watches: good investiment?

[lillo9546]

are watches a good investiment if you love em?
Not critical, but having at least from 1 to 10 watches with an overall value of 20k max.

[zbigi]

To me (largely uninformed about the issue), it looks like watches are near the top of the speculative bubble. Similarly to crypto, collectible playing cards etc. To time to buy them was probably five/ten years ago.

[Sclass]

I don’t think so.

I have a small collection I bought up 1995-2000. It has held its value but it isn’t the models that went up a lot.

The market can get illiquid for years at a time.

Love? Love play is for the heart. Not growing money. Don’t mix emotion and investing. It doesn’t end well.

The market is small, volatile and the number of winners is tiny in a field of depreciating assets. These issues will short circuit your compounding process. That is how will you reinvest profits, diversify, and scale as you win (if you do)?

Though it sounds really good when the luxury watch market is rising, the way the winners are distributed across the market make it difficult to construct a long term collection that will produce high growth over extended periods of time. This can short circuit compounding. I guess this is a problem with all investments but my feeling is it can be stronger with collectibles.

Storage? How will you keep things worth thousands of $ that are easily stolen? Scaling issues again.

Good question though. It kind of elucidates what you do want in a good investment.

[jacob]

It's useful to distinguish between investing (something that generates something that can be sold) and speculating (something that is to be sold for more than one paid for it). Unfortunately, modern portfolio theory has conflated this distinction. Note that something can be both an investment and a speculation. For example, many stocks are both but not all. Collectibles are almost pure speculation. The only way a watch can be an investment is if you can somehow charge people to look at it, like displaying it in a museum, or paying $1 to know what time it is

[mathiverse]

The only way a watch can be an investment is if you can somehow charge people to look at it, like displaying it in a museum, or paying $1 to know what time it is

Or, if you have the contacts who can get you the gig, having the type of watch that movie directors want to rent for their movies or random people want to rent for different occasions!

[Scott 2]

Jacob made this leap automatically, but maybe worth pointing it specifically - watches are a specific case of investing in collectibles. Advice generalizes along the entire asset class.

Challenges:

Liquidity - what's the market
Authentication - is it real
Grading - how good is the condition
Storage - will it degrade with time, or need ongoing maintenance to maintain value
Security - how do you keep it safe from theft and acts of God
Transaction overhead - a physical good has to change hands with every buy or sell event

IMO collectibles can make a fun hobby. Maybe you can make it cost neutral, if you keep emotions out. But that's probably going to kill the fun.

People making a lot, are using asymmetric information to take advantage of other collectors. Maybe you find this ethically objectionable, maybe you see it as a fair part of the game. But it's not easy. You're much more likely to be the sucker, especially early on.

The most likely result, is an heir sells your collection for pennies on the dollar.

[zbigi]

It's useful to distinguish between investing (something that generates something that can be sold) and speculating (something that is to be sold for more than one paid for it).

That was my first thought here, but, before posting, I looked up the definition of "investment" in Cambridge Dictionary, and, lo and behold, "investment" is a very broad term, whch covers basically any activity where you put in money or effort, and hope for a payoff. That's the common use of the word I guess (not very practical though when discussing finance per se), which is what the dictionary captures.

[jacob]

That's the common use of the word I guess (not very practical though when discussing finance per se), which is what the dictionary captures.

Yeah, same reason why people refer to buying new clothes as an "investment" or paying less for something as "savings".

[PhoneticNachos]

Reddit's sub /r/watches is a good resource.

I used to want to get a very particular $30k Patek Philippe watch years ago, but I realized that it would be something that I would think about wearing, and protecting far too much to ever get much enjoyment out of it.

So I found a similar watch for around $300 and wear it every day that I am in the office and out for nice dinners/occasions, and know that is easily replaceable.

Limited edition watches under $1k, can have some value, but the bigger retention comes from crossing the threshold of at least $10k timepieces.

Once you go to the "big bucks" past $100k, they are treated more like art.

The classic saying about why people spend $250k on a watch, is because they can't bring their yacht into a bar to impress people.

Be careful you may think this is projecting BDE, but you can quickly cross over into SDE, especially with Millennials and Zoomers, and the upcoming Alphas.
The traditional wealth "flexing" is viewed as very crass, given the extreme greed and wealth inequality with the 1% versus the 99%.

[zbigi]

Be careful you may think this is projecting BDE, but you can quickly cross over into SDE, especially with Millennials and Zoomers, and the upcoming Alphas.
The traditional wealth "flexing" is viewed as very crass, given the extreme greed and wealth inequality with the 1% versus the 99%.

I wouldn't worry about that. Today's 1% boomers were hippies once, protesting against war in Vietnam, moving to the country to live on a farm, exploring exotic spiritualities, practicing "free love" etc. Once they get older though, many of them became conservative and started making money, with some of them eventually ending up rich. No reason similar dynamic won't play out with nowayday's young generations, who are if anything much less radical than the boomers were.

[Seppia]

My answer would be “no”.
But I can tell you that if you are knowledgeable, have good reputation on the forums and are patient, you can buy/sell in a way that you can make the watch collecting hobby very cheap.

[Salathor]

I also love watches. But the idea that watches are going to go up is a guess, not an investment. If you want a cool watch, just budget for it as an expense and buy one--but don't talk yourself into thinking it's not just a jewelry expense (because it is).

[Henry]

Only time will tell.