Investing in Rolex watches

[TexasHusker]

My dad bought a brand new Stainless Rolex Submariner in 1985 for $500. I am wearing that watch as I type, and it appears that the value is now in the $6/8K range.

So in 32 years it has doubled roughly 4 times, or one every 8 years. Using the rule of 72, that represents a 9% annual increase on average.

Wonder what would be wrong with finding good deals on these and storing them away?

[Fishindude77]

That would be kind of like gun collecting. If you're knowledgeable on the subject, you can probably do OK.

[corn18]

The vintage watch market has exploded in the last 5 years. If you know what to buy, you can make a some money. Or you can do what I did and buy what you like at the price they are asking and lose a bit (10%). The Daytona I am wearing right now I could flip and make $1000. The IWC I bought last year is sitting languishing waiting for a buyer. This guy is very happy with his find:

http://www.ebay.com/itm/292060170753

That is a real watch and it will go north of $150k is my guess.

[TexasHusker]

That would be kind of like gun collecting. If you're knowledgeable on the subject, you can probably do OK.

I had to completely clean out my dads house a few months ago to sell it, and I found basically a cache of guns - rifles, pistols, and shotguns, plus a pristine vintage Red Ryder BB gun - in the trunk of his car!

I have zero knowledge of guns, but my son has a gun safe and we locked them up.

[james.hendrickson]

I had to completely clean out my dads house a few months ago to sell it, and I found basically a cache of guns - rifles, pistols, and shotguns, plus a pristine vintage Red Ryder BB gun - in the trunk of his car!

I have zero knowledge of guns, but my son has a gun safe and we locked them up.

This would make an excellent new thread.

[disneysteve]

The problem with buying watches now to put away for the future is the same as with any other collectible item. It's impossible to accurately predict what will and won't appreciate over the years.

I've sold collectibles since the mid 1980s. I've done really well on some items and lousy on others. There also tend to be cycles in the values, too. So I may have bought something in 2000 that was hot for a few months or so, then the intereset died out and the items sat in my stock for years. Now, those items are "vintage" and selling well again.

[PeggyHefferon]

Rolex watches have enough history as a collectible that if you buy at a fair price there is a good chance it will appreciate. But you can never be certain.

[PeggyHefferon]

Speaking to DisneySteve's comment of never knowing what will appreciate, do a search on Shopkins. Pencil top erasers in fun shapes that sell for insane prices for the rare ones.

[~bs]

For Rolexes (as with anything else collectible) to appreciate in value, it has to be relatively limited in quantity compared to the demand. The problem is that you cannot predict the demand. Sometimes, you can take what would otherwise be a non-noteworthy or piece of crap (DeLorean DMC-12), it'll get popularized somehow, and the value shoots through the roof.

Also understand that the value of collectibles tend to rise with the economy, and fall with the economy as well. As people in general are more flush with money, they're willing to spend a lot more to acquire it. It's why right now, "The vintage watch market has exploded in the last 5 years.". So has many other collectible and discretionary luxury items.

[corn18]

I have an example:

I bought a very nice 1989 Rolex Submariner with date from the original owner who paid $1200 for it in 1989. It was in great shape. I paid $6000 for it. I sold it for $5800 (I overpaid because I liked it).

If you try that with a Rolex Datejust of any era, it won't work out as well.

A Rolex Daytona from the 1970's sells for $50k-$150k.

A 1966 Rolex Submariner that cost $195 would sell for $12k now if it's in good shape.

An Omega Speedmaster from 1967 will sell for $9,000 today. New it was $100.

So there are gems out there. But like cars, you better know what you are doing and be able to spot a fake. There are millions of fakes out there and I see them on Ebay all the time selling for prices as if they are real. I report them, but I'm sure I miss 100 for every one I catch.

If you try to buy something new betting on the come that it will be collectible, then all bets are off. There are rare Rolexes that people can't give away. There are Rolexes that they made millions of that are hot. I could not even begin to tell you which new ones will be worth more 10 years from now. But I like buying them, wearing them for a while, selling them for about the same money and then doing it again. Risky, but if I stick with the known resellers (Rolex, Omega, IWC, A. Lange, etc...), then I know I can flip them easily. Buy something weird or offbeat like a Bvlgari and you may get stuck with it.

[disneysteve]

Also understand that the value of collectibles tend to rise with the economy, and fall with the economy as well.

Another factor is generational. Vintage watches may be hot now and the people buying them are probably baby boomers who are now in their 50's and 60's, have disposable income, and are nostalgic about things like watches at a time when many people don't even own one anymore because they use their smartphone to tell time (I haven't worn a watch for over 5 years).

So 10 years from now, will the folks who then are in that phase of life have the same feelings about watches? Possibly not. If so, the demand for vintage high end watches may dry up. There's no way to know.

[~bs]

^

The problem with buying current items is that the production amount is so much more than it was 30 40 50 years ago, so it reduces the chances greatly that it may become a collectible and appreciate in value (more than the stockmarket or inflation).

My recommendation to anyone thinking of "investing" in a collectible type of item is to buy items that you personally are interested in. That way if the "investment" nature of it doesn't pan out, you still derive satisfaction from owning/using the item.

[97guns]

I don't own any but I know high end watches hold value well, they are a good "investment" or for better term a great way to store wealth

[disneysteve]

I know high end watches hold value well, they are a good "investment"

Only if the demand continues to exist. It may. It may not. As they always say with investment products, past performance is not a guarantee of future results.

[97guns]

Only if the demand continues to exist. It may. It may not. As they always say with investment products, past performance is not a guarantee of future results.

A reason I wouldn't view it as an investment but a hard asset


"Hard Assets are investments with intrinsic value such as oil, natural gas, gold, silver, farmland, natural colored diamonds and commercial real estate. Typically hard assets are an excellent inflation hedge. In general, commodities/hard assets are negatively correlated to both stocks and bonds.