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The vintage price appreciation curve (VPAC)

  1. slique12

    slique12 Apr 13, 2017

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    Some of us collect only for the love of watches. Very few of us collect only to invest in watches. But, I assume many of us fall somewhere in the middle - we want to own vintage pieces we love and would prefer to not lose money along the way.

    I'm new to vintage watches. How new you ask? 12-18 months, and lately, I've been thinking about something quite a bit - what is the appreciation curve for vintage watches? Yes, there are thousands of vintage watches, and hundreds of scenarios where these watches will appreciate (or not) differently, but the key question is:

    If one buys a vintage watch whose price is on it's way up (price trend suggests the bottom was in the past), and at fair market price at the time (not pay 50%+ at an overpriced dealer), how likely is it that one will lose money at any point in the future? Or using the graph below, how likely is it that the price trend goes down after it crosses the vertical grey line?
    VAC.png
    I hope this creates a healthy discussion so that folks that are new (like myself) can benefit from the wisdom of those who have been doing this for 10/20/30 years.

    And yes, I decided to introduce a new acronym - VPAC. Why? Because why not:)
     
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  2. shishy

    shishy Apr 13, 2017

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    Haha, I've been collecting vintage watches for an even shorter duration but was thinking about just this in class earlier. I was trying to find data on historical vintage watch sales to build models and look at this. As you said, I imagine it depends on a variety of factors (e.g. social media "influencers", etc.).

    I think it would be possible to build a forecasting model for types of watches (however we want -- e.g. by niche "so vintage military vs. not", or by brand, and so on) provided we can find the data - I know watchrecon shows the prices watches have sold for, but I am not quite sure how to go about finding this information for watch sales way before that. Do you have any idea?

    I'd be pretty interested in digging through data to build something like this, though. Neat question :).
     
  3. Larry S

    Larry S Color Commentator for the Hyperbole. Apr 13, 2017

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    I posted a thread before X-Mass expressing my dismay at having started to think this way a year in, that it was ruining the hobby for me, and welcomed the sharp smack in the noggin from the Squirrel and counsel from other OF members.

    Keep what you wear, sell what you don't and buy the best examples you can. Don't play with cash you cant afford to spare. If you sell, be comfortable that you will recover some cash but might not break even or profit. Read / consult these forums and don't over pay. Watch for frothy categories.

    Cheers...
     
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  4. Foo2rama

    Foo2rama Keeps his worms in a ball instead of a can. Apr 13, 2017

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    Too many external forces on this. World economy and the recent rise of vintage collecting the past 5 years are major external factors. I see what your trying to do but I don't think it applies to watches and cars.

    Even Rolex with its more "stable" market would not really work.
     
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  5. slique12

    slique12 Apr 13, 2017

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    Building a forecasting model would be a fun exercise and I'd be totally open to think through how that could be built, but I don't have any knowledge of data beyond watchrecon. This thread attempts to answer a much simpler question though:)
     
  6. Foo2rama

    Foo2rama Keeps his worms in a ball instead of a can. Apr 13, 2017

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    Your making an assumption that watch prices on vintage pieces can be forecasted in the mid term.

    Look up historical data on Rolex 1655's for example. This will drive you nuts if you try to correlate the prices. They rose from obscurity spiked then dropped then came back below the spike. That watch is considered fairly "blue chip."

    Also the whole rise of vintage pieces is a fairly new thing. My read is that 5-8 years ago the world economy was stronger and people purchased new watches in higher numbers. The economy went back down and people turned to vintage after they got bitten by the bug, as new watches started going up in price for a variety of reasons which moved people to the vintage market also.

    Who knows where the vintage market will be in 3-5 years. I'm not calling it a bubble but I'm not really sure your can forecast the market in a meaningful way to tell you if any vintage piece will go up.

    I think the Ninas are bubbled right now and are being manipulated on the market. It's fairly obvious that Patek is manipulating the vintage Patek market themselves to drive up and justify new Patek purchase.
     
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  7. slique12

    slique12 Apr 13, 2017

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    Building a forecasting model was introduced to the thread by @shishy.

    The goal of this thread was to understand something much simpler.
    1) Do vintage watch prices come down once they have started to trend up?
    2) If so, how and when does that happen? Is there something that can be learned there?
    3) If one buys an original vintage watch (whose price trend is on the way up) at fair market price at the time, how likely is it that the watch will come down in value in the future?

    I was thinking about two watches over the last week that really sparked this question - vintage speedies from the late 60's and the Yema Yachtingraf. Both of these have gone up really fast over the past couple years (probably longer for the speedy) and how does a newcomer think about making/not making these purchases even if they happen to find good examples at fair market prices.
     
    Edited Apr 13, 2017
  8. Kmart

    Kmart Apr 13, 2017

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    Like @Foo2rama said there's just no real way to answer any of these questions. Far, far too many external factors to consider and they all vary depending on which watch we're talking about. At a very basic level I would say that rare watches such as pre-moon Speedmasters and early Daytonas/Subs -- watches where the supply is only dwindling at this point and demand remains high/is increasing -- will continue to go up in value, especially since more and more collectors with very deep pockets seem to be entering the game on almost a daily basis and driving the market up for the rest of us. On the other hand, more common vintage pieces like Constellations, Seamaster dress watches, Datejusts, etc. should remain fairly static in value. There are enough of them on the market and the demand is stable enough that, while I don't think they will really lose value over time, they probably won't skyrocket like rare vintage chronos / divers have.
     
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  9. adi4

    adi4 Apr 13, 2017

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    Also keep in mind condition puts some examples of the same models on an altogether different curve. People will and regularly do pay a hefty premium for excellent condition examples, and the market for those is different than an example with minor/major wear.
     
  10. eugeneandresson

    eugeneandresson Apr 13, 2017

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    I'm on the fence here...but if this excercise
    a) gives you a pleasurable way to spend your time
    b) yields interesting or semi meaningful results
    c) gives you the moral ground to justify feeding your addiction
    then by all means, please go on and do share.
    Thanks for the initiative and thanks mods for the top class forum!
     
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  11. oddboy

    oddboy Zero to Grail+2998 In Six Months Apr 13, 2017

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    @ffej4, didn't you have a similar graph ?
     
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  12. ffej4

    ffej4 Survey Man Apr 13, 2017

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    @oddboy @slique12 During my freshman year of college, I also considered this. I created this after taking microeconomics 201, so I was just 95 courses shy of my PhD. Here is what I came up with:

    1.jpg

    In all seriousness though, I've decided that watch collecting isn't going to be about depreciation/appreciation for me. All about personal enjoyment. Sure, I'll cut some corners by purchasing watches that are 6-12 months old to save on that initial hit you always take when buying new, but beyond that, I've given up on the investing outlook. That's just me. Other folks will look at it differently. If you're buying timeless pieces like Speedy Pros and Submariners, you can be pretty sure that your watches will depreciate less than the average vehicle, though.
     
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  13. Tony C.

    Tony C. Ωf Jury member Apr 13, 2017

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    lololol!

    We're in the final stages of by far the greatest credit/debt bubble in history, and you think that the "bottom" was in the past? Boy, are you in for a rude awakening.

    Countless people thought the same thing about Japanese stocks in the late 1980s, and for 25 years now that market has only occasionally reached around 50% of those all-time highs.
     
    Edited Apr 13, 2017
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  14. Foo2rama

    Foo2rama Keeps his worms in a ball instead of a can. Apr 13, 2017

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    Let me put it this way....

    If this was something that could be done, don't you think that at least a few people here are smart enough to apply this and would be rich by now?
     
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  15. slique12

    slique12 Apr 13, 2017

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    No one is denying the credit/debt bubble, or the existence of other macro economic trends. But comparing vintage watches to stocks is a terrible analogy. At its core, a stock price today is what people are willing to pay for a company's future performance. The price of a vintage watch is linked to availability, how much the vintage watch community appreciates the design, movement, historical significance, etc. And come to think of it, the US market did reach and go way past the previous high from the dot com era. Regardless, this point is moot.

    As a newcomer to vintage watches, I haven't experienced the cycles of vintage watch pricing. I have access to 3-5 years of FS ads on watch forums, and perhaps some big auction websites that typically sell more expensive pieces. So when I look at a watch today, even if it fairly priced for today's standards, I wonder - will this watch stop experiencing the appreciation I've noticed in the recent past? Could it even go down? If so, how much do I stand to lose?

    It's not about making money, it's not knowing if the vintage watch I just paid $4k for today becomes $2k in three years. With new watches, it's an obvious answer. With vintage, it's not - thus this discussion.
     
  16. slique12

    slique12 Apr 13, 2017

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    Totally. But this is not the intent of this thread. As I said above, it's not about making money but not knowing if the vintage watch I paid $X for today become $0.5X in a few years, even when I've taken the time and effort to ensure the watch is all original, is priced at fair market value, and price wise seems to be headed up.
     
  17. Tony C.

    Tony C. Ωf Jury member Apr 13, 2017

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    If you believe that stock valuations are remotely realistic at the present time, I've got a nice bridge that might interest you. Stock prices today are a reflection of previously unheard of easy money Central Bank policies, coupled with perverse incentives for corporate executives to buy back huge numbers of shares, etc.

    Few of the valuations of the highest flying stocks can be justified by any realistic expectation of future performance.

    While you are correct in separating vintage from contemporary, and there is no doubt that the former are better bets in terms of investing, I think that you are still failing to appreciate how another major economic crisis (not if but when) will impact the market. That's not to say that the discussion isn't worth having, or that parsing various categories, brands and models isn't an interesting and potentially worthwhile exercise. But the market has been bifurcating for some time now, and the downward pressure on the majority of vintage watches is accelerating. When the crisis unfolds in earnest, many of those in bubble territory will "correct" to much lower levels.
     
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  18. ffej4

    ffej4 Survey Man Apr 13, 2017

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    @slique12 I understand what you're saying. You're not on a mission to invest in watches for the purpose of appreciation, but you'd like to know that your vintage watch valued at $4k won't depreciate to a value of $2k in five year's time. That's a sound concern. But, honestly, I don't think anyone has an accurate way of determining a semi-correct answer.

    I'd say general economic conditions are an important determinant in watch pricing. In a depression/recession, the demand for expensive luxury/collectible goods would presumably diminish. Other than that, I'm not sure what other factors would easily determine the direction of appreciation/depreciation.

    Edit: I've included a couple of interesting and simple reads on the topic of investing in collectibles.

    Investopedia
    Wall Street Journal
    Wall Street Journal 2

    Just Google "investing in collectibles." It seems like all the articles agree that the biggest downside is a lack of market understanding and the near-impossible ability to predict where the market is headed for any collectible good.
     
    Edited Apr 13, 2017
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  19. watchknut

    watchknut New watch + Instagram + wife = dumbass Apr 13, 2017

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    If you want to invest, see what European and Asian collectors are collecting...errr...hoarding. That has always helped me, as their tastes seem to be 6-12 months ahead of the curve.

    Also, no matter the market swings, collector grade pieces will always be in demand and will command the strongest prices.

    What I call the "middle market", watches with apologies, always get gutted in the downswings.

    If you are investing, buy based on condition, condition, and condition...and buy smart.

    To do that, you need a shit ton of knowledge, good luck, a set of brass balls, and deep pockets.
     
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  20. STANDY

    STANDY schizophrenic pizza orderer and watch collector Apr 13, 2017

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    There is enough information on this forum to work out what's worth collecting and what's not
    Many members here give this away everytime they post a picture of a watch :whistling::whistling:

    Sorry to say but it's not something that you pick up quickly. It's the lightbulb moments along the way that all of a sudden add up and it's daylight.....
    Many of the long time collectors with great collections took a few years to hit their straps with the wisdom of others.

    The best bit of advice on the topic and I have linked to it several times

    https://omegaforums.net/threads/condition-condition-condition-and-other-pieces-of-advice.1716/
     
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