Our partner, XM, lets you access a free demo account to apply your knowledge.
No hidden costs, no tricks.
We saw something strange at the start of 2020. When the pandemic hit the globe, everything shut down and everyone thought that all businesses that are not dedicated to the online market space would fail. But the watch market didn’t follow that logic and exploded, instead of crashing.
Why is the watch market so valuable and so desirable that even a global pandemic could not affect it? The reason is simple. It is a rarity and in low supply. We all know that when something is in demand, but supply can not satisfy the demand, prices go up. This is exactly why the watch market is so huge today. With top brands releasing pieces in limited quantities, watch enthusiasts are ready to pay top dollar in order to get their hands on luxury watches. This demand and rising prices created a huge opportunity for investors to start investing in watches and make good profits.
In this following guide, we will take you through the interesting world of watch investing.
There have been some changes in the watch market in the last few years. One of the main things that changed was the demand for second-hand watches. Expected growth in the second-hand market is expected to be around 8-10% each year. This caused watch prices to go up, as more people are now able to easily sell their watches that previously were hard to sell because of their “second-hand” status.
Another reason why the watch market is growing rapidly, and more investors are joining the market is because now there is a bigger demand for more metal sporty watches and the market is not dominated by classic pieces anymore. The reason behind this is the relaxation of the dress codes, as a more casual look is now more accepted in high-end societies, and more people started to look at less classic and more casual watches.
These two things are one of the main contributors to this expanding watch market, which caused watch investment to become a lucrative business alongside a great hobby. Today it has become easier to purchase a watch and then resell it for a profit. But it is not as straightforward as it seems, and we need to look at some details and know where to buy in order for our investment to succeed.
"..if you were investing in watches over the last 36 months, you've beaten every index, including the S&P, and so it's still my best performing asset class" - Kevin O'Leary
When it comes to investing in watches, compared to some other traditional forms of investments, investing in watches can become a hobby alongside a business venture. When we invest in penny stocks, for example, we look at them as just assets that are there to generate money. Watches, on the other hand, can be admired. They are not traditional financial assets that sit there just as assets and can be admired and looked at with pleasure. They can hold some meaning to us, which means that even if the investment fails, and we are not able to sell it for profit, it will still retain value for us.
Investing in watches can be done in many different ways. Which investment strategy we choose depends on the type of watch we want to invest in and how much we want to invest. Below we will discuss some of the most used methods of investing in watches.
When we want to purchase a good and expensive watch, we don’t just go into the store and choose watches from the shelf and purchase them. More expensive watches come with their own dealers who are there to help us choose the best watch for our budget. This method is one of the safest methods, as every watch that we purchase from an authorized dealer is authentic and comes with necessary and legit documentation.
Sadly, it has one downfall which is that not everyone is able to purchase watches this way. Usually, there are long wait lists of people wanting to buy certain watches. This means that people who have good connections are more likely to get their hands on desired pieces, while those who are new to the watch market will be left behind and have to look at other options.
Another way that we can purchase watches is to look at the secondary market. There are countless online auctions and marketplaces which sell expensive and desirable watches. We mentioned before that buying directly from the dealer is a hard and long process that in the end might not even work out. Because of this, many people who don’t have connections tend to visit these places in order to purchase their desired pieces.
This secondary market has grown rapidly in the past few years, as the demand for second-hand watches has increased. This place is full of people who want to sell and purchase watches, and it makes it easier to find a good watch that is up for sale.
But there are some risks associated with this secondary market. Every business has scammers who are trying to trick people and scam them out of their money. These marketplaces are full of those kinds of sellers who fabricate documents and lie about the watch's authenticity. Because of this, we need to be very careful when dealing with the secondary market, and it would always be good to have your own appraiser check the watch's authenticity before buying it.
When something is expensive and because of this it is not available to the general public, people start to invest in fractions of the assets. This is just like stocks, but you don’t receive dividends (with some exceptions). Watch investing has also adopted this strategy. There are some platforms that allow investors to invest in a fraction of the watch and not the whole thing. To do so, companies purchase high-end watches and then give investors the ability to purchase a portion of the watch. This lowers the entry price of investing in expensive watches and gives investors opportunities to enter the world of watch investing with small investments.
But this method comes with some disadvantages. For example, you are not in possession of the watch, which means you are not able to wear and admire the watch. Also, the choice of available watches is low, compared to other markets. This is a form of investing for those who want to invest small and don’t have a problem with not having a watch in their possession.
Watch investing is not only investing in watches, it can be done by investing in the companies which produce those watches. Most well-known watch manufacturers are private companies that are not publicly traded. But there are some companies that are listed on exchanges for people to invest in. Here we can look at the market and see if any watch retailers are seeing growth then invest in them directly.
Although, if we ask some watch enthusiasts, this is a bad idea, and they prefer companies that are privately owned. According to them, these companies care more about quality and tend to hold value for longer, while publicly traded companies tend to make quick profits while the market is hot.
Well when investing in watches, it is not as straightforward. You can't just buy any expensive watch and expect its value to go up. Because of this, we need to look at some specific details when selecting a watch to invest in, in order to receive some profit from it.
Recommended retail price is one of the most important numbers we have to look at when deciding which watch to invest in. RRPs are provided by manufacturers themselves, as to how they value each of their pieces.
When deciding which watch to purchase we need to look at its RRP history. This number tells a lot about each watch. If RRP has been growing as time passes, it means that this watch will likely be a profitable investment.
RRPs are not only used to decide if that specific watch is worth buying. When companies raise the RRPs, older models produced by that manufacturer tend to rise in prices as well on the secondary market. Because of this, this indicator is also used to determine if the second-market watches of that manufacturer are worth investing in.
When we are choosing which is the best watch to invest in, one of the most important aspects we have to consider is the brand and model of the watch. There are some brands that sell expensive and luxurious watches that despite their rarity tend to lose value over time. Because of this, when selecting a watch we need to look at the history of the brand and how its watches are doing over time.
One of the best things to do is to look at the discontinued watches market for a specific brand. This will tell a lot about the brand and if investing in their watches will be profitable.
As we mentioned before, there are long waitlists for watches. This means that not everyone who wants to purchase a watch will be able to do so from the primary market. This causes watches to be sold for big markups on the secondary market.
Because of this, comparing primary and secondary market prices is a really good way to decide if the watch is worth investing in. Whenever there is a big demand for a specific watch, it tends to sell for a high price on the secondary market. We can take advantage of this. There are many different platforms such as Chrono24, which provide good data about price movements. Using this data we can make good predictions on how the market will move and which watch is good to invest in.
"Interest in watches is a very particular one, but this has also allowed the interest on the die hard enthusiast spectrum to be as strong as it's ever been, arguably, the talk of monetary gain has led to more press coverage and general discussion around high-end watchmaking" - Teddy Baldassarre
There are many different watch brands we can invest in, and the final choice as to which brand you should invest in comes down to you. But here we will present some of the most famous brands to you which tend to be safer investments and keep their value or increase in value over time.
Undoubtedly the king of watches, Rolex is the most well-known watch brand in the world. Because of this status, they tend to rise in value or at least keep it. They have a really huge and rich history, as they were the first watch to be on top of Everest, they were the first fully water-resistant watch and many other noticeable achievements. This history gives them the trust of investors who know that quality is the main priority of Rolex.
If we are talking about long-term investing, then Patek Philipe is one of the best brands to invest in. Their slogan was that you don't buy Patek Philippe for yourself, but for the next generation.
Their mechanical watches are considered pieces of art. Each piece is built with quality in mind. They are built in-house by their unbelievably talented craftsman who put huge amounts of energy and dedication into each watch they put together.
Compared to the aforementioned brands, Omega watches are not as expensive, but they still tend to rise in value. Just like Rolex, Omega tried to achieve fame by being part of some important milestones. For example, Buzz Aldrin wore Omega on his wrist as he landed on the moon in 1969.
One more great thing about Omega is that they also produce all of their watches in-house, with a huge dedication to quality and detail.
There are many examples of watches appreciating in value over time. Here we will present you with some notable examples.
Rolex is the biggest watch brand in the world with many of its watches appreciating in value over time. But there is one watch that has gained huge attention.
Rolex Cosmograph Daytona which was selling for $25,450 a few years ago, has seen a 251% increase in its value and now sells for over $63,950.
Breitling is known for their quality watches. They have some of the most desirable pieces while maintaining reasonable prices. But their watches still tend to appreciate in value. Their Navitimer 01 is a great example of it.
The Rose Gold version of Navitimer 01 is selling for around $13,000 on the secondary market, which is a 169% increase in value.
There are many different Royal Oak Audemars on the market. But the one we want to focus on is Royal Oak Ref 15202ST.OO.1240ST.01. This watch which was selling for $28,900 in 2021 now sells for around $100,000.
Grey market watches are authentic watches that are sold through unauthorized markets. These watches don’t come with insurance, documentation, and other benefits that you get when you purchase them from an authorized seller. Also, you can get them cheaper than the original price.
Yes, watches are great assets that allow us to diversify our portfolio. They are relatively easy to transport, and if picked correctly they tend to appreciate in value.
Watch dealers can make between $60k - $100k in yearly wages. It will depend on the watches you deal with and the customer base you have.