Id like the take from our resident watch market gurus

[Tangier11]

This video is a little less than a year old but should be still relevant. Do any of you watch market gurus agree or disagree with these thoughts?

https://www.youtube.com/watch?v=FW1TqHaDfgE

[daOnlyBG]

Short answer: the video sucks.

Longer answer: the problem with videos like the one you just shared is that they take advantage of public ignorance of several economic concepts:

1. Inflation. This one's easy: $3500 20 years ago is not the same as $3500 today.
2. Compound interest. Ignore inflation for a moment, and consider the salesman's opening example with the stainless steel submariner. The annual compounded rate of return on an investment that gives you $6500 after a base investment of $3500 and 20 years is a paltry 3.14%. That's a pretty weak investment. When you account for inflation, you're in US Treasury territory. Want to guess which is more secure?
3. Opportunity cost. If you choose to "invest" in watches strictly for monetary gain, you're taking time and resources away from investing in stock indexes, ETFs, funds, etc. which are more likely to produce higher returns at (usually) safer conditions.
4. Arbitrage vs. appreciation. Yes, if you should be so lucky for your AD to offer you a 116500, you can buy it and get a massive return within the hour. That's arbitrage. You took advantage of a system that offers a fixed price and then flipped it to another system (grey market) that offers more. That's not remotely the same thing as buying something to throw in the safe and wait a couple decades to cash in.

The truth is that in horology, there are only a select few watches that beat the market over the long term. They are SO far and few in between. Even the Paul Newman Daytonas' annual rate of return is shockingly lower than what you'd imagine- and when you factor in the forward risk of choosing the right watch (i.e., looking into the future), the rate of return is even lower.

It's more prudent to buy the watches you love because you love them, and have their dividends pay off in the form of pleasure. That's the point that videos like these miss.

[locutus49]

This post should have a sticky. We should have a permanent ROLEXES as Investments thread and your post should be the very first in the thread. Still, most would ignore it and think they are buying the next Paul Newman.

Originally Posted by daOnlyBG

Short answer: the video sucks.

Longer answer: the problem with videos like the one you just shared is that they take advantage of public ignorance of several economic concepts:

1. Inflation. This one's easy: $3500 20 years ago is not the same as $3500 today.
2. Compound interest. Ignore inflation for a moment, and consider the salesman's opening example with the stainless steel submariner. The annual compounded rate of return on an investment that gives you $6500 after a base investment of $3500 and 20 years is a paltry 3.14%. That's a pretty weak investment. When you account for inflation, you're in US Treasury territory. Want to guess which is more secure?
3. Opportunity cost. If you choose to "invest" in watches strictly for monetary gain, you're taking time and resources away from investing in stock indexes, ETFs, funds, etc. which are more likely to produce higher returns at (usually) safer conditions.
4. Arbitrage vs. appreciation. Yes, if you should be so lucky for your AD to offer you a 116500, you can buy it and get a massive return within the hour. That's arbitrage. You took advantage of a system that offers a fixed price and then flipped it to another system (grey market) that offers more. That's not remotely the same thing as buying something to throw in the safe and wait a couple decades to cash in.

The truth is that in horology, there are only a select few watches that beat the market over the long term. They are SO far and few in between. Even the Paul Newman Daytonas' annual rate of return is shockingly lower than what you'd imagine- and when you factor in the forward risk of choosing the right watch (i.e., looking into the future), the rate of return is even lower.

It's more prudent to buy the watches you love because you love them, and have their dividends pay off in the form of pleasure. That's the point that videos like these miss.

[123Blueface]

Buy watches because you love them.........that’s it..........end of story.

[daOnlyBG]

Originally Posted by locutus49

This post should have a sticky. We should have a permanent ROLEXES as Investments thread and your post should be the very first in the thread. Still, most would ignore it and think they are buying the next Paul Newman.

Thank you for the kind words.

FWIW, I do think the mods should sticky that post or at least something similar to it. I've come across far too many people who are disappointed that the "Hulk" they purchased on the grey market didn't appreciate enough for them to buy a brand new Toyota in the span of a few years.

Like... really, people? Watches don't print cash.

[Fleetlord]

This is the 2nd post about this video.

You will not get the answers you are looking for on TRF!

[Pw92676]

Originally Posted by locutus49

This post should have a sticky. We should have a permanent ROLEXES as Investments thread and your post should be the very first in the thread. Still, most would ignore it and think they are buying the next Paul Newman.

Excellent post and reply.