I'm not sure about the post-1990 generation: I was born in 1991
Whilst I agree that today's kids are less naturally exposed to timepieces, when people my age are, most of them understand the appeal/have a family heirloom watch.
All is not lost

 

Good points from several posters in this thread.

I agree that the western pre-owned watch market is at a high risk of losing value with the transition to a new generation, but one factor we might need to take into account is the potential expansion in the Chinese, Indian and other new developing markets...they can still feed the new luxury watch purchase in the future. Not sure how the grey or pre-owned market logistics will evolve in those markets, though...i.e. if you are based in the US, Canada, UK I don't know how easy it will be to flip to watches to these new market consumers in the future.

Another thing I would point out is that I for one only started getting into watches in my 40s, with smartphones already available...I had no interest before, no reference from my father/family. In my case a new good friend ignited the fire...i.e. burning of cash

I do think that many people will still get into watches, even the younger generation, just at a later age and when they have significant disposable income to spend. Some men just feel the urge to collect something...be it cars, watches...so there will be an adjustment / correction...but with so many positive and negative vectors at the same time I really think it is a bit early to speculate on how steep that correction will be.

 

Bingo I have been mentioning this for years

Also

How many young people will buy the latest and greatest ( ie; iPhone new releases )
I have been around watches for a bit and to see the flippers of say Tudor watches for example is something not seen years ago. 10 years ago new watches were not sold within 12 month in the volume we see today.
This has a twofold result for luxury brands ( good and bad ) when you sell last years 5k watch for 4K to buy this years 6k

 

I think that one should focus on long-term trends, not market timing. Clearly, valuations on many watches of interest are currently at high levels. That being said, even with substantial price corrections, watches with the attributes that caused the high valuations will, over time, retain or increase in value, IMO. Stocks/bonds have had long periods of over-valuation, only to correct in price. However, if you look at decades long price trends, the direction has been up. The same holds true for real assets, though selectivity is key to success. Buying overpriced swamp land only ensures that you will lose, however, buying rental property in gradually improving neighborhoods has proven to be fruitful in terms of absolute returns. I read with interest that there is a new Richard Mille chronograph, co-branded with McLaren F1, that will be offered for sale at close to 1,000,000 Pounds Sterling. The editorial comment in "Car Magazine" was that it surely will become more valuable in the following year. To me, aside from the regrettable aesthetics of the watch, this is a ludicrous concept. However, the new money being created in countries that are non-traditional in terms of Western taste norms seems to embrace very conspicuous forms of consumption. Would I, if I had the means to buy such watch, buy it? Not ever, in fact, I would be embarrassed to wear it. That does not in any way denigrate those whose culture encourages such excesses. If one believes the adage that success breeds success, then showing visible proof of that success is a key part of continuing to succeed.
So, the implications of all that verbiage above? If you love a watch for its look, feel, symbolism, or whatever, and you can afford to own it for an extended period, chances are good that it will retain its value if it is not a total outlier in form, and has integrity of condition and originality. If, on the other hand, you are trying to score a bargain on ebay, or at a boot sale, you may profit because of your superior knowledge. However, few of us really have that expertise ( I don't), and buying opportunistically to sell on at a profit has often been called the greater fool theory. I've blathered on for far too long, back to work now.

 

some good thoughts but i think you are neglecting to consider the coming changing demographics that will certainly have a severe negative impact on demand in the coming years. the 25-40 year old collectors of tomorrow will not be able to replace the 45-60 year old collectors of today. the younger generation just doesnt wear watches to the extent that boomers do, nor do they place as high of a value on "things" vs experiences as the Boomers do. yes, stocks have had periods of overvaluation but you have had dying marginal buyers being replaced with young people entering the workforce. when the marginal buyer of a $10k 1960s era Speedmaster dies, does one replace him? when they begin dying at faster rates, who will be there to absorb the supply when these collectors' heirs go to sell?

 

you and me both! set it and forget it!

 

60/40 with 10% international. Rebalance at 5%. All index funds. It's very boring but that's the way I like it.

 

im 85/15, prob 90/10 with the rally, but im in my early 30s. not really a believer in international but i get why people do it. the arguments for it are as valid as the arguments against it, imo.

 

jfmiii makes some very valid points about the cohort that will/may replace the buyers of $10k 1960s era Speedmasters. I totally concur with the question and the worry. However, I have seen many a renaissance of things that were totally out of favor. In fact , being out of favor often sparks a movement to bring back the past. I often claim that my crystal ball is cloudy, and that certainly applies here. All I can say is that there is is always some risk in a risk/reward transaction, and we all evaluate it subjectively. Hopefully, the future will include some anachronisms such as fine wrist watches .

 

In a previous life, I was an antiques dealer, and I've seen much of what's being discussed here play out with other "alternative asset classes" - furniture, 1st edition books, art etc - with changing fashions and demographics determining what remains valuable and what doesn't. What was always constant was that the top end of the market/high quality always rose, due to scarcity, and that there were always "rich people"/specialist collectors willing to pay for scarce quality....Bar a zombie apocalypse/End of Days, I don't see the latter changing in the lifetime of anyone on OF....

For me that translates into slowly paring my collection back to a top quality focused set of Omegas that I really love, can wear, and which one day I can pass on to my boys - or which they can sell and get good money for, if they choose. That means some older Speedies, Military, special divers, and a couple of dress Connies. What does slightly worry me about Omega is their potential overtrading and brand value destruction, caused by an endless supply of "limited" editions - and once you start releasing a watch to celebrate the release of a previous watch, it starts to look like the beast is devouring itself...

To the OP question, I don't have any "luxury goods" stocks in my investment portfolio - mostly because the returns are usually rubbish. I mostly have food, pharma, tech, energy and weapons - the things people will always need

 

Hey, all of you... look up...up ... and up again, ober there at the beginning of this thread. Does it have something to do with autos?

 

Sorry, just saw that auto theme is over, so just ignore my previous feed.

 

Hmm. Investing in top dollar watches is risky. I invest in vintage watches costing 80 to 140 bucks to acquire and sell them off at a 64% profit on Average. As a hobby that averages to 200USD net profit per month. And I get to enjoy them for a while too, keeping several choice items that I know will appreciate.

 

Besides the primary two reasons not to invest in watches...

1. Baby Boomer's passing away, Generation Z having never owned a watch
2. Currently at the top of the market

....there is a third:

3. The consumable parts are disintegrating

With most desirable vintage Speedmasters approaching 50 or 60 years of age their dials, hands, and bezels are way past their life expectancy. As we know, originality is king right now, collectors insist on dials with patina, bezels with gentle fading, matching hands, and thick unpolished cases and these elements are all a ticking time bomb as the years go by. What are charmingly referred to as "tropical" with "ecru patina" will look like "nuclear holocaust" eventually with very few replacement parts available and all that originality/profitability gone out the window if they are restored.

If you close your eyes and imagine a future 10 or 20 years from now where the prime target demographic are all dead or on fixed incomes, their offspring having flooded the market with dad's collection, the examples up for sale having eroded to very poor condition, and Gen Z having never owned a wristwatch in their lives, there is a perfect storm of an epic market collapse. Today's 17 year old's 20 years from now would never pay $10,000+ for a 75 year old Speedmaster. If they have a vintage itch, I could see them going wild collecting a 40 year old Motorola Startac. Might want to start investing in those.

 

What about the growing middle class in developing countries

 

I suppose when i look at my watch collection there is one common similarity and that is Omega. If my life would allow it there would also be a Porsche 911 on the driveway this to me is because not only do i love both, i also believe they are great investments. They are great because they will give to me a personal thrill of enjoying at very little cost. This is achieved to me by looking for certain things that the companies create. Not all models will thrill and not all models will be worth more, but every now and then they achieve both. I recently bought a Seamaster 2254.50 because i have loved it for ages and i believe it will be worth at least what i paid for it when im finished. I am not rich enough or i doubt will ever be to throw away money on over priced cars or watches or paying too much for anything. So i have to look at watches as a investment and i also love them. To put it simple if Omega 2018 bazelworld brought out a Octoset of the best 8 watches and i thought i could get it cheaper in three years time even thou i loved it. Then i would wait. Buy what you love at what you feel is the best price and you will not lose much.

 

I agree here. There are certain brands and models that are fine investments and as long as you know the markets and invest wisely, you should come out on top. I like to leverage luxury assets as short term investments personally whereas some folks buy them and hold on to them for quite some time before letting them go. It all depends on your risk tolerance, liquidity, and what you want to get out of the market. I personally want to enjoy as many watches as I can while making a return of 20% or greater ROI which is double what the standard index fund return ratio is.