Assets - Investing in the watch industry

[DLT222]

gostang9

So for me, that would be a very unpleasant experience. I have enough difficulty putting away the summer toys from October to April every year for cold weather. The only way I cope is by looking forward to the warm days ahead and then using the toys as much as possible when I can.

In your scenario, I'd be buying a fantastic driving machine, only to leave it parked for a decade or more, and then sell it for profit. That sounds like torture and it wouldn't be worth it for me. You'd also have to have a crystal ball because not every car ends up appreciating (at least, probably not the ones I'd be able to get my hands on..).

Torture for you, not for someone else. Everyone looks at investing differently.

WatchVaultNYC

With non-traditional financial assets, the way most people will define "parking" money is buying an asset and waiting for it to appreciate over time while you hopefully enjoy the asset.

Flipping a deposit on a car does not seem to fit that definition, unless you find joy in the deposit?

Now, if you're talking about buying and selling cars and deposits on cars as a business, that's a completely different angle than my post about "parking" money, which you commented on.

I secure cars for collectors & private individuals that also use their cars as daily drivers and some don't. Last week i supplied a brand new Range Rover SVR and a brand new BMW M2, both dailys. Some of the rarer stuff is used but sparingly and they keep the miles down to keep value.

I handle transactions from people that are cash rich and time poor and do not necessarily want to go to a dealer and sit there with a sales guy bashing out a deal, they would rather pay me to do it all for them and deliver their new car to wherever they want. They are the people that 'park' money more regular and actually lease their daily!

Lets face it, markets are shit, interest rates are shit & we have clearly seen that watches are an investment if bought right. Its the same for some cars.

Edited: Jan 22, 2017

 

[DLT222]

gostang9

Btw: if you view watches as only pieces of art, meant to be looked at and not worn, then we have such a different view of them that we're likely not going to find a way to understand each other...

If on the other hand, you enjoy arguing for the sake of arguing, then I'm happy to continue engaging! :-D

I dont view watches as a piece of art, I was saying if you have a Monet, would you put it in a vault? Some would, some wouldn't. Yes I have 3 or 4 watches that are new an unworn, thats how I would like to keep them. The rest I change around regular.

Why would I argue for the sake of arguing? Im making a point that another member made about cars being a bad investment when if bought right, like watches, are a great way to park money if you drive them or not.

 

[WatchVaultNYC]

DLT222

I secure cars for collectors & private individuals that also use their cars as daily drivers. Last week i supplied a brand new Range Rover SVR and a Brand new BMW M2, both dailys. Some of the rarer stuff is used but sparingly and they keep the miles down to keep value.

I handle transactions from people that are cash rich and time poor and do not necessarily want to go to a dealer and sit there with a sales guy bashing out a deal, they would rather pay me to do it all for them and deliver their new car to wherever they want. They are the people that 'park' money.

Lets face it, markets are shit, interest rates are shit & we have clearly seen that watches are an investment if bought right. Its the same for some cars.

That daily driver SVR not appreciating right now yes? Will probably lose 1/3 of it's value in a year?

 

[DLT222]

You only have to read this article on Hodinkee today..

https://www.hodinkee.com/articles/patek-philippe-3428-platinum-reading

 

[DLT222]

WatchVaultNYC

That daily driver SVR not appreciating right now yes?

No your right its not, but you wouldn't buy an SVR and leave it sat there, its not massively sought after. Not all cars appreciate just like watches.

Like I said, SOME cars are good for parking money and SOME watches are good for parking money!

I might add that the SVR is his daily driver, it is leased over 3 years and handed back for a new one. The 35 cars sat in his collection are all owned outright and bought at UK RRP and have appreciated 2-3x their value since he bought them. He openly admits he is parking money & these are his own words!

 

[gostang9]

DLT222

The 35 cars sat in his collection are all owned outright and bought at UK RRP and have appreciated 2-3x their value since he bought them.

And that is when I can understand buying cars as investments. When someone is in a place where they have plenty of great cars to drive and they have he means to properly store a large contingent of 'excess' inventory for which they don't have a need or desire to drive. Similar cases can be found with watches where buyers have so many great daily wearing pieces that they can leave a few rest unworn while they appreciate.

I will concede that you have a valid point for a rare set of individuals, I... do not have the problem of "excess inventory"...

 

[Ricbo2010]

Personally, I'd love to buy for investment but I don't have the spare £££ to risk a significant loss. I have been fortunate enough to be able to buy a few watches (Submariner 14060M, Speedmaster 145.022-69 and my new incoming, a GMT 16750).

I bought vintage as I prefer over new but also I am fairly hopeful that I can wear and enjoy these watches and if I need or want to sell, could do so without losing out financially. More importantly, I have got myself totally immersed in reading the posts on this great forum and wanting to learn more and more.

 

[kleungsf]

I have a saying that you don't mix hobby and work, and when the hobby becomes work, time to find another hobby. When you are watch collecting for pleasure, you are buying watches to own-wear-admire and talk about it, and if you are lucky make some money when you let it go. When you are collecting for investment, you are buying to own, maybe wear it once in a while, and secure it like an asset from depreciation for resale later, basically like a dealer. I choose to collect and wear my watches as a hobby, while I am sure others take pleasure of collecting as an investor.

 

[WatchVaultNYC]

DLT222

No your right its not, but you wouldn't buy an SVR and leave it sat there, its not massively sought after. Not all cars appreciate just like watches.

Like I said, SOME cars are good for parking money and SOME watches are good for parking money!

Thats right, some. Say 18,000,000 new cars were sold in the USA in 2016, and 1000 of these $200K+ cars were "park your money on" cars - the ones that appreciate right after you buy new. That's 0.006% of new cars. Your broad assessment (that you did not qualify or limit) about my statement that "new cars are a poor way to park money" - that "You couldn't be more wrong", is a bit of a stretch by any reasonable standard

Just letting you know that I am continuing this conversation just for the sake of argument - nothing personal about you. Car buyer/"facilitator" for the filthy rich is a great job and I bet you make lots of $$$ and get to hang out with amazingly smart and successful people, plus the industry contacts you develop probably gets you in on great personal use cars on the chap.

Edited: Jan 22, 2017

 

[SteveHarris]

Lovely watch OP

What strap do you have it on?

Steve

 

[MaiLollo]

I believe that part of the surge in the vintage watch market is due to a lot of investors coming in as the stock/debt markets offer lowering returns for a stable risk level, so wealthy guys invest in watches to "diversify' their asset base. If it weren't the case, I believe that the market would have risen across the board on all "value classes", but I feel like the rarest & most expensive part of the market has increased the most (look at the increase in value of a 2915 vs a 105.003, or the increase in value of 1518 steel & rosegold over the last 3/4 years). You can also see a small number of investing firms specializing in vintage watches today. So, investing in watches is a trend, but it is a risky one: if it wasn't the case, the fund headed by Paramico (one of the finer watch collectors out there) wouldn't have been through the tough times it has seen; also, when/if the stock markets and especially the debt markets are going to pick back up, will the vintage watch market have the same appeal to the people that are desperately looking for a return ?

Luckily for me, I do not have money to invest, so I just buy stuff I like whilst I can afford it

 

[Sculler22]

If you take a macro view of watches, you may want to consider other asset classes. Younger generations don't wear watches because they are constantly staring into their smart phones. Individual collector quality watches are efficiently priced by the market and the dealers add a substantial mark up for the peace of mind that their customer requires. Even if you find a "bargain", the probability that the watch may not be right is very high.

 

[MaiLollo]

S Sculler22

If you take a macro view of watches, you may want to consider other asset classes. Younger generations don't wear watches because they are constantly staring into their smart phones. Individual collector quality watches are efficiently priced by the market and the dealers add a substantial mark up for the peace of mind that their customer requires. Even if you find a "bargain", the probability that the watch may not be right is very high.

I am part of a "younger generation" myself, and whilst I partly agree with what you say, things are never going to change until some watch media (think Hodinkee) will become mass market and reach people that are not into watches yet. Usually people get into the hobby because it is a family tradition, a watch is passed on, you look it up, keep it because of sentimental value and you fall for them. I'm trying to say that if a lot of younger people aren't into watches, its because they have never been exposed to them. When I tell my friends stories about some of the watches that I own/like, I often get positive feedback, and some of them have are now hooked to this madness of ours!

 

[al128]

Isn't hoodinkie catering to the hipster crowd?

If anything else I see a revival of old stuff (1 speed bicycle, vinyls, cassette,...)

 

[MaiLollo]

It does not matter who they cather to, it matters that they spread the word on horology in order to bring new people into the game! NY Times, Bloomberg and fashion stuff magazines have featured hodinkee, which is very much needed in my humble opinion.
I would never buy something from their shop for instance as everything is overpriced, but they have a lot of quality content (their "sponsored" reviews are not worth much but they do have to live off something)

 

[dsio]

Just to post something that isn't a good investment, a mate was trying to unload on me or swap for a watch a chess set his dad had purchased as an "investment" that apparently cost $30,000+ made of marble and precious metals. He's sold it to a gold scrapper for $500 after I told him I had no interest in a pointlessly expensive chess set, now I'm sort of regretting that thinking man... for $500 that'd be a cool way to play chess. But damn, what the hell was his dad thinking buying that as a long term appreciating asset.

And I went on google thinking surely that must be the most expensive chess set on earth... nope... not even close... they go up to 8 figures. I have no idea how.

 

[Sculler22]

I am on the Hodinkee mailing list for new arrivals. While I don't get their text alert service, I usually see their emails within a few hours of receipt.When I take a look at the new arrivals, many of them are, more often than not, already marked sold. I think this speaks directly to MaiLollo's point about spreading the word on horology. I have often heard that everything old is new again in regards to fashion, and it seems as if the same phenomenon is happening with watch collecting. The conclusion: buying carefully, and being a good steward of what you buy, may yield better returns than CDs and other conservative investment vehicles. Should we all sell the farm to buy some ultra expensive, genuinely important timepiece? Probably not, but for someone with a very large net worth, it could turn out well.

 

[speedolex]

DLT222

It amazes me how many people don't look at watches as investments.

I think we are around 5 years away from a vintage watch market crash.

Used to be, a kid would get his first wristwatch right around age 15, it's when he started to have after school activities, would need to know the time so that his parents could pick him up at a coordinated spot. It was a must-have, we all had Casio's in our youth, we all remember.

Now that every 15 year old has a cellphone, they don't need a watch for that function. Cellphones became absolutely commonplace by 2005, so if you do the math:

2005 - 15 = 1990

Statistically speaking, anyone born after 1990 had a cellphone by age 15 and the wristwatch was never a part of their lives. No longer did they need the time on their wrists, the cellphone was a clock and the way mom reached out when it was time for pickup after band practice.

Today's 30-40 year old who has the coin for a great vintage collection will soon be replaced by a new gen of 30-40 year olds who have never had a watch strapped to their wrists in their lives and that's the problem. We're at the tail-end of the supply of 15 year olds who had a Casio when they were kids. A watch goes from something people grew up with to something completely foreign. A vintage wristwatch goes from an aspirational must-have to an expensive curiosity.

I've got 2 boys, born in 1998 and 2001, handsome 18 and 15 year olds with a fanatical wristwatch collector as a father. I have never gotten them to wear a wristwatch, ever. I've as much as said "hey boys, there's $75,000 worth of Rolexes and Omegas here in this box, they're yours if you want them" and they look at me like I would have looked at my dad if he offered me his collection of Edison cylinder recordings.

 

[Sculler22]

They are 18 and 15, and I would be willing to bet that in 10 years they will remember the standard that you set in buying interesting watches.
At that point they may be more amenable to giving you the proper credit for their good taste. Right now they are establishing themselves as fully formed, but not yet mature, human beings.

 

[speedolex]

S Sculler22

They are 18 and 15, and I would be willing to bet that in 10 years they will remember the standard that you set in buying interesting watches.
At that point they may be more amenable to giving you the proper credit for their good taste. Right now they are establishing themselves as fully formed, but not yet mature, human beings.

Agree completely, because they have a father that cared this passionately about vintage wrist watches I'm sure eventually it will rub off and they will view my collection as something very special, heirlooms to be passed on to future generations.

My concern about investing in the watch industry is that once you get past people like us and our offspring you have the other 99% of the population who will dominate with their 30-50 year old buying power and those people will have never worn a wristwatch let alone have a passionate connection to them like we did.

The market is at a high and the future buying population is about to fall off a cliff; not a great time to invest in horology.