At the risk of offending some people, I’m going to say that their buying luxury watches aren’t really an “investment.” It’s a consumerist move, to make people go aaaah at whatever’s strapped to their wrist. Don’t believe me? Ask your friends who have expensive watches. What’s the last one they sold for a return? In most cases, there’s no intent to sell – and that makes them collectors at best, not investors. This week, we look at some actual approaches that characterise the actual investor:
A quick note on collectors versus investors
Before you start investing in luxury watches, you need to be clear that money is your main intent – not enjoyment of a large watch collection. There’s a large distinction between collectors and investors.
Collectors buy watches as a mainly consumerist move. Most don’t even want to sell the watches; and keeping them usually means there’s no resale or Return on Investment. Collectors also tend to buy watches they like, rather than watches the market likes.
Investors are not any more attached to the watches than they are to their stocks, bonds, or other financial assets. They aim to buy and sell when the time is right. They have no qualms about buying watches they dislike: if the resale potential is there, they’ll buy it however hideous they think it looks. And quite often, they’ll never wear the watch anyway.
If you’re a collector at heart, be honest with yourself and don’t convince yourself the watch is an investment. That’s usually the road to disappointment.
Rethink your decision to buy purely based on brand
Among new investors, the most obvious approach is based on branding. This means grabbing at the first Rolex, Audemars Piguet, or other luxury time piece with a recognisable company name.
This is a hit-or-miss approach, as you’re ultimately guessing at what has good resale value, and what doesn’t. There are other approaches however, which could have a more consistent pay off.
These may be slower: you’ll need to do a lot of legwork when hunting down specific time pieces, and you’ll likely buy less often, and have a smaller collection. But the result isn’t just more impressive, it might also mean a better return.
Alternative strategies to just buying the brand:
- Look for “celebrity premium” over brand
- Pick luxury microbrands
- Go for specific serial numbers
- Buy from a specific time period
1. Look for “celebrity premium” over brand
With this approach, you focus less on the brand, and more on where the watch came from. The simplest example of this would be celebrity ownership – if a watch was formerly owned by Tom Hardy, Katy Perry, Harrison Ford, etc., then the resale value can shoot way past the brand.
Daniel Craig’s Omega Seamaster, for instance, famously fetched US$254,273 at an auction in 2015; way past the roughly US$7,500 the brand and model would usually sell for.
More recently in 2019, a Rolex GMT-Master worn by Marlon Brando in Apocalypse Now fetched US$1.952 million in an auction; not bad for a brand and model that would usually fetch around US$19,000.
Investors who take this approach almost never walk into a watch store; they don’t want a new watch. Rather, their places of purchase are usually auction houses. They also care very little about how much a brand or model goes for; all that matter is who wore it, and for what purpose.
The most challenging part of this approach is the connections you need. Unless you happen to have a direct line to many celebrities, or somehow manage a steal at an auction, it’s tough to pull off.
2. Pick luxury microbrands
A growing trend is to pick high-end timepieces from microbrands (a fancy way of saying a watch company that’s not as famous). Typical examples include Laventure, Monta, or Oak & Oscar.
As new brands, these manufacturers are still finding their footing. This creates a higher possibility that the earliest products will be discontinued, or changed significantly from the original iteration.
There is, also, the rather rude suggestion that they may close down while retaining their cult following. And even if none of that happens, a microbrand will have, by default, much smaller production runs. All of this will drive up resale value through sheer scarcity.
Micorbrands are also cheaper, thus posing less investment risk. They’re also more accessible to new investors, or those in the low single-digit million category. At prices that can go as low as $2,000+, these watches wont’ break you if they fail to resell.
3. Go for specific serial numbers
I’m not referring the standard serial number found on every Rolex or PG, but rather the serial number of a fixed series. E.g., the Baltic MR01, which ranges from one to 300 pieces.
In general, the smaller the range the better the scarcity value (but other factors, like the desirability of the series, still play a huge role).
With watches like these, investors tend to pick the numbers with the most psychological appeal. Number one of 300, for example, or number 300 of 300, will tend to have more appeal than a more “random sounding” number like 273.
There’s also a cultural effect. As we’re an Asian country, I doubt most Singaporeans would prefer number 44 in the series, versus 88. In other parts of the world, numbers like 13 may be harder to resell.
Among millennials and Gen Z types, you may find the rakish sort who wants a number like 69 or 420 (if you don’t get it, be warned – it’s not a family-friendly search).
4. Buy from a specific time period
A typical example of this would be investors who pick only pre-quartz crisis models. This was a period in the 1970s to ‘80s, when quartz watches replaced mechanical ones, causing a decline of Swiss brands.
Mechanical watches made a comeback as a luxury item in around the late 1990’s. But for investors, and the collectors they cater to, only watches from before the crisis are the “real thing” – the argument being that that those watches were crafted for real use, and not simply as a sort of fashion accessory.
(I don’t fully agree with that mindset, since I suspect everyone has always cared about how well their watches go with their outfit).
Other examples of this could be investing in WWII era watches (1939 to 1945), as there’s natural scarcity. In addition, these watches tie together two prospective groups of buyers: watch lovers, as well as antique or war memorabilia collectors.
This approach may be good for investors who are already into time period collectibles (e.g., stamps, furniture, or art from a certain time period), as they’re already attending the relevant auctions.
There’s more to investing in watches than buying though, as you also need the right strategies to sell. That part gets more complicated – but follow me on Single-Digit Millionaire, and you’ll get an update when I look into the details.
