Rolex as an Investment

[SeamasterGMT]

I know, I know, another Rolex investment thread but...

I've made this point before in other threads and nobody has responded to it so here it is again...

I bought a Deepsea in 2008 for £4750. Today, this ref. is £8050. On the used market for a BNIB Deepsea, they are somewhere between £6600 and £7200.
So, that is a 40% - 50% return in 4 years! Anyone else getting solid returns on their investments like this?

cheers.

[MonBK]

That investment % you're talking about won't happen until you sell it and to your surprise might turn out different.

[SeamasterGMT]

No invest % will happen until you sell.
Why will it turn out different?

[MonBK]

Originally Posted by SeamasterGMT

No invest % will happen until you sell.
Why will it turn out different?

What I mean is that the £4,750 you paid equals approx $7,500 which is again approx. what you can purchase a used one for today.

In your example above you compare your old watch to a BNIB.

[AH0RSEY]

... take a car for example, that would have almost certainly LOST 50% in those 4 years...

so anything on the plus side is a bonus .... even if it 'makes' 10% that's nice, but really I suspect people don't buy rolex for investment, rather its enjoyment.

IMHO watch investing is a different league I suspect and is pretty risky for those without the ability to win and lose on trades over time. But I'm sure its fun!!!

[Aventura]

Originally Posted by AH0RSEY

... take a car for example, that would have almost certainly LOST 50% in those 4 years...

so anything on the plus side is a bonus .... even if it 'makes' 10% that's nice, but really I suspect people don't buy rolex for investment, rather its enjoyment.

IMHO watch investing is a different league I suspect and is pretty risky for those without the ability to win and lose on trades over time. But I'm sure its fun!!!

Good!! It's true. Excellent comment.
Regards.
Aventura.

[SeamasterGMT]

True AHORSEY, and to be honest, I don't trade, flip or sell watches at all. It just seemed to me, when people say "modern Rolex watches can not be seen as an investment" that this statement is not necessarily true.

[jay1988]

Should you buy it as an investment ? No. You don't see people shoving stocks and stacking their shelves with DSSDs.

However as a luxury item it does appreciate well. That's all that can really be said about it. It holds its value extremely well and if you keep it in good condition you could probably make a bit of money of it in 5 years because of price increases.

Would I invest in it by buying hundreds of them ? No but the great thing about a Rolex is you can always sell it without taking too much of a loss which makes it a good luxury item to acquire.

[Singslinger]

Originally Posted by jay1988

Should you buy it as an investment ? No. You don't see people shoving stocks and stacking their shelves with DSSDs.

However as a luxury item it does appreciate well. That's all that can really be said about it. It holds its value extremely well and if you keep it in good condition you could probably make a bit of money of it in 5 years because of price increases.

Would I invest in it by buying hundreds of them ? No but the great thing about a Rolex is you can always sell it without taking too much of a loss which makes it a good luxury item to acquire.

Absolutely right. If you were to look solely at the percentage return, then yes it looks like a good investment.

But 1) the present secondhand sale price (assuming the watch is sold) isn't sufficient to replace the watch with a new one and 2) it only makes financial sense - to me at least - if the owner buys 10-20 of these watches and sells the whole lot if the price does rise. I seriously doubt anyone would do this.

In other words, to qualify as a good investment to me, percentage return isn't enough - the absolute figure is equally, if not more, important.

[Citizenrich]

Originally Posted by Singslinger

Absolutely right. If you were to look solely at the percentage return, then yes it looks like a good investment.

But 1) the present secondhand sale price (assuming the watch is sold) isn't sufficient to replace the watch with a new one and 2) it only makes financial sense - to me at least - if the owner buys 10-20 of these watches and sells the whole lot if the price does rise. I seriously doubt anyone would do this.

In other words, to qualify as a good investment to me, percentage return isn't enough - the absolute figure is equally, if not more, important.

Many investment partnerships; more commonly referred to as hedge funds, invest in collectible goods. Replacement cost would be no consideration.

[beshannon]

Originally Posted by SeamasterGMT

I know, I know, another Rolex investment thread but...

I've made this point before in other threads and nobody has responded to it so here it is again...

I bought a Deepsea in 2008 for £4750. Today, this ref. is £8050. On the used market for a BNIB Deepsea, they are somewhere between £6600 and £7200.
So, that is a 40% - 50% return in 4 years! Anyone else getting solid returns on their investments like this?

cheers.

Paper gains are not returns.

The falling value of the dollar and the price increases by the manufacturer has propped up the preowned market.

The falling dollar has eroded your purchasing power, ie., you cannot sell your watch and replace it without extra cash

Enjoy your watch for the purpose it was created, it is not an investment

[capote]

Because you don't get a return on your Rolex I would not call it an investment. You can call it speculation if you sell your deep sea and make a profit. Unless you plan to sell, a Rolex or a Tag Heuer or a carrot are equally good "investments"

[gimpex]

Originally Posted by capote

Because you don't get a return on your Rolex I would not call it an investment. You can call it speculation if you sell your deep sea and make a profit. Unless you plan to sell, a Rolex or a Tag Heuer or a carrot are equally good "investments"

So buying gold is a not an investment ?

And until a few months ago , before Apple started paying dvidends , it was not considered an investment ?

Hmmm

[capote]

Originally Posted by gimpex

So buying gold is a not an investment ?

No, its pure speculation IMO.

[gimpex]

Originally Posted by capote

No, its pure speculation IMO.

Of course you are entitled to your opinion , but I still think your definition of an investment needing to pay a return is misguided , IMO

[rr-nyc]

Originally Posted by capote

No, its pure speculation IMO.

What investment isn't based on speculation? Stocks, bonds, currency, precious metals, pork bellies are all bought on speculation.

I don't see a Rolex as being an investment but it's a good liquid asset that can be sold in a matter of minutes anywhere in the world...whether you turn a profit or not is another thing

[DiamondJack]

Originally Posted by rr-nyc

What investment isn't based on speculation? Stocks, bonds, currency, precious metals, pork bellies are all bought on speculation.

I don't see a Rolex as being an investment but it's a good liquid asset that can be sold in a matter of minutes anywhere in the world...whether you turn a profit or not is another thing

Renato.... I take your point but a true investment should have a definable and quantifiable return. With stocks and bonds or rental property or other income producing investments etc, that quantifiable return is the income yield which you can rely on to a certain extent and is available from outset. With non income producing assets, it's all about taking a gamble on the future value. You get zero income or quantifiable return holding gold for example.....

The capital value when you sell, what I would call a true investment, is more of a by-product of the investment and the more speculative aspect. This may go up or down and you may or may not get your money back. But the income yield is what investing is all about .... earning a return on your money from day one......

I think people regularly get confused between speculating/gambling to make short term capital gains and investing in the true sense of the word, although clearly large proportions of people interested in making money will speculate/gamble and call it investing.

In my experience, wealthy people are not overly concerned about speculating or gambling other than for fun and their main aim is preserving wealth and making their money work for them...... they accept capital markets work and are efficient and by diversifying through different investment and asset classes they expect to see capital appreciation over the longer term. But this is a by-product of their investment and making their money work for them now is the key driver......

Most non income producing assets such as commodities etc are an input into the capitalist system... i.e. companies take that input and add labour, design, marketing and use their retail skills to make a profit from it. Why would they do that if they could just buy and sell gold, for example, as a raw commodity without the inevitable speculation and risk that incurs. They do so because they can produce a regular income and profit by adding value to the raw input of gold and selling to their customers. They will also pay a dividend to investors.

[beshannon]

Originally Posted by gimpex

So buying gold is a not an investment ?

Yes gold is an investment and your question answers why a Rolex is not an investment.

Gold is highly sought after and in short supply. Gold is universally recognized as an item with "worth"

Rolexes are common as more and more are made every year. They require periodic service and parts.

If you insist on buying a wristwatch as a possible play on the future value, buy it in a precious metal

[Fiery]

Originally Posted by beshannon

Yes gold is an investment and your question answers why a Rolex is not an investment.

Gold is highly sought after and in short supply. Gold is universally recognized as an item with "worth"

Rolexes are common as more and more are made every year. They require periodic service and parts.

If you insist on buying a wristwatch as a possible play on the future value, buy it in a precious metal

Then how come 2nd hand Day-Dates and gold DJs take a huge hit in depreciation (regardless of model year), while SS Subs/Daytonas/GMTs hold their value a lot better? The amount of precious metal in watches is very small compared to their MSRP Of course investing into a precious metal Patek would be a different question completely.

[padi56]

If you buy right a Rolex is not a terrible investment but IMHO watches should not be thought of as purely a investment. The 5- 7% typical growth in value is fairly good, but if you take in the details like the routine service and repair costs with the watch.Then price rises over the years, inflation the buying power with your cash over those years, lower liquidity and income and other tax implications the investment in a Rolex is not as good as what you should expect with most stocks or bonds.

IMHO the bottom line, any Rolex thought of purely as investment value should be considered a secondary benefit of buying any luxury watch brand, and not a primary reason for a purchasing any watch.

[gimpex]

Originally Posted by padi56

If you buy right a Rolex is not a terrible investment but IMHO watches should not be thought of as purely a investment. The 5- 7% typical growth in value is fairly good, but if you take in the details like the routine service and repair costs with the watch.Then price rises over the years, inflation the buying power with your cash over those years, lower liquidity and income and other tax implications the investment in a Rolex is not as good as what you should expect with most stocks or bonds.

IMHO the bottom line, any Rolex thought of purely as investment value should be considered a secondary benefit of buying any luxury watch brand, and not a primary reason for a purchasing any watch.

Agreed.

Consider the investment as a secondary benefit ( even though it's nice to know you are not losing money , but just wearing it instead of holding in the bank ) ... And the key it to buy right.

[Fiery]

Originally Posted by padi56

If you buy right a Rolex is not a terrible investment but IMHO watches should not be thought of as purely a investment. The 5- 7% typical growth in value is fairly good, but if you take in the details like the routine service and repair costs with the watch.Then price rises over the years, inflation the buying power with your cash over those years, lower liquidity and income and other tax implications the investment in a Rolex is not as good as what you should expect with most stocks or bonds.

IMHO the bottom line, any Rolex thought of purely as investment value should be considered a secondary benefit of buying any luxury watch brand, and not a primary reason for a purchasing any watch.

I agree 100%

[NYMike]

Don't forget to ad the $600 you'll have to spend every 5 years on service.

[landroverking]

Not an investment IMO.

[slcbbrown]

Here's part of the problem, about 10 threads up is a thread about the best Rolex bargain anyone wants to claim. We can't have lots of folks claiming 100% appreciation, 100% of the time, and lots of other folks claiming to have bought amazing Rolex bargains (half price).

I think you can plan on taking a beating if you buy a Rolex at MSRP and try to sell in the first few years (same for the other high end brands). In time, you may well be able to sell at the same price you bought, and with Rolex, you can always find a market. The difference between Rolex and almost all other high priced brands is that the others will rarely get back to even and the market for smaller brands is very spotty.

[alanc]

I rarely buy luxury goods because I'm practical at heart and practically speaking, buying a luxury auto (for example) that depreciates 50% after a few years, raises the issue of whether the enjoyment of the thing (really the only plus over a less fancy car that performs nearly as well) is worth the loss in value.

I don't see Rolexes as having that problem. True, maybe you won't make money on it, but it's nice to know you'll practically break even at worst, if you ever have to sell it. That makes it a lot easier to justify the pleasure you will feel having it on your wrist (really the only plus over a watch costing 1/10 as much that performs just as well).

[DiamondJack]

An investment (in conventional terms) should produce an income.... so stocks, shares, bonds, commercial or rental property, deposit accounts etc etc.

Everything else is purely a speculative gamble on future value....... There is nothing to say a watch or a piece of jewellery or even something like a classic car won't make you a good return on your initial outlay but you are kidding yourself if you believe you are making an investment whenever you buy something that is non income producing......

Now clearly, if you trade watches at a sufficient volume, you are then moving into the realms of a commercial enterprise.... hopefully based on sensible financial foundations. If you were a company, you would pay out dividends to investors based upon that profitability.

But would you invest in a company that just bought watches for the directors to wear...... and they told you they would sell them one day in the future to make a profit I rest my case.......

[MonBK]

Originally Posted by DiamondJack

An investment (in conventional terms) should produce an income.... so stocks, shares, bonds, commercial or rental property, deposit accounts etc etc.

Everything else is purely a speculative gamble on future value....... There is nothing to say a watch or a piece of jewellery or even something like a classic car won't make you a good return on your initial outlay but you are kidding yourself if you believe you are making an investment whenever you buy something that is non income producing......

Now clearly, if you trade watches at a sufficient volume, you are then moving into the realms of a commercial enterprise.... hopefully based on sensible financial foundations. If you were a company, you would pay out dividends to investors based upon that profitability.

But would you invest in a company that just bought watches for the directors to wear...... and they told you they would sell them one day in the future to make a profit I rest my case.......

Very well said.

[Citizenrich]

Originally Posted by DiamondJack

An investment (in conventional terms) should produce an income.... so stocks, shares, bonds, commercial or rental property, deposit accounts etc etc.

Everything else is purely a speculative gamble on future value....... There is nothing to say a watch or a piece of jewellery or even something like a classic car won't make you a good return on your initial outlay but you are kidding yourself if you believe you are making an investment whenever you buy something that is non income producing......

Now clearly, if you trade watches at a sufficient volume, you are then moving into the realms of a commercial enterprise.... hopefully based on sensible financial foundations. If you were a company, you would pay out dividends to investors based upon that profitability.

But would you invest in a company that just bought watches for the directors to wear...... and they told you they would sell them one day in the future to make a profit I rest my case.......

My excellent B school education and some dude named Warren from Omaha have a different definition of an investment than you do.

There are all sorts of ways to put capital to work and many, if not most, of those
produce or carry no current income.

[Citizenrich]

To answer the original question: any successful passive investment has to do with price and timing.