Watches - Is the idea of investing in them crazy?

[IloveJapan]

Dear TJKansai,

Thank you for your comment. I am curious to know which of your friend’s models went up in value. Just for knowledge’s sake I am asking. Then I can stimulate myself with some detective work asking myself why they rose!

Of course we do live in some very unusual times, with all this central bank Liquidity, which has made all manner of asset prices rise…

I also wonder what he thinks of the Tag Heuer brand, which is quite controversial but when I look at their models they seem pretty cool…

[IloveJapan]

Watches are gorgeous. Like cars. There are some incredibly beautiful designs out there. But like cars, they are money traps.

Here’s what the advertising doesn’t tell you. My mother in law’s $10,000 Rolex started keeping time erratically after a half dozen years. The official agent recommended an overhaul which fixed the problem but made us aware of a greater problem. (This standard overhaul is recommended by Rolex every 10 years.) That cost ¥80,000 but that was back in 2010 so it’s probably another ¥10,000~20,000 more by now.

I am too scared to consider what the overhaul costs for those far more complex and expensive Swiss watches would be. Does that sound like a good investment to anyone?

Dear Tokyo, do you know what Rolex model your mother-in-law has? Rolex seems to have a reputation for certain models maintaining or increasing their value…so that might answer how worthwhile those overhauls are. I too have been told overhauls can cost upwards of Y100,000.

It definitely seems a outrageous letdown though if such an expensive watch becomes erratic! I am assuming here that it was acquired from an authorized agent or otherwise reliable seller?

[beanhead]

You seem very keen to try to find watches that will bring you a profit.
There are websites and forums dedicated to this topic, where you will probably be able to get better insight than here.

[Tokyo]

Dear Tokyo, do you know what Rolex model your mother-in-law has? Rolex seems to have a reputation for certain models maintaining or increasing their value…so that might answer how worthwhile those overhauls are. I too have been told overhauls can cost upwards of Y100,000.

It definitely seems a outrageous letdown though if such an expensive watch becomes erratic! I am assuming here that it was acquired from an authorized agent or otherwise reliable seller?

It’s a Ladydate-Just Oyster in yellow gold. It’s labeled a certified chronometer and so it’s a bit of a joke that it lost time! It was bought in a Japanese department store so I am sure it’s not a fake either.

The best thing about the watch - as well as her mother’s jewelry - is that my wife and her sister inherited it all without declaring and therefore paying inheritance tax on them.

[Haystack]

Dear Tokyo, do you know what Rolex model your mother-in-law has? Rolex seems to have a reputation for certain models maintaining or increasing their value…so that might answer how worthwhile those overhauls are. I too have been told overhauls can cost upwards of Y100,000.

It definitely seems a outrageous letdown though if such an expensive watch becomes erratic! I am assuming here that it was acquired from an authorized agent or otherwise reliable seller?

It’s a Ladydate-Just Oyster in yellow gold. It’s labeled a certified chronometer and so it’s a bit of a joke that it lost time! It was bought in a Japanese department store so I am sure it’s not a fake either.

The best thing about the watch - as well as her mother’s jewelry - is that my wife and her sister inherited it all without declaring and therefore paying inheritance tax on them.

Hmmm maybe I need to thread a loop through a couple gold bars before my death so my children can inherit my "jewelry" tax-free.

[Bubblegun]

I suppose if it’s antique, and rare possibly, but I think things like these should be worn, and enjoyed. That way, you never loose. Like a car!
Wether they go up in any value, I guess only Time Will Tell!

[Gulliver]

People still wear wrist watches?

On the other hand, I was flabbergasted when my wife recently got ¥50,000 for a ugly old smelly 20 year old Louis Vuitton bag at the local pawn shop. I guess you’ve got to know your market.

[laurie]

For the vast majority of people, watches are a hobby. Finding, maintaining, collecting, trading and working on watches can be really fun, but it costs money rather than makes money. You might somehow end up getting lucky and making money on a rare find but it's very unlikely.

I have a watch that has sentimental value. It also a bit of monetary value, but I wouldn't part with it.

As for everyday wear? Garmin Forerunner 235

[bigtimegames]

Higher end watches aren't really an investment, but a few thoughts

1) Expensive watches get more expensive every year and classic styles don't change. A classic rolex may cost $6,000 in 2010 and the same model with minor changes costs $10,000 in 2020. Fact my AP Royal Oak cost me $13,000 in 2015, and today when I look the retail price is closer to $26,000 (partly due to FX partly just crazy inflation on luxury goods).

2) High-end rare watches retain and grow value faster. At the same time my AP Royal went up 100%, the AP Jumbo Royal probaby went up 150% since it was more expensive and more rare. (These are indicative #'s, I forget the actual but the rare collector items jump more)

All that being said, the cost to maintain these watches is non-trivial. They scratch easily and even break easily (internal delicate movements). A typical servicing for a cheaper Omega is $500 every 3 years, and I think about $1000 for my AP...

[Petronius]

I love mechanical watches.
I bought a rolex sumariner 10 years ago and sold it last year when I realized its price on the secondary market. That made me worried of wearing and breaking it. I like to wear my watches. They are a hobby, and they cost money, including the maintenance.

But there is no revenue cash flow attached to them and they are not an "investment". You are just hoping that down the line someone will value them more than what you paid for today but they do not provide any valuable service to anyone, like a company would, and you therefore couldn't do a discounted cash flow valuation on them.

As others have pointed out, you might be savvy enough and have the right resources to make money out of it, like someone trading antiques or art.
You won't be wearing these watches, just keeping them safe in their boxes to flip them.
There is a difference between price arbitraging (you find a watch on Mercari at a price below market and flip it), which is what the majority of the market is about; and buying a watch and keeping it in a safe for a few year hoping that the price will go up (which is much closer to gambling).