3 Rules of Investing in Watches AKA Dropping Fat Stacks
The first major watch purchase that extends into the 4 figure range can be quite a shock to the system. Here’s how you could responsibly decide whether you’re ready or not.
The first time you might have spent money on a watch might have been a purchase that was a few hundred dollars, perhaps a fashion brand in a retail setting, or even a smartwatch, but regardless of the situation, it was expendable. It was money you were willing to put down, because it was “only” a few hundred dollars.
The paradigm shift that has to occur is the perspective that the money you spend should always hold its value.
Here are 3 subjectively simple rules to follow before making that transition from an expendable purchase to an investment purchase when it comes to the watch game.
Rule #1: Never Buy Retail
Don’t pay for their electricity or salespeople. Retail lighting is your enemy. Those watches won’t look as good with their price tag once your greasy hands get on them in your dim living room.
If done right, the used/pre-owned market is your best bet to capture a fiscally responsible deal. You would have found treasure if you could find a timepiece that comes with all the original accessories: boxes, user manuals, warranty cards(expired or not), miscellaneous documents, tags, and original receipts.
The savings you could capitalize on vary with the brand, models and their demand, but used watches generally sell on the grey market at a discount.
The only exception to this rule is if you are someone with an ongoing relationship with retailers like Rolex with the opportunity to purchase new extremely desirable references with the intention to quickly resell, which is an entirely different discussion.
Rule #2: Know Your Grey Market
The grey market is term used to describe the pre-owned/used watch market.
Rule #1 will give you 3rd degree burns if you don’t do your research. You should have an intimate understanding of the relative supply and demand of the watch that you’re interested in on sites like Chrono24 and eBay, or other major vintage watch retailers. Find the median price and what condition of the watch warrants which price points.
Buying a used mechanical watch off the grey market that needs servicing could easily result in an additional $300 to its price, be ready to incorporate this cost to the price tag if the watch has an unreliable or unknown service history.
Don’t buy from sketchy people or dealers online. Does the retailer value their brand? Does the person selling have a long history of positive reviews. There are many determinants, but make sure you’re protected.
Rule #3: Respect Liquidity
Ever heard of Westclox? Neither have we.
Take advantage of the marketing/advertisement spending that an established watch organization like Rolex, and Omega incur as part of their business strategy.
Why does that matter?
Your taste, and financial circumstances are ever changing, and constantly evolving. Owning a timepiece that caters to that will allow you to be flexible in either opportune or inopportune moments in your life. You want to be able to invest in a timepiece that you know will have a market for it once you’re ready to part ways with it. The beauty with brand recognized watches is that if you purchased it for a fair market value, you won’t incur depreciation costs, but potentially even experience some appreciation in value.
The more time you invest in your research, the better the payout. Keeping track of the price trends of the watch you’re looking to buy over weeks, months, or even years. This level of patience and effort will give you an idea of market demand and/or if it’s appreciating. Buying a watch can be as simple as writing a check or pulling out your credit card, or as intimate and involved as what we are suggesting you do.
None of the above matters.
If you’re making an emotional purchase, the rules listed above need not apply. If the financial cost is an opportunity cost you’re willing to accept, then go for it.
You will have to make some of the mistakes like many of us long term watch lovers, nerds, and addicts have made when we first got into this hobby.
If you have been bitten by the bug by a particular timepiece, it’s a slow death. It’s worsened when you see the watch in question on Instagram over and over again.
Follow us on Instagram!
