Something weird happened in spring 2020, just at the pandemic’s start: the vintage-watch market boomed, just as regular life came to a standstill. Soon, sales of new watches began to rise as well. For years, everything had been heading in this manner.
Steel sports watches had supplanted old-school fancy pieces as the objects of white-collar desire as dress requirements continued to ease, and it began to feel as though auction houses were setting sales records every week. Collecting watches has suddenly become much more popular — and much, much more difficult.
But then something weird happened: a completely new way of thinking about collecting arose. One that values adaptability and the capacity to enter and exit a famously growing industry. One that prioritizes personal preference above group consensus. And one that appears to be more of an art than a box-ticking, cheque-writing science.
Why should you buy a high-end watch?
Watches are often purchased for three reasons:
- Increase in worth. Luxury watches have the potential to rise in price for a variety of reasons, with many reasons why these investment watches can increase in value.
- Increased diversification. Real assets may serve as a solid inflation hedge as well as a means to diversify your investment portfolio.
- Devotion. The purpose of an investment is to produce money, but if you like timepieces, it may be more fun to invest in (and wear) a watch than, say, a mutual fund.
How to Invest in High-End Watches
Purchasing watches directly
The most apparent approach to investing in timepieces is simply purchasing one from an authorized dealer, an auction website, or a marketplace. The benefits include complete power and choice over which watch to purchase, the option to shop about and compare pricing, and the ability to wear the watch.
In comparison to some of the other choices, we’ll examine below, the negatives are that a greater degree of understanding is necessary, you’ll need to consider storage and insurance, and depending on where you buy from, you may need to be cautious about authentication.
Purchasing stocks in watch companies
Many luxury watch brands remain in private hands, including Rolex, which is held entirely by the Hans Wilsdorf Foundation, a private family trust; Patek Philippe, which is owned entirely by The Swiss Stern family; and Audemars Piguet, which has been family-owned since its inception.
The major alternative way to gain exposure through the stock market is to purchase stocks in watch companies. Watches of Switzerland, a luxury watch retailer listed on the London Stock Exchange, is the most relevant example. Its share price has increased by more than 160 percent in the last year. Chronext likewise announced plans to go public but has postponed its first public offering.
Investing in Mutual Funds
You may be wondering if there are any funds in which you can invest to gain exposure to watches. In a nutshell, such funds are not generally available. In the market, we occasionally see a group of affluent collectors organize their own private “funds,” either legal or informal, where they pool money to acquire watches.
Due to regulatory constraints in most countries, there are no exchange-traded watch funds or funds similar to what exists in real estate with REITs, allowing any ordinary investor to readily participate in alternative assets.