Watches: A Good Investment? Part 2

Since reading Part One, you must be entirely convinced that a watch is a solid investment, right?  Yea, I didn’t think so.  Let’s face it; a luxury purchase is an emotional purchase.  I know many of you reading this article are like me and are currently squandering all their money on frivolous things like food and shelter.  Occasionally everyone, no matter what our financial position, splurge on ourselves now and then and when we do hopefully there are sites like this one to rely on for good advice and helpful suggestions on how to reengage the logic side of our brain in our decision. 

For those with a little extra disposable income you might be like the group Sam Hines, a Christie’s vice-president and head of watches referenced recently, “We had clients tell us, ‘I am not earning any money in the bank, so I’d rather put it into something I can wear, enjoy, and that’s holding its value”.  Imagine if we could have saved up all the money we’ve blown on convenience store-like purchases in our lifetime (soda, gum, chips, soda, fast food, candy…did I mention soda?) we’d all have enough money to get a nice watch or more. Some of us are just plain better at restraining ourselves on immediate ancillary purchases because they have their eye on a more lasting ancillary purchase. 

During my research looking for my first luxury watch I’ve been able to create a top ten list of ways to save money on your purchase to be sure you obtain the most value from your purchase and to avoid any buyer’s remorse.

Top Ten Ways to Obtain the Most Value from your Watch Purchase:
1.    Search within reliable brands (Rolex, Patek Philippe) and stay with classic models and avoid new models within even a reliable brand (See Part One).
2.    Look for buying vintage from a reputable local or online dealer.
3.    If buying vintage or from an online dealer, no matter the price point always try and buy a watch in     mint condition with box and valid papers.
4.    If buying new is important look at reputable online dealers to save money.
5.    When buying from an authorized dealer, check with multiple dealers and ask if they discount their pricing.  In many instances buying from a dealer out of state will save you sales tax.
6.    Research the quality brand to verify it can command high price at auction or during resale.
7.    Look for rare (precious metals or limited editions) and special pieces with a unique history (like     Omega Speedmaster, the first watch on the moon).
8.    Be willing to wait for watches to appreciate over time.
9.    Get a watch from a brand with controlled pricing and distribution
10.Avoid ladies’ watches, fashion, or designer watches.

In the next few posts, as I refine my search for my first luxury watch, I will expand on each of the above ways to save money on your watch purchase to clarify and give some more specific advice to aid in your own search.

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Watches: A Good Investment?

I’ve noticed my wife use the phrase, “It’s a good investment” (which is way better than “Look how much I saved you”) when discussing a potential purchase.  She’s not buying gold bars or penny stocks, but she uses the term when a less expensive item is obviously of lesser quality and will require either more maintenance or an additional replacement than the more expensive option.  By her definition, pay a little more, get more value, and lower your risk of additional costs or early replacement during the life of the purchase.  It makes sense.  When it comes to the emotional purchase of a luxury item, however there are very few which retain their value.  Expensive cars and the newest technology depreciate within seconds after the purchase and forget about getting your yacht money back.  Educated purchases in art, jewelry, precious metals, and watches won’t fall quite as far after the purchase, but will likely take many years before they will appreciate enough to qualify as an investment.  The two brands as a whole which are exceptions to this general rule are Rolex and Patek Philippe.  Their consistency over the years, their reputation of quality craftsmanship, strong marketing, and long history of value appreciation, has created a strong aftermarket and vintage following.  After these two, there are many watches from various brands that are solid investments and good watches to collect for example here are the Top 10 most popular brands in 2012 according to search requests from the site Chrono24.com

Top 10 Watch Brands

1.    Rolex                           21.16%

2.    Omega                          7.80%
3.    Breitling                         6.01%
4.    IWC                               4.73%
5.    Patek Philippe                3.69%
6.    Panerai                          3.68%
7.    Audemars Piquet            3.58%
8.    TAG Heuer                     3.34%
9.    Jaeger-LeCoultre             2.98%
10.  Cartier                           2.82%
Total Top Ten Brands          59.79%

 In Part Two of Watches: A Good Investment, we will discuss tips to getting the most value out of your purchase

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Why Buy A Quality Watch?

There are many reasons why someone decides to buy their first luxury watch.  A special occasion, holiday, promotion or career milestone, or a birthday like my recent 40^th (wow it sounded even older when I just wrote it). If you are going to purchase a luxury watch, there are a few things to consider.  A quality watch consists of four elements: function, history, art, and style.  With certain brands, these elements are more equally represented than others.  For instance, a digital gym watch has a high amount of function and maybe some style, but it most likely lacks a significant amount of history or art elements.  When looking for a quality watch you want to touch on as many of these elements as possible and here are a few questions to help determine if it does:

Function

1.    What else does your watch do besides tell the time?
2.    How many complications does it have? (the more complications the more expensive it
     will be)
3.    Is your watch functional for multiple activities or just a specific one?

History

1.    How long has the watch brand been in business?
2.    What is the brand famous for or how has the brand/model contributed to watch history?
3.    Will this watch hold its value over time?

Art

1.    What design qualities are unique to this brand or model?
2.    Is this brand mass produced or hand-crafted?
3.    Are there additional craftsmanship details which keep you looking at the watch for
     hours?

Style

1.    Does your watch complement your personality?
2.    Is this watch consistent with your wardrobe?
3.    Is your watch an accurate indicator of your status?

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Defining Affordable Luxury

Let’s be honest, if money was no object then everyone would be wearing the blingiest object of haute horologe they could find.  While in Las Vegas on business (or what I like to call my mini-watchcation) a very talkative Jaeger-LaCoultre clerk asked me to try on one more watch before I left.  While still watch-drunk from trying on a wide range of watches, I didn’t notice which watch was clasped to my wrist until I turned over my wrist and saw the Spherotourbillon for the first time.  I could sense she was just waiting for me to ask how much, which she proudly replied over $250,000 after tax…yea, only the price of a nice home or high end sports car on your wrist, that’s all. The tourbillon was originally invented in 1795 by Abraham-Louis Breguet to remove the effect gravity has on the gears to increase the watch’s accuracy.  I immediately asked for her to take it off and at that moment I knew I could never own a watch so expensive, just like I couldn’t imagine having an actual Da Vinci or Monet hanging on my wall…because I’d be too afraid of how much it would hurt if something ever happened to it.

In my search for the best value on a luxury timepiece, I am attempting to create a category called…Affordable Luxury.  Affordable Luxury is the equilibrium point between high-end quality and affordability for the average person.  For me personally, I’m past the disposable designer watches, but I’m nowhere near (and probably never will be) the point of justifying paying more than my home for a watch.  High-end luxury watches are to be admired like fine artwork or a luxury automobile, but rarely owned by the normal consumer. Therefore, my goal is to find a collection of quality watches which are affordably priced but also garner the respect of those with more means than the rest of us.  







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My Watch Quest

I still own the first “cool” watch I ever purchased.  My aqua and yellow skeleton Swatch with gray and yellow ribbed wristband of 80s era pop culture fame still reminds me of how much more self-confident I felt the first time I wore it to school.  Did it actually make me cooler?  Heck no, I was still a major geek in junior high.  I’ve since lost the red rubber vertical swatch-guard, but it’s still a reminder of my first watch purchase which led me from the function of a black calculator watch (see…real geeky) to fashion where the purpose of the watch was as much a statement of style as was telling the time. 

During my college years and early years of employment, I’ve become confident in who I am and in my sense of style, but my watch purchases have only slightly developed with my trend toward department store designer watches which offer style a measure of style and a great deal of affordability.  My choices have ranged from digital watches for running triathlons with my wife, to a nice watch to match my charcoal suit, and more recently to a gold and silver skeleton fossil which reminded me of seeing the gears of that very first Swatch.

I’m now to the point, where quality and craftsmanship are overcoming my self-imposed or better yet salary-imposed ceiling of $175 for a designer watch.  Talking to friends and colleagues, a quality watch represents a symbol of success or accomplishment.  While a small degree of this applies to me as well, it wasn’t enough alone to drive me into the world of horology.  For me I want a watch that will stand the test of time (oh yea, that pun just happened).  I’m tired of being frustrated every time I scratch a bezel or wear the color off a metal band.  I’m tired of replacing watch batteries.  I’m tired of disposable watches that can’t get wet or can’t take life’s normal wear and tear.  I want a quality watch which will someday fill my children with memories of their father instead of a disposable one filling a landfill somewhere.  But most importantly, I’m finally mature enough (as long as we aren’t asking my wife) to appreciate and to properly maintain and care for a quality timepiece. 

So where do I start?  There are at least 178 major watch companies worldwide and approximately half of those would classify as a luxury watch company and of those there are twenty companies with well-known reputations like: Rolex, Patek Philippe, Omega, Cartier, and Jaeger-LeCoultre.  It would be pretty easy to drop ten grand on a new watch with any luxury brand and be done with my search, but I want to be sure the right blend of craftsmanship, reliability, and style of a luxury timepiece with the affordability of my wife's permission (If you say it works any different at your house, just test it and at best you'll find out she's only letting you think you're calling the shots).  Call it impossible, but this is my quest: to build a watch collection which make’s sense to my mind, heart, and wallet and along the way I hope all my readers benefit from what I learn.  If I’m going to spend the money then I’m going to do the research to make sure there is no buyer’s remorse because at these price points I could easily find out how much an ulcer costs. 

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