Watches as Investments
Deep Thoughts, Uncategorized

Watches as Investments

Meehna Goldsmith recently posted an excellent interview on Investing in Watches (Part 1 and Part 2).  The topic is very interesting, especially as it has long been taboo to discuss on other internet forums.
First of all, I would not buy watches as investments.  There are plenty of investment opportunities in the world, and while I will argue later that watches could potentially be a good one, it is too uncertain now.  My own watch buying is built more around a storage of a value rather than appreciation.  My goal is to not lose too much on a watch and then the pleasure of owning it far outweighs the opportunity cost of investing the money somewhere else.

That being said, I really do think watches *may* prove to be a good investment – but, here is the key – IN THE LONG RUN.  In the short run, watches depreciate.  We all know this.  I cannot think of a single product designed to actually be used that does not depreciate from its NEW state to a USED state.  But really that is a limiting view.

What I am more interested in is 15-20+ years from now.  At that time horizon, the question is no longer new or used, it is good or bad, important or unimportant.  This is when the real action starts.  Assuming people still care about watches at all (I hope and believe they will), I truly believe that some sectors of the current market have a real potential for major appreciation.  I believe that this period of Contemporary Horology created by a few amazing, independent companies – a representation of living, breathing creators – will be looked back at as an important period in watch making history.  If that is true, you can only imagine what will happen to values of whichever pieces are considered the most important, often made in quantities of less than 100 – way rarer than nearly any Patek you see at auction.

This was my favorite part of Dolly’s interview:

MG: Why do some timepieces hold value and others don’t?

DC: To understand why certain specific timepieces will surely be of value, far and above what they are worth in the market today, one only has to ask questions of history. Certain postage stamps, violins, wines and first print books were made in relatively large numbers. Even art for that matter. Were these more delicate, more easily damaged, recreated and copied, than timepieces? Didn’t they have periods of total neglect, when the educated portion of the public ridiculed, even destroyed them, and viewed them as disposable? Didn’t almost all art, wines, stamps, books, and even automobiles have extreme variations in their form and values? Didn’t the precious, highly prized examples often have common parts of low value, pedestrian components, and were mass-produced at their time of conception? Watches will outperform all of these.

If you buy pieces of real value and true creativity that are the finest representations of the culture NOW, not reproductions of history, you could be very happy at auctions in 20-30-50 years.

  • I’m glad you found the interview interesting, Steve. You’re right; investing has long been a taboo subject on the watch internet forums and yet it is an area on everyone’s mind, at least it crosses it. When most people spend money, particularly thousands if not tens of thousands of dollars, they want to feel like they’re getting good value in an economic sense. While obviously the most important factor in a decision is whether or not you like the watch and it will bring you enjoyment, I don’t believe you can ignore the money element. It’s there. I do agree, however, that purchasing solely for investment is fraught with danger, particularly for the short term. As you said, there are a lot of investment opportunities out there with less uncertainty. I buy my watches first because I enjoy them.

  • Chezlaskin

    My thoughts have always been to buy what you are passionate about. But, in order to be passionate about something, the buyer must be knowledgeable in a deeper way. Many buyers are not. They simply buy what others are validating as valuable or worthy, sometimes with little thoughts of their own. I have always bought on passion, but with an eye towards retaining value. I have never bought with an eye towards price appreciation, but have been very fortunate in that regard with many purchases – precisely because I was a knowledgeable and passionate buyer. I have never really bought what was trendy – unless there was a confluence of it being trendy and also something I thought had lasting value. I think it’s a wonderful way to place your money in a wealth-retention way – provided one buys carefully and with passion and knowledge. Great post.