Watch Investment

“What watch to invest?” I was asked this question countless of times. Although I have flipped enough watches in the recently past. Yet never once I can answer this question with any full conviction.

Why is it so hard? First we must understand the intend is to “invest”. Many people (who asked this question) just want justification to buy a watch to wear, but they are hoping it’ll worth more in future too. Factoring headwinds like deterioration of watch condition and servicing cost, it is indeed a challenging question to answer. This is almost the same question as “which company shares shall I invest?” These watch buyers want to buy the next FAANG of Geneva……

Patek Phillipe 5070R with Lemania based Caliber CH 27-70

It is impossible to predict the trends of the future. Some of the watches that became a real collectable like Rolex Paul Newman Daytona, Patek Phillipe Nautilus, Audemars Piguet Royal Oak etc. weren’t born a celebrity. In fact they are not popular at launch and it difficult to sell them in the 1970s and 1980s. Because they didn’t sell exactly that well, number made were limited, hence making them a rarity. Once considered as a “funky” the exotic dial Paul Newman suddenly became a hot property as taste changed.  But we shouldn’t be choosing to buy “ugly” unpopular watches now, but rather, we shall put the focus on choosing the timepiece that will still be love by collectors in future. How can we start choosing a watch out of the thousands of design? First we need to ask yourselves, why do we need a beautiful hand crafted mechanical wrist watch?:

  1. Hobby 
  2. Asset
  3. Discreet
  4. Easy storage and transport
  5. Watch as buddy follow where you go, part of your life; your legacy
  6. Pass it down to the next generation
  7. Investment for Monetary and Value appreciation

The main motivation behind having a watch collection + investment is the journey and joy of doing it. Before we part our hard earn cash, we need to how to protect our investment and to ensure choice of watches will not fall off the trends and value plummets in future.

Fundamentals that make any watch a great investment:

  1. Craftsmanship
  2. Design that’s Iconic and evergreen
  3. Watch brands that is not so market driven (or not driving by profits and take a wrong path that will harm future valuations)
  4. Choose the correct metals (steel is evergreen and yet subtle, Platinum in some cases for rarity)
  5. Watch models that are discontinued (we can estimate its production numbers)
  6. Watch size about 38-42mm (human don’t changing wrist size)
  7. Provenance: watches with “good” ownership history, ie. owned by famous watch connoisseur will fetch a premium

A good list for beginners on “investment watches”: 

*Don’t get too excited about limited edition (LE). Too many of LE watches out there are just marketing gimmick. Often manufacturers create a LE by changing the dial colors, hands and accompany it with a special box.  Unless it strictly a LE with a unique case/bracelet design or a watch that is build around an entirely new movement (for example: Harry Winston Opus series).

Rolex Sea-Dweller 4000 ref.116600 with short production of 3years

Previously I talked about some basic fundamentals and principles on watch selection. Choosing a watch for collection is just the first step. Next phase is perhaps the most fun and exciting for collectors: Hunting.

1) buying used watch for collection is OK, but we it is important to scrutinized its condition. Whether was it unpolished or still having the original factory parts such as (dial or hands). Factors such as this may not affect the price a lot now, but it will determine whether it fetches a premium price years down the road.
2) Network: Build a strong network with fellow collectors and watch dealers. Do look out for opportunity to trade among the circle of collectors. Sometimes we do need to sell or trade before more acquisitions can come along. You definitely need a trusted avenue for both buying, selling or trade. Also good piece tends to be offer to someone we know since collectors are often remorseful when letting go of watches. We prefer to sell it to someone we know; who knows we may want it back someday?
3) Get compete set, with Box & Paper. It is important  to try and get a complete set, ie. box, warranty card, tags and instruction booklet. It is often more desirable to collectors when a watch comes as a complete set. A complete is easier to sell and of course it commands a higher price too.e know; who knows we may want it back someday?
4) Budget. It is important to invest within one’s budget; similar to all other forms of investment, we only do it with surplus cash.

Keep watches with the compete set: Audemars Piguet Royal Oak 15408BA

Wearing, maintaining and reviewing:

Wearing: I often encourage people to wear watches and enjoy. However, we must be clear which are watches in your collection that are the most precious or fragile and limiting their usage will goes a long way of keeping it pristine.

Brand New condition watches my collection will not be worn, for one simple practical reason: Since most of them are still with the original factory seals; wearing it will immediately reduce its status from “NEW” to “USED”. Hence,  I must keep them in the same showroom condition, however if I like it so much, I’ll purchase an Used piece of the same model for wearing.

Fragile or precious ones like vintages watches, should see more limited usage. it is almost inevitable that we will knock our watches against the something as we wear it, so it necessary to choose the  correct watch to suit that day’s activity. 

Daily Beaters, I know it may sound contradictory to have daily beaters as investment watches. Sport watches’ greatest virtue is they can take some punishment without resulting big penalty in valuations, hence it is possible that a daily watch that will appreciate over time, despite for its usage and deterioration of condition. Owners of modern Rolex submariners and GMT will understand this very well. 

Keeping your collection is great condition is also paramount to its future valuations. Below is a great article from the famous auction on how to keep our watches collection in great shape:

Keeping a record: It is also important to keep track of cost, servicing history of individual watches. Ultimately we to know how much money was committed to each piece and we need it to know whether our investments are indeed profitable of not.

Review the composition of your collection every half a year or so.  We are easily affected by blogs & review. There is always temptations of better watches, but we must keep faith in why we make as a purchase in the first place. However, we do need to a periodically review of the collection and sell off less desirable pieces, because priorities, trend and taste may have being shifting gradually.

Watches such as Daytona 16520 can be very sensitive to over-polishing, careful considerations have to be taken during maintenance regime.

Selling and Profiting taking:

Perhaps the least talk about topic on the subject of Watch investing. For any form of investment there must be an exit. Avenues available to sell a watch can be:

  1. Network of collectors
  2. Trusted dealers who will either buy-in or do consignment of your watch
  3. Online platform such as eBay, Chrono24, Facebook marketplace or Carousell
  4. Some collector choose to build a profile over social media like Instagram and market their watches there themselves
  5. Auctions house

**My Thoughts: “As the monetary easing continues well into 2020s so the stubbornly low interest rates environment will persist, fiat currencies values will continue  to erodes. Holding physical asset such as watches might be an good hedge against it. So on a longer run I will continue to maintain a stable holding of Rolex & Patek Philippe. Pressure from near term COVID crisis may present some buying opportunities, in view of this, I’ll be looking to de-invest some holdings to free up some cash in anticipation.”

**Disclaimer: Past performance does not ensure future results, and there is no assurance from Les Precision that any investment objectives will be met solely base on the information in the above article. Investors should consider their investment objectives and risks before making an investment. Real world economy and financial markets do have a massive influence on the luxury resale market, so please exercise with caution.

Patek Philippe Nautilus 5712/1A with co-branding Tiffany & Co

Leave a Reply

Your email address will not be published. Required fields are marked *