Using Rolex as Investments --- Why not?

[Monty22]

Originally Posted by jimcarver

I personally think it just takes the fun out of the hobby.

With hindsight many things are a good investment, I bought a 116710 in early 2015, its now worth considerably more....did I know that when I bought it? No. Would I see the same sort of increase if I were to buy now? Also no. (well its discontinued but take a Sub as a similar comparison).

For me it just creates that cycle where watches are so hard to get because people "are buying a watch to pass down to my son" and that kind of thing, without actually knowing if their son will like watches. Buy a watch if you want a watch, don't if you don't. It's a simple as that for me.

+1. I have always believed that watches going up in value is a perk. All other talk about heirlooms, etc is just about trying to rationalize an emotional, unnecessary purchase. Not pointing fingers, as I am guilty as well. I personally prefer the nonsensical love for the hobby versus the investment talk


Sent from my iPad using Tapatalk

[ciandro]

Originally Posted by BigAppleBill

Sure. Why not a Rolex-backed crypto currency? Oystercoin?

Ah Oystercoin! Trademark that fast! Lol


Sent from my iPhone using Tapatalk

[sgwatchguy]

Originally Posted by GT3 Mike

Watches as an investment, especially a mass produced timepiece like Rolex is a bad idea. If you want to invest in horology, look at Pateks.

Honestly, I hope the Rolex market tanks and my watches become worthless. I didn't buy Rolex for value retention or profits and like others have said, the fake hype, FOMO market has absolutely destroyed the hobby.

You may be on the wrong forum mate. Also maybe less Instagram so the hype isn’t messing with ya. If nothing works, maybe donate your watches to the less fortunate. They don’t seem be bringing you much happiness

[sgwatchguy]

Originally Posted by Fleetlord

Honestly the topic is irritating to the WIS, who are also professional and advanced amateur investors, that populate watch forums as the dollar amounts and subsequent returns are relatively insignificant, so it’s not worth bothering with...and becomes an annoyance as it makes obtaining watches harder..etc.

However, the monied general public sees things differently. Watches are a bargain compared to art and collector cars..etc. Since cash is trash and what else are they going to do with their money? Watches keep going up to the moon! Just buy them..

Well said.

Someone sold a piece of computer art for what, $69m last week. Did they buy it for the art or as an investment? Perhaps both.

[sgwatchguy]

Originally Posted by richris1

i think this discussion (imo) comes down to what your own personal definition is of an “investment” is.
When i put away $$$ for investment....lt won’t be in watches, because my personal definition of an investment, would have bigger expectations and returns.
I buy watches to enjoy.....the piece of mind knowing rolex won’t tank in value....just icing on the cake. Ymmv

^^^ +1

[Rocket_Man]

I don't think the current frenzy in Rolex pricing is because people are buying them as investments. As a previous poster said, you would have to buy a lot of Rolex's to have any meaningful return on that investment and no one can really accumulate that many at a low enough acquisition costs to make any real money. My oldest watch is over 35 years old and worth about $1,000 more than its purchase price. If I could have bought a thousand of them 35 years ago I'd be a millionaire.... whenever I can find the time to sell a 1,000 datejusts.

It is the short term flippers that are using this term 'investment' but that is not really what they mean. They are acquiring a limited product, by luck or connections, and selling it to a handful of dealers who are able to manipulate the prices on the re-sale market because these are not a commodity item. These dealers are not making money by holding these long term, they are holding them for hours and flipping them for a quick $1,000 or $500 profit. They are the only ones making real money in this frenzie but only because they move many watches a day. The guy who got lucky and got a Daytona at their AD made several thousands but that is not repeatable, just a one-time good deal. You are not going to fund your retirement with a Daytona. If these watches were really good long term investments these dealers would be holding them all for the next decade. But they are not. They know when the bubble burst there is no investment in holding these. The profits are all in the short term (like hours) flipping. That is not investing. That is just capitalizing on a short term imbalance in supply and demand.

Meanwhile folks that enjoy the hobby for many years now have to compete in this frenzy which is not benefiting long term holders but mostly benefiting short term flippers and the middleman dealers.

[Sandpit]

I would think that if the likes of the Hulk, new Kermit and the BLNR models didn't have that "investment" factor - they would not be as popular as they are now.

Personally, I only buy a watch that I can see myself wearing in 20 to 30 years time. I consider that money gone forever as I never plan to cash it in. I buy for the enjoyment and for the love of the piece.

However, what I would say is that it makes the decision a lot easier when you can buy knowing that the value will be mostly retained. There's always that "what if" scenario. So i do get it.

What I don't agree with however is those that are building the oh so boring collections of the hyped pieces and are treating them like an investment portfolio. Obviously everyone is free to do as they wish, but I feel a watch should really be bought for the enjoyment - and not because it might go up in value.

[Toivonen]

Originally Posted by samgobigs

I've heard many posts along the lines 'don't use Rolex as investment' but let me play the devil's advocate and ask why not? Why is this a bad idea?

For example, if you really believe a particular model, say a Daytona as an example, will increase in value over the next decade or so, and if you have the funds, why not buy this watch and store it in a safe, for the sole purpose of investment?

I buy stocks in companies I never buy a product from, and real estate in places I would don't live in, so I'm ok with the idea of buying a watch and not using it.

Also, since there's no way or investing in Rolex as a company (it's privately owned), investing in their timepieces would be the closest way.

There's also minimal cost in terms or maintenance or servicing if I just leave the watch in a safety deposit box. There's no roof to repair and annoying tenant to deal with unlike owning a piece of real estate.

Their watches are almost guaranteed to increase in value each year due to their predicted annual piece increase, so this also works in favour of investments. And as brand with expert knowledge in marketing and supply and demand, there's a good chance that their models would always be in demand many years from now.

I have plenty of investments elsewhere and thought this would be a nice way of diversifying away from other investment options.

That kind of approach has ruined this world completely, imho.

Now, if I can afford and I like a Rolex x as a pure watch enthusiast, I go into a Rolex AD, ask it to be buyed and... receive smiles and laughs.

There's NOTHING wrong in buying something in an x momento and finding that, after y time, it's value not only hasn't decreased but it has been grown. But living this world only by a speculative approach is something to point the finger against, imho

[padi56]

Originally Posted by Deroya

Because it destroyed the market... and possibly the reason things are the way they are now.

Exactly that today Rolex watches are little more than £££$$$$ object things.

[Macnavara]

To me the fact that my watches are worth more now is a bonus but i was buying Rolex when they were worth less as you left the Ad.
Ive also made plenty of losses on Rolex and i didnt care as i loved them.....i guess im in the minority now that still thinks of them as a watch and not $ or crass status symbols

[PenPaper]

Sounded like a good idea to me once, to be able to enjoy watches and have them as an investment tool.

Say I've just purchased a $20k watch at retail, and market value is $25k. As a member of the public, I would probably have to sell it at a lower price compared with the reputable and established resale dealers, maybe $24k? And each time I would still have to contend with issues of safety and security during delivery or meetups with buyers, of haggling over prices with would-be customers, of no-show customers, and so on. And if I take it to the resale dealer instead, chances are I wouldn't be getting a lot more than the $20k I paid for in the first instance, if at all.

And! (at least in line with practices in my region) all this without even considering the purchase and similar sale of other pieces to even be allowed access to the piece in question. So just too much of a hassle for me in the end.

[jamesbondOO7]

I am not sure it is a good investment, but it is nice to know that after several years of wearing a Rolex, if you like it less, you can sell it with a nice profit.
That has been my experience with 5 Rolexes so far.

[padi56]

Originally Posted by Macnavara

To me the fact that my watches are worth more now is a bonus but i was buying Rolex when they were worth less as you left the Ad.
Ive also made plenty of losses on Rolex and i didnt care as i loved them.....i guess im in the minority now that still thinks of them as a watch and not $ or crass status symbols

Have to agree this is what owning a Rolex watch should be about it's not like most of today's investment this or that and mostly ££$$$££. Now my Father was fascinated with watches and I can thank him I suppose for the watch bug.Now I can always remember when I was quite young, my Dad saying one day he will have a Rolex.Now myself at the time had no idea what a Rolex watch was.Dad saved hard for many years and had about 2- 3 other jobs eventually in 1980 he bought a Daytona 6263 for around £750 but not 100% sure of price,but originally he wanted a sub, but Daytona was cheaper plus AD gave him a discount.At this time this watch was quite a bit cheaper, than the other sports range,but still a lot of money even back then.He was very proud of his Rolex watch,and it was only worn on special occasions.Dad was always a hard worker but suffered with ill health for most of his short life.Dad had 14 brothers and two sisters,a very large and close nit family.Now this 6263 is not a watch or a money object to me it's part of my Dad, thought I would share a part of his life with you all.


My Father was a miner for almost 40 years,but alas he died at the age of nearly 56 years.He suffered with his heart and chest after WW11 he lied about his age he was just 17 and although a coal collier in then a reserved occupation.He joined the navy and was on aircraft carriers HMS Furious and HMS Glorious.Now the Glorious was attacked by the German battle-cruisers, Scharnhorst and Gneisenau and a direct hit,caused her to sink.Out of a complement of of around 1500 men there were only 39 recorded survivors.My Father was reported missing,presumed killed in action.But was picked up by a Norwegian fishing boat, after being in the that cold sea for almost 32 hours.And without a shadow of a doubt that experience, and 35 odd years in the mines helped shorten his life.My Dad was a very strict but fair, private man, and did not complain about his illnesses.When he died, it was just like I lost my best friend,and now myself in my late 70s, I still think about and miss him.And in the 6263 a small part of him lives on,this watch is very special to me,and would never part with it at any price.

[17noir]

People invest in different things. I personally buy watches not because of possible increase in future value, but I enjoy wearing them. If it happens to go up in value, that's a bonus for me.

[Miker86]

Originally Posted by padi56

Have to agree this is what owning a Rolex watch should be about it's not like most of today's investment this or that and mostly ££$$$££. Now my Father was fascinated with watches and I can thank him I suppose for the watch bug.Now I can always remember when I was quite young, my Dad saying one day he will have a Rolex.Now myself at the time had no idea what a Rolex watch was.Dad saved hard for many years and had about 2- 3 other jobs eventually in 1980 he bought a Daytona 6263 for around £750 but not 100% sure of price,but originally he wanted a sub, but Daytona was cheaper plus AD gave him a discount.At this time this watch was quite a bit cheaper, than the other sports range,but still a lot of money even back then.He was very proud of his Rolex watch,and it was only worn on special occasions.Dad was always a hard worker but suffered with ill health for most of his short life.Dad had 14 brothers and two sisters,a very large and close nit family.Now this 6263 is not a watch or a money object to me it's part of my Dad, thought I would share a part of his life with you all.


My Father was a miner for almost 40 years,but alas he died at the age of nearly 56 years.He suffered with his heart and chest after WW11 he lied about his age he was just 17 and although a coal collier in then a reserved occupation.He joined the navy and was on aircraft carriers HMS Furious and HMS Glorious.Now the Glorious was attacked by the German battle-cruisers, Scharnhorst and Gneisenau and a direct hit,caused her to sink.Out of a complement of of around 1500 men there were only 39 recorded survivors.My Father was reported missing,presumed killed in action.But was picked up by a Norwegian fishing boat, after being in the that cold sea for almost 32 hours.And without a shadow of a doubt that experience, and 35 odd years in the mines helped shorten his life.My Dad was a very strict but fair, private man, and did not complain about his illnesses.When he died, it was just like I lost my best friend,and now myself in my late 70s, I still think about and miss him.And in the 6263 a small part of him lives on,this watch is very special to me,and would never part with it at any price.

Thank you for telling your (and your father’s story). Very interesting and a nice change to the usual posts complaining about AD availability.

[challer]

If you think they’ll make a good return, by all means buy them for investments. All investing is about human psychology. Now predicting the right models or even if watches generally will be that popular in 20 years, that’s the struggle isn’t it. People told me I was wasting my money on BitCoin at $1/coin. And laughed when I continued to buy it at $1,000/coin. And even today they’ll tell you its a folly at $55,000/coin. Could be. Will Rolex watches ever perform like this? Unlikely. But they could double, adjusted for inflation

[RogerOP]

I’d like to see the end results of using Rolex as an investment.

It’s fair enough having valuations, but I’d rather see how much the item was sold for.

[Pw92676]

Originally Posted by EEpro

Bravo

Originally Posted by csaltphoto

Well yeah! Never going to sell it. But if I had bought 100...

Without a plan to sell, investment talk is moot.
Sell 1 or 2 and one is not an investor, just playing around for some spare change
Sell 100 and one is not an investor but at that point a watch dealer.

[Harry-57]

It's nice to wear something I love day in day out and know it's not bleeding value, but I have plenty of other things, including watches, that do. Taking all my things into consideration, my net loss would be big if I turned them all into money.

There is a difference between trading and investing. You need to buy a lot of things and sell them for a good profit to make enough money to feather your nest after you have ploughed some of the profit back into your next acquisitions. Even if my LV is theoretically worth 75% more than I bought it for, I would need 100+ of them in a vault to give me a small pension over say, 25 years off the profit if I sold the lot. This would be a weak investment. If I rented each out for £100 a month, that would be a better use of the "investment" sum but would eat into capital value, increase risk of unrecoverable loss and cost money to run.

Debt is not wealth. If you have a high credit limit you are not wealthy. If you have no debt whatsoever, no loans, mortgage, credit card balances outstanding, you are wealthy. If you don't use every spare penny you have to pay down debt ahead of due date you are not becoming more wealthy. You are not investing in your future.

If you want a nice watch, have one. Have two. Don't wrap it up into some pseudo investment justification. Just love it and enjoy it. Maybe if you sell it you will make some money, maybe you won't.

[VogelPhoenix]

It seems that if the OP wants to think about a bunch of Rolex models as investments, this should be analyzed in investment terms. Then it's probably good to consider that this (by itself) is an undiversified investment, has large carrying costs (storage, insurance, service), huge bid/ask spreads and many unique risks (damage, fakes, fraud in buying/selling etc).

Buying from ADs at retail (and w/o bundling), also eliminating some initial risk, would be a good start, but makes it hard to acquire a critical mass that puts a dent in overall portfolio performance. Maybe in this domain "day-trading" (flipping) is actually the better approach compared to buy-and-hold, if it's all about money?

[beshannon]

Originally Posted by samgobigs

I
Their watches are almost guaranteed to increase in value each year due to their predicted annual piece increase

Rolex does not increase prices each year

Inflation is creating a rise in price as well as increased demand, your money is being eroded in a hard asset

When do you plan to sell?

How much do you expect to make?

When will you replace a poor "investment" with better "investment"?



I do not expect answers as no one ever has them. For a time the forum was closing threads like this.

[77T]

Originally Posted by samgobigs

I've heard many posts along the lines 'don't use Rolex as investment' but let me play the devil's advocate and ask why not? Why is this a bad idea?

I think you see those posts due to fact this isn’t an investment forum. WIS react differently.
If you asked the FA’s, they’d say the fickle and emotional nature of the watch market makes it speculation vs. an investment grade category. It’s not an asset class like precious metals.

Originally Posted by samgobigs

For example, if you really believe a particular model, say a Daytona as an example, will increase in value over the next decade or so, and if you have the funds, why not buy this watch and store it in a safe, for the sole purpose of investment?

Because the watch world is in the midst of a bubble, buying high is a good strategy? Don’t be fooled by watch auctions of rare Daytona’s - modern ones are hyped value that is reminiscent of the art world.

But consider this: it’s not paying dividends, there is no market measure like P:E to track, cost to reinvest is high (i.e., buying more “shares”), it’s locking up value at a high price per “share”, and the sole market maker (Rolex) can issue more and more year after year.

Originally Posted by samgobigs

I buy stocks in companies I never buy a product from, and real estate in places I would don't live in, so I'm ok with the idea of buying a watch and not using it.

Companies and real estate have broad, liquid markets to trade - not so for the narrow Watch trading market. The cost to buy/hold/sell is some of the highest trading costs in the globe due to platforms holding back a percent of value.

Watches don’t produce income to cover expense like real estate.

Watches don’t grow in value like equities in the same industry - holding a Watch is like buying a barrel of oil vs. a share in drillers and refiners.

Originally Posted by samgobigs

There's also minimal cost in terms or maintenance or servicing if I just leave the watch in a safety deposit box. There's no roof to repair and annoying tenant to deal with unlike owning a piece of real estate.

As mentioned earlier, there is no income in Watches. Therefore it has a positive higher cost to service vs. real estate where income covers expenses as the asset grows in value. RE pays income in excess of expense.

Equities have zero maintenance and some investment grade pay dividends. Those who don’t pay dividends tend to attract people chasing short term growth. If you became a Watch flipper you’d be a trader vs. investor - nothing wrong with that but know what you’re getting into.

Originally Posted by samgobigs

Their watches are almost guaranteed to increase in value each year due to their predicted annual piece increase, so this also works in favour of investments. And as brand with expert knowledge in marketing and supply and demand, there's a good chance that their models would always be in demand many years from now.

Dead wrong on first point. There are no guarantees.
On the second one, demand only helps if you’re riding the wave as a flipper. If you’re holding in a safe then it’s akin to timing the market.

Few can time the market that well. Had you or I been good with that in the past then we’d have a few billion$ already.

Originally Posted by samgobigs

I have plenty of investments elsewhere and thought this would be a nice way of diversifying away from other investment options.

Watches aren’t diversification as it isn’t a growing industry IMHO. It is shrinking.

Now if you want to generate losses (because your Bitcoin has gone too high) then it is a form of a tax strategy I suppose.

In sum, most Watch collectors react emotionally about the commoditization of their grails - ergo the reactions you’ll find on a Watch forum.



Sent from my iPhone using Tapatalk Pro

[DonRickles]

As with many items that require the fruits of my labor, I'm happy knowing that this "temporary allocation of funds", is a relative safe haven.

"The increase or decrease in value is not my major concern, as wearing them is my dividend..... "

Signed, Don Rickles!

[Benzsiam]

Originally Posted by UK_

As investments go, I think there are better options (ETFs etc).

But generally a Rolex will hold its value over the long term, which is great.

And is also why Rolex will never want to go back to the days of supply greater than demand.

A lot of these ‘profits’ are in paper, selling a watch is a lot of haste.


Sent from my iPhone using Tapatalk

I agree with this comment.

As for investment, stock market would be a better choice, you can invest in S&P500 without being an expert. You can sell without any hassle. Selling a watch is not as easy as you think. The only thing that is better than stock is no tax involve on the gain.

[drfrankenstein]

Originally Posted by Rocket_Man

I don't think the current frenzy in Rolex pricing is because people are buying them as investments. As a previous poster said, you would have to buy a lot of Rolex's to have any meaningful return on that investment and no one can really accumulate that many at a low enough acquisition costs to make any real money. My oldest watch is over 35 years old and worth about $1,000 more than its purchase price. If I could have bought a thousand of them 35 years ago I'd be a millionaire.... whenever I can find the time to sell a 1,000 datejusts.

It is the short term flippers that are using this term 'investment' but that is not really what they mean. They are acquiring a limited product, by luck or connections, and selling it to a handful of dealers who are able to manipulate the prices on the re-sale market because these are not a commodity item. These dealers are not making money by holding these long term, they are holding them for hours and flipping them for a quick $1,000 or $500 profit. They are the only ones making real money in this frenzie but only because they move many watches a day. The guy who got lucky and got a Daytona at their AD made several thousands but that is not repeatable, just a one-time good deal. You are not going to fund your retirement with a Daytona. If these watches were really good long term investments these dealers would be holding them all for the next decade. But they are not. They know when the bubble burst there is no investment in holding these. The profits are all in the short term (like hours) flipping. That is not investing. That is just capitalizing on a short term imbalance in supply and demand.

Meanwhile folks that enjoy the hobby for many years now have to compete in this frenzy which is not benefiting long term holders but mostly benefiting short term flippers and the middleman dealers.

^ Well said. Someone on here turned me onto The Timepiece Gentleman's YouTube channel. It has some entertainment value the way a reality show does but also provides a lot of insight into the market and non-AD watch dealers in general. Pretty insightful, worth checking out at least once imo, he's getting enough of a following, I'm sure one of the streaming networks will eventually pick him up.

[crew]

Originally Posted by Singslinger

I think a Rolex model like the Daytona today would make a good investment if you buy say, 10-20 pieces.

Assuming you might make a return of say 50% over 10 years, then the absolute amount made is meaningful.

To me, making 50% in say 10 years (or even 5 years) on one watch that cost around US$13,000 is good but not really that great an investment because the absolute profit isn't that big. You'd need the price to rise at least 5 times for me to be interested but how realistic is this?

Speaking being realistic, no one is going to buy that many pieces of the same model in the hope that the price will appreciate.

Ergo, for me - just buy, wear and enjoy and forget about it being an investment. If the price rises then well and good but I ain't gonna be able to retire on the profit (if I sell).

I agree, for watches to be an "investment" you have to have a meaningful scale.
Now if we could only figure out how to buy 10-20 Daytonas for $13k THAT would be quite an investment!
So now we have our plan, we just need to find those watches at the right price.
Details....

[Sandpit]

Originally Posted by RogerOP

I’d like to see the end results of using Rolex as an investment.

It’s fair enough having valuations, but I’d rather see how much the item was sold for.

This would be interesting actually - but the on-costs would need to be built in. E.g. servicing, repairs, insurance, storage (i know some use deposit boxes).

There's also the theft / total loss factor. That I know of, it would be quite difficult for somebody steal an ETF off my arm.

[Tensai]

It is a free world (mostly). You can buy and sell whatever you want for a profit if you are smart...watches, cars, real estate, tulips, art, baseball cards, etc.

The Wall Street fanboys who claim that BTC, stocks and bonds are the best and only investments. Poppycock.

[IamJacky]

I invested in buying rental properties back in the late 2000's and early 2010's, and finally paid off most of the mortgages by now.

Today, the passive income generated from these properties now allows me to be able to purchase these Rolex watches. Not to mention the value of these properties have doubled if not tripled since purchase. If I had reversed the order and "invested" in Rolex watches, I would never have been able to own any of the rental properties I have today.

[Sprezzatura!,]

Originally Posted by Deroya

Because it destroyed the market... and possibly the reason things are the way they are now.

X2