buy anything again. This strategy may prove profitable, but it’s mostly reserved for secondary market players and investment companies, not individuals.
2. How long does it take to get a return on your investment?
According to the Knight Frank Luxury Investment Index, watches offer the highest profitability in the long term (in 10 years, up to 108%), provided that you have acquired a really interesting model. In the short run, you can only make money on hype models like the MoonSwatch (MSRP of $450, but secondary market prices reached $4,500) or the Patek Philippe Tiffany Nautilus (MSRP of $52,000, but sold at a Christie’s auction for $3.3 million). Despite the price corrections that took place this year, watches continue to rise in value.
3. When did the boom in the secondary market begin?
Watch collecting has been a common practice among the wealthy for as long as watches have been around.
Collectors value watches for their complexity, craftsmanship, attention to detail, manual labor required, and uniqueness. Thanks to American banker and watch collector Henry Graves, for example, the Patek Philippe Henry Graves Supercomplication was born and remained the most complicated timepiece for many decades (it sold for $24 million at Sotheby’s in 2014). However, the Patek Philippe auction in 1989 was when interest in the secondary watch market really took off. The development of the Internet and social media has only further fueled this interest. In recent years, investment companies, auction houses, and secondary market sellers have joined the game, and we have since seen a boom in this luxury segment.
4. What brands are the most profitable to buy and sell?
There are no secrets here. Look at recent results from the leading auction houses and you’ll see that Patek Philippe and Rolex are the winners in terms of big sums. In recent years, they have been joined by Audemars Piguet, and from time to time, you’ll also see big numbers from A. Lange & Söhne, Vacheron Constantin, Cartier, and Omega. Some independent watchmakers have also enjoyed great success with their watches at auction, including leaders F.P. Journe and Philippe Dufour (watches from these two brands have sold for over $1 million).
5. What factors affect the value of a watch?
There are numerous factors that affect a watch’s performance. These five things are some of the most important considerations:
- The brand must be widely known.
- The model must be released in a limited series or as a single copy.
- The brand itself should be interested in supporting the secondary market for its watches, i.e., organizing and participating in auctions, opening its own museum, etc.
- The watch must be interesting in terms of innovation, materials, technical solutions, and/or design.
- The economic environment must be favorable.
6. Why did prices for some models go down this year?
Obviously, prices can’t rise indefinitely. Moreover, many deemed it was time for the secondary market “bubble” to deflate a bit. But unlike the markets for securities, real estate, or precious metals, where fluctuations in prices can be explained with real reasons, watches are luxury goods. Here, emotions are central to buying decisions, and those are notoriously difficult to predict. After the collapse of the cryptocurrency market in March, watch prices began to decline. This was encouraged by the general instability going on in the world. However, a number of models continue not only to maintain their positions, but also grow in value. Of course, we’re talking about the auction favorites here. In general, if you trace the price curve for many watches, then despite minor drops, you’ll see a steady increase in value over time.
7. What requirements need to be met for a new watch to retain its value?
For starters, you need to consult an industry specialist first. This will help you understand the current state of affairs in the watch market. If you purchased a watch for the sole purpose of its further sale, then you definitely need to keep its original box, documents, receipt, and warranty card. If you plan on wearing the watch in the meantime, then be sure to clean it regularly and maintain its technical condition. If you inherited a watch, and an industry expert agrees that the model is valuable, then it is better to take the watch to an official service center for repair. Note: Polishing watches made of precious metals can reduce their price significantly.
8. Do any celebrities invest in watches?
I don’t know of anyone who has publicly admitted that they buy watches for the sole purpose of investment. There are, however, famous collectors who sometimes organize private exhibitions, the largest of which took place this year. Patrick Getreide presented his collection in London, showcasing 168 watches out of more than 600 in total – all of them rare pieces by Patek Philippe, Rolex, and others, but this event was the exception. Collectors rarely show their treasures to the general public. And is Patrick Getreide really an investor? To some extent, yes. His collection is priceless, but will Patrick sell his collection to earn money? Probably not. The boundary between a collector and investor is marked. Brands do not openly support the hype around their watches in the secondary market, preferring to encourage loyal collectors, because the collector is there for a lifetime, while the investor leaves disappointed after a couple of unsuccessful purchases.
Thierry Stern, president of Patek Philippe, says this about investing in watches, “Buying a watch for this purpose is not justified. You do not enjoy owning it, but only follow the price fluctuations. And when it goes down, your mood spoils. So why spoil your mood? Watches need to be loved and bought with one purpose: to enjoy them every day!”