The jobs release this morning in the US got me thinking about inflation, which then got me thinking about pricing of vintage Speedmasters (yeah, slow Friday). I've read many threads talking about Speedmaster bubbles, including how rapidly prices have risen recently. In full disclosure, I'm a new owner of a great 145.022-69 "straight writing", purchased for less than a new Speedmaster retails today. That to me is great value - but that's just my opinion and not the purpose of this thread. I wanted to quickly look at original vs. current vintage Speedmaster pricing, relative to inflation and risky assets. I grabbed some data from the interwebs and posted a quick and dirty analysis reproduced (hopefully) below:



What's interesting is that all models have outperformed US inflation, but none have really outperformed US equities. What's also shocking is that it's very easy to forget how much inflation occurred in the US in the 60s and especially the 70s. Living in our ZIRP/NIRP QE world, it's hard to picture nominal interest rates above 4%!

 

Great bit of perspective, thanks!

 

Totally different story, but I recently inherited an IRA account, which I went ahead and paid the taxes on to convert to a managed benefit account. When it was set up (early '90s?), there was a guaranteed rate of return on the inherited funds if I converted to their managed account of 4.5%. In about 6 years I can get back the money I paid out in taxes (and then owe more taxes on that interest - lol).

Great chart, and very interesting to see.

 

...precisely my point in avoiding the words "investment" and "watches" in the same sentence..

 

However if you were to do the exact same chart with vintage Daytonas, you would likely have a bit different of an outcome.

 

Not so sure that's 100% precise, given that most of the rise in prices can be attributed to the more recent decade. Most current owners/collectors of speedmasters might largely also have come from those few years as well

 

Interestingly, I think a more appropriate benchmark would be Gold, as it pays no interest/dividends (a large component of the total return of the S&P 500) and has storage/maintenance costs (like a watch). The comparable annualized return for the years indicated is 6.4%, 7.0%, 7.7%, 5.2%. So generally the Omegas perform as well (or better in some cases) than another passive investment.

 

I don't disagree - wish we had a time series of data. However, a logarithmic graph of price % gains (if it were available) might show a less pronounced kink than you expect. An $85 watch that sold for $1700 still has appreciated 20x, even if it subsequently sells for $17,000 that's only another 10x gain.

 

Analysis updated through year-end 2018 below. Enjoy the price gains!

 

Interesting read. Thanks

 

Wow, what a more in depth analysis than I would have done. It shows if you hold long enough and get lucky with a collectible that becomes hot you can come out ahead financially, but as a serious long term investment watches are probably a crap shoot. That is why I always say to my friends to buy something "you like" but a "fair" used price and maybe you won't get hurt in the long run. I also say get something you can get parts for and any good watchmaker can repar.

 

i saw an analysis years ago that Picasso had compounded at high teens basically forever. . but art / collectibles in aggregate lag the s&p 500 very badly. for every daytona there are 100 examples that don't do as well. i think people looking to make money or store value in watches. . .are misguided. its just a fun hobby!

 

I will take a 2998 for $15,000, please

 

Thanks for the 2018 update

 

my take away is that in the long run buy as much stocks as you can while you are young and never time the market and you will retire much richer. the watch stuff is just a bonus.

 

Watches are an (expensive) hobby. Seeing it as an investment is trying to justify spending more than you should on a hobby.

For each case of someone who made some money on buying and later selling a specific watch, there will be hundreds (or thousands) of other cases where it was a net loss.

 

I don't disagree with this at all; in fact the price analysis was simply picking a few "original issue" watches and seeing the long-term "performance". For some, like the sorta plain vanilla 1976 145-022 much of the price gain can be explained simply by inflation, so the "real" performance is much less interesting. However, for others, like the 2998, we can see significant out-performance, driven by any number of factors. The question is whether one can identify the factors that create collectibility, perhaps decades before anyone thinks of the item as desirable. This seems, I dunno, difficult (although I am happy with my NOS TinTin!)

I *do* think there are many knowledgeable collectors who can consistently make money on their hobby. My guess the one thing in common (besides encyclopedic knowledge -- HT @Spacefruit) is turnover. If you're constantly re-evaluating your collection you are less likely to buy high and sell low.

 

A side note related to the subject. Couple of weeks ago, Isaac Wingold labeled a Speedmaster as "investment grade" on Bring a Loupe and had to quickly walk it back when people started complaining in the comments. Maybe people are starting to lose patience with them.



He gave investment advice, then he says he didn't, and that a watch blog is not the place for investment advice. If it isn't, wonder why did he give it in the first place?
I suppose that's because of how this whole thing operates. Some blogs publish or used to publish Catawiki highlights, and Catawiki would pay them a small cut, if the buyer for a particular item has found the listing through said "highlights." I think that chances are high, that Bring a Loupe operates in a similar - if not identical - way. A random choice of listings that Isaac (and Louis before him) finds interesting is a highly unlikely scenario, given that H is all about money.
The more people lose patience with them, the better. It's unlikely to hurt Hodinkee big-time, but at least some of their audience might start looking for knowledge elsewhere, and that's a step forward.

 

Some people will find any excuse to bash Hodinkee...good Lord. The original comment by "wis101" makes absolutely no sense - the wording in the article was "While this is admittedly comparable money to a Porsche 911, you don’t have to worry about getting hit by depreciation upon taking delivery of this guy." His point was that if you spend $100K on the watch (and actually, ya know, want the watch), it isn't like a new car that depreciates as soon as you drive it off the dealer lot. That's not investment advice...it's a very simple comparison that was made in a lighthearted tone.

 

thank you