A wrist shot of my Daytona reference 116505. The watch was purchased from my AD when gold pieces were arguably still out of favor. Two and a half years later that narrative has changed and the resale value is up considerably. An investment? Let’s explore…
One need only to look at the incredible success of Hodinkee over the past decade to see that social media and increased interest in the industry has moved the collector’s grade and high-end watch market into the mainstream. The Apple watch has brought an entire generation back to wearing the time on their wrist instead of in their pocket, and A-list celebrities like Kevin Hart, Ed Sheeran, Mark Wahlberg, Post Malone, Ellen Degeneres, Sylvester Stallone, Michelle Yeoh and John Mayer have made it a point to put substantial wealth into their watches. Watches have subsequently become a hard asset class. As technology evolves, it seems contrarian to move back to analog timekeeping; however, like the automotive market, where manual transmissions and naturally aspirated vehicles are becoming more coveted than ever before, there’s something about the romantic appeal of a mechanical timepiece paired with new innovation in the mechanical space that continues to pull in passionate consumers in a way that digital watches can’t.
It may have taken a while for the idea to evolve that a watch could be a solid place to park capital, but the addition of a new pre-owned Rolex dealer practically every week is further proof of a major shift from attitudes past, when watches were considered just ‘tools’ or ‘toys.’ This new ‘investment’ sentiment is now more hotly debated than ever and is fairly controversial amongst some circles who are tired of seeing speculation in the market drive up prices for hot pre-owned watch models and multi-year waiting lists from authorized dealers. Look no further than CRM Jeweler’s analysis on the average Rolex Explorer’s performance over the past 50 years vs the S&P 500. While there are many important factors involved in a watch’s value over time - primarily condition and authenticity - it’s clear that a no-nonsense example of a steel Rolex can consistently appreciate over time (in line with the S&P’s performance of around 9-10% per year) while still being used and enjoyed on a daily basis. A small YouTube account I found even went as far as to measure the risk volatility involved with equities vs investing in Rolex. The analysis concluded that while Rolex performs roughly in line with equities, the risk rate involved with the watch brand is actually substantially lower. Of course, investing in hard assets, collectibles like art, for example, comes with less liquidity, but it should be noted that Rolex, as well as many other top watch brands, are amongst the most liquid assets of any collectibles around.
I would advise people to really do their due diligence before jumping into an investment grade piece. If any dealer is claiming that the value will always go up, they are simply wrong or stretching the truth. Not all trends are positive for every watch so don’t take anyone’s word for it; make sure to educate yourself in order to get started properly.
Passion vs Investment or Both?
If you’re just entering the hobby or becoming more involved, it’s important to consider how you might approach it to avoid mistakes. Someone might be looking to buy one great watch to use for life. One collector might only care about the art of watchmaking and have little to no interest in where values are headed, whereas another investment focused collector might buy N.O.S. or (new old stock) watches, put them in the safe with all their stickers, only to be sold for top dollar to the next owner. I believe there’s a middle ground to all of this and would urge people against only pursuing ‘safe queen’ watches, as mentioned. That said, you don’t want to be banging your wrist into the doorjamb with any nice watch. The conversation can go on endlessly as to where one may fit into the larger picture but as a watch collector who has adopted a flexible approach, I’ve found plenty of enjoyment from the various areas mentioned above and see it as a rewarding lifelong hobby that allows me to learn history and share information with the interesting people who share my passion.
Picking a Horse (or a Few)
Nobody can predict the future. I may not know what the price of a 5-digit reference Submariner will be in 6 months, but what I can recommend is to stick to the most iconic models as the foundation of your collection. The reason a Submariner has been a great watch to own over time is that it has remained relatively unchanged for 70 years, it’s instantly recognizable the world over and has built an incredible amount of historical and cultural significance. You can’t really go wrong with any era of that model. The price of an original Sub from the 50’s might shock some people today (potentially in the region of $250-$500k USD). Some of these watches from the 50’s, 60’s and 70’s are very expensive now, thanks to sentimental value from Baby Boomers that grew up with them and the fact that their production numbers were relatively small. It also doesn’t hurt that fewer and fewer great examples remain intact as each day passes - it’s simple supply-demand. If you look at the history of collectibles on a macro level, you’ll soon learn that the general rule is that vintage is a moving target, and that target has clearly begun to shift again as more collectors today are looking for the next era of watches to pop. Thus, there’s a new focus on ‘neo-vintage’ models from the 80’s, 90s and even the early 2000’s. My suggestion would be to learn the nuances of some of these models that draw collectors’ attention. Finding a serial number from the very beginning or the end of the run of a reference is a good place to start. ‘Swiss only’ or ‘APH’ dials are a couple of other variants to research that collectors are seeking out. These small details can make a world of difference in the value of a piece and there are still some significant opportunities out there if you know what to look for.
Vintage vs Modern
As a big proponent of owning both vintage and modern watches it’s impossible to choose sides. For everyday use, a modern watch is by far the best option because it will likely be the most water resistant and robust. In modern watches there are fewer truly ‘investment grade’ options simply because the production numbers are generally much higher now. That said, there are still opportunities in certain models across many of the top brands (usually involving interesting dials or precious metals, which are produced in lesser quantities). Some of the smaller independents like FP Journe and Ming have shown strong performance at auction.
Vintage watches have garnered more interest from an investment standpoint because of lower production numbers. They were made with materials that display age not seen as often in modern pieces, and develop patina which will draw collectors’ attention. The same exact model can often have a completely different appearance depending on the life it’s had, adding the appeal of age and character. Part of the patina that a steel or aluminum bezel will take on over time has added to the aesthetics of collectible vintage watches. Unlike ceramic, which is a popular material on modern watch bezels, better for people who want a watch that won’t scratch or fade, an aluminum bezel Submariner appeals to a person who is looking for a watch that will eventually look more worn with time. Whether they be from the vintage or ‘neo-vintage’ era, the number of top condition watches grows smaller each day. Many either get lost, broken or water damaged and go to ‘watch heaven,’ creating more opportunity for the next generation of collectors.
Navigating the world of watch acquisition can be overwhelming and there are plenty of sharky waters of which you’ll want to steer clear. My advice would be to ‘buy the seller’ first and foremost, and not necessarily the watch itself. You’ll also want to consider where you fit on the spectrum as a collector or enthusiast. If you’re a serious collector, chances are you’ll want to know the exact service history of the piece whenever possible and likely prefer it to be not be polished or only lightly polished, especially for steel Rolex. This is where buying from boutique dealers and other collectors becomes most attractive because there’s often more history and provenance provided. A ‘service dial’ or ‘service hands’ for example can reduce the value of the piece as they replace parts in the watch, changing it from how it was as new. There are plenty of dealers who also provide consultation on collection strategy to help clients build out ‘portfolios’ of watches - which can shift over time as trends evolve. If you’re focused on modern pieces it can of course be very challenging to acquire certain watches. Try to find an authorized dealer you can connect with, be patient and understand that the majority of people are asking for the same models.
I recognize that not everyone is a full-blown enthusiast, so if you’re going to pursue the hobby of watch collecting you’ll probably enjoy it most if you have the research ‘bug.’ The most interesting watches I’ve come across either have an amazing story or provenance, are vintage and/or have irregular features to separate them from the pack. Some of my favorite examples are Tiffany signed dials, Omani Khanjar stamped dials and watches with real military provenance.
The biggest mistake I also see new collectors make is focusing too much on the top brands (i.e. Rolex, Patek and Audemars Piguet). As with any investment, it’s important to diversify. There’s a lot of value to be found in other brands and as the market matures everything will get lifted to some degree, especially in vintage. I can now say as a dealer that there are plenty of vintage watches that can still be had in the sub $500 range that can easily shoot to $2000 and beyond in a matter of 2-3 years. It’s not all about numbers though and I won’t give away everything but we’ve noticed an increased amount of interest in the following brands in the past couple of years to name a few; Benrus, Bulova, Enicar, Eterna, Hamilton, Movado, Vulcain. The list goes on. There are plenty of high quality watches with real cultural significance amongst these brands. Find what speaks to you, learn the history and above all, buy on condition. Happy hunting!