Rolex as an "Investment"

[wappinghigh]

Ok so quick back of the envelope calculations on that veteran example carzyc posted above.. $346 compounded annually at 10% (what I regard as true cost of money aka living costs CPI.. and also accounting for fact rates were way above 10% throughout a lot of the 70's80,s and 90's.. ) for 47 years = $30,000. Then assuming it cost him 100 bucks (or equiv) worst case scenario annually for the safety deposit box ..money he could have compounded = a holding cost of $80,000 bucks (I compounded that at same).. so if he actually received $700,000 for that watch.. did he? After dealer/service/sales costs etc.. I guess he has done well on that one!!!.. he would walk away with maybe 700,000 les 50k dealer/sales/service costs, less 80,000 (safety deposit) less 30,000 (had he not ever purchased it and put money towards something else) = an actual watch value (to him after sale) of $540,000.. that make sense??? He's done pretty well on that example..?.

[wappinghigh]

So the question then becomes which future example???

What is the "future Rolex Cosmograph Oyster"?

[10klakes]

There are worse things to spend money on than Rolex watches. Each of the Rolex watches I have purchased have been thoroughly enjoyed, and if I needed to liquidate then today, I would do just fine.

There is also a such thing as a bad investment, such as a stock or fund that does NOT return 5%, but actually decreases in value. I own some and can tell you, if I had to liquidate these loser stocks today, I would absolutely take a loss.

Welcome to the forum, I hope what brings you here is enthusiasm for Rolex/watches, and more than financial/investment debate.

[wappinghigh]

Originally Posted by 10klakes

There are worse things to spend money on than Rolex watches. Each of the Rolex watches I have purchased have been thoroughly enjoyed, and if I needed to liquidate then today, I would do just fine.

There is also a such thing as a bad investment, such as a stock or fund that does NOT return 5%, but actually decreases in value. I own some and can tell you, if I had to liquidate these loser stocks today, I would absolutely take a loss.

Welcome to the forum, I hope what brings you here is enthusiasm for Rolex/watches, and more than financial/investment debate.

Yep I agree on all that!

Sure is..

Just curious that so many people think they have made a fortune on their Rolex.. maybe they have... if they are lucky as this example seems to show... but I doubt it (unless they saw into a crystal ball it was to become the classic, then stored it away for years and never serviced or wore it..)

Cheers

[Jabbo84]

What about investing in your children and education??

[TswaneNguni]

Originally Posted by Jabbo84

What about investing in your children and education??

That's what we all live and work for from the morning they are born ...costly buggers !!

[wappinghigh]

Ok.. let's say the same vet had bought a red sub instead... and used it... let's say he had paid (for argument sake the same) ..$346

On Chrono24 right now they are selling (prev worn watches) for anywhere between say 20 and 30K..

Using the same compounding I have used above the net gain after sale today 2020 = zero... maybe even a loss.

So the key issues here are

1/ What "future classic?" Rolex?

2/ Keep it pristine and never wear or service it..

For pure investment purposes only ...Are we in agreement here?

[locutus49]

It is easy to look back in time and cherry-pick an investment, say a PN Daytona or Apple stock, and say, well I'll just find something similar now that I'm sure will equally appreciate.

Problem is, if it were that easy to pick future winners, everyone would be rich. But back in reality, for some to get rich off of investments, others have to lose money. And everyone thinks they will win, not lose.

Originally Posted by wappinghigh

Ok.. let's say the same vet bought say a red sub instead... and used it... let's say he had paid (for argument sake the same) ..$346

On Chrono24 right now they are selling for anywhere between say 20 and 30K..

Using the same compounding I have used above the net gain after sale today 2020 = zero... maybe even a loss.

So the key issues here are

1/ What "future classic?" Rolex

2/ Keep it pristine and never wear or service it..

For pure investment purposes only ...Are we in agreement here?

[wappinghigh]

^ Sure.. exactly.. agree

[214270Explorer]

I really wish these investment topics could be tagged, when posted, and eliminated by some sort of fancy software program.

[danyvw]

Originally Posted by 214270Explorer

I really wish these investment topics could be tagged, when posted, and eliminated by some sort of fancy software program.

Agree 100%

[daOnlyBG]

OP, I'd like to share an answer I posted a while back. I wouldn't think to reshare it, but since @locutus49 suggested the response be "stickied," I think you might find it useful.

A while back, someone shared ProducerMichael's video titled "THE BEST INVESTMENT WATCHES YOU CAN BUY!!" (hint: a substantive title need not be in caps) and asked for the forum's opinion. The video basically detailed which watches were likely to nominally go up in value- that is, either keep their value at cost or increase, even if it's just a few bucks. Here's my response:

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.

[JonaG]

Don’t mind me, I’m just here for the memes

[Fat_ninja]

Originally Posted by JonaG

Don’t mind me, I’m just here for the memes

[Setarip]

Can’t we all just go back to discussing how the $149 Chinese Seagull is superior to the Rolex Daytona?

I miss all the time wasted one that one.

[locutus49]

Hey I own a Seagull 1963. Best chronograph with a 12 hour power reserve I own.

Originally Posted by Setarip

Can’t we all just go back to discussing how the $149 Chinese Seagull is superior to the Rolex Daytona?

I miss all the time wasted one that one.

[Setarip]

Originally Posted by locutus49

Hey I own a Seagull 1963. Best chronograph with a 12 hour power reserve I own.

Have you ever run the numbers to figure out what it would be worth if you’d bought it 30 years ago for ¥5 RMB ...taking into consideration the changes in FX, compounded interest, demand, etc.??

[dtwer]

Originally Posted by Setarip

Can’t we all just go back to discussing how the $149 Chinese Seagull is superior to the Rolex Daytona?

I miss all the time wasted one that one.

That thread. In some ways one of the most hilarious threads.

[Brew]

I thought my taste in Rolex leaned towards the losers. But the looneys have spilled over into the Classic line, and now I'm not so sure. Perhaps they were ok "investments" after all?

[schoolboy]

Originally Posted by Brew

I thought my taste in Rolex leaned towards the losers. But the looneys have spilled over into the Classic line, and now I'm not so sure. Perhaps they were ok "investments" after all?

Haha I’m with you on this one Brew

[schoolboy]

Originally Posted by Brew

I thought my taste in Rolex leaned towards the losers. But the looneys have spilled over into the Classic line, and now I'm not so sure. Perhaps they were ok "investments" after all?

We’re both part of the undesirable Datejust gang

Haha

[Boaters]

Watches would be at the bottom of my list as investments. Sure some of us that have invested years ago in the brand have made good money on paper .. But all that I know are WIS's and could care less and have not sold .. Why because they are WIS's ... Sure it is nice to know that the money we have spent has not evaporated but that is not why we made our purchases at least for me because we are watch affectio's

[Smarties]

Better invest the money in some blue chip stocks!