Investing in Watches 101
Daniel PintoThese days, everyone wants to get into the world of watches. A real gold rush... for 904L steel, actually. I've been in this industry for a long time, and I've never seen anything like it.
Thanks to Instagram and a turbulent global economy, we're experiencing a price boom in the secondary market. While it's true that luxury watches as an investment have outperformed the S&P, gold, Bitcoin, and almost all other asset classes, like any other investment, not all that glitters is gold... sorry, steel.
What should you do if you're new to this hobby, have some cash, and are thinking about buying watches to invest in? Well, I'll give you the advice I wish I'd had when I first started out on this path—a path full of twists and turns, riddled with mistakes and horrors, but ultimately as unique and incredible as this very special hobby is.
My first impulse is to advise you against investing in watches. A watch is something so personal, so full of stories, with so many hours of research, development, and expertise behind it, that above all, it should be a tool to enjoy your life more, not a financial instrument. Our hearts tell us they're meant for enjoyment, not profit.
On the other hand, the brain thinks that a watch can last hundreds of years, generally retains its value, is universally appreciated, and, due to the nature of its manufacturing process, is scarce. All these attributes make it a great candidate for an investment object, which, unlike a bond or a stock, can be touched, enjoyed, and shared day after day, much like a fine work of art. Additionally, a watch is an excellent store of value, allowing for the storage of wealth in a concentrated manner and outside of any restrictive framework, where its liquidity also makes it a good way to transport wealth.
Back to the heart of it, my general advice is always: “Buy what you like. Not what others think you should like, not what you always see thanks to the Instagram algorithm, or what you think will get you the most likes in your circle, but what you truly like. At the end of the day, the only one you should justify that expense to is yourself... and probably your significant other.”
Well, we're going to spice up that very personal advice a bit for the purposes of this column. Today, we're actually going to focus on treating watches as an investment instrument and nothing more. We'll forget about adventures for a moment and turn our attention to the market—the dirty market. And if your goal is solely and exclusively to build a watch collection that represents a profitable investment portfolio, learn these tips as if they were the commandments in stone from the Church of the Holy Trinity Watchmaker in the La Chaux-de-Fonds Valley.
1. Don't pay your collection with debt
If you only have time to learn one, please let it be this one. Like other assets , watches can lose value. Unlike other assets, they can be stolen or eaten by your dog. A model may be fashionable because it appears on John Mayer's wrist, but the next month the same model appears with a green dial and yours is no longer worth the same. Therefore, any investment you make in watches should be with money you are 100% willing to lose without affecting your standard of living. Save leverage for your real estate investments.
2. Incorporate the costs of maintaining the clock into your analysis
It's not just the initial purchase price. A good watch should be serviced regularly (at least every 5 years in general) and stored in a safe place. Make sure you factor this in before you start calculating.
3. Don't buy the product, buy from the seller
It's key to make an informed purchase, from a reliable, established channel that provides the certainty that they will respond to any future problems. Don't obsess over the original purchase documents, but do demand a certificate of authenticity issued by a trusted entity. The seller is more important than the product.
4. Check before you buy
Take the watch to a reputable repairer—like LOFT , for example... Any seller who boasts of providing good service will offer you the option of inspecting the watch at an independent repairer. A mistake at this stage can cost you dearly.
5. The condition is essential
Never buy a poor example of a great watch, even if it's your dream watch and you can only afford one in poor condition or with a dubious history. It's better to wait and save more to buy the best possible example of the watch you want. Condition is more important than papers, especially with vintage watches, and will be key to the long-term profitability of that piece.
6. Don't be afraid to bid to try to get the best price
Behind every watch is a person with a story. We don't know everyone's reality, so it's important to try to find the best deal for you, but always respect the person on the other end. At the end of the day, the best part of this hobby is the community of fans behind it who make it happen.
7. Avoid bubble or "hype" models
Royal Oaks, Hulk Submariner, White Daytona, etc. Some examples of watches that are very fashionable but actually NOT SCARCE. It's hard to believe given their current prices, but believe me, thousands and thousands of units are manufactured each year. These models tend to have prices driven by trends, and as we all know, trends are unpredictable and the enemy of a balanced investment portfolio. Scarcity is what paves the way for long-term profitability.
8. Invest in market-leading brands
Whether they're market leaders in recognition, technical merit, or value for money, leading brands are your best option for retaining value and profitability in the long and medium term. Rolex, Omega, Grand Seiko, Patek, and their models with the greatest historical legacy (Submariner, Speedmaster, Snowflake, Calatrava) are the equivalent of investing in Apple, Google, and Coca-Cola. Once you've covered these bases, you can move on to riskier pieces that are high-return bets within your portfolio.
9. Think vintage
For decades, the vintage market—prior to 1980—was the driving force behind the growth of watch collecting. The greatest collectors of the century traveled the world in search of Paul Newman Daytonas , Speedmasters , Calatravas , and Heuer Carreras . Along the way, they made fortunes. The phenomenon of collecting new watches is very recent, and because it is so homogeneous, it is more difficult to find truly profitable opportunities. In the internet age, it is easier than ever to access vintage pieces in markets like Switzerland, Japan, or the US, where the chances of finding a hidden gem or a future classic are much higher. Furthermore, let's remember that scarcity is key to profitability, and with a vintage watch, we can be sure that there will never be more examples on the market than there are today.
10. Never stop studying
As in every industry, luck favors the best prepared. If before you had to dig through paper catalogs or travel to remote corners to learn about watches, today everything is online. Study, learn, and never cease to be amazed by the wonder that is this industry and its people. As you develop your taste and critical eye, you'll be better positioned to spot a gem about to explode in value. As in every path, there will be mistakes and bad days, but unlike other paths, the watchmaking path can promise you something truly incredible every day.
Use these 10 commandments as the first step on your path, and keep learning every day. Don't forget to always share what you've learned with those just starting out, and above all, enjoy it! Here at LOFT, we're always ready to hear your stories and learn together.
At the end of the day, it's just a clock.
