Watches Are Yet Another Easy Way Rich People Make Their Money Into More Money

Greyson Korhonen/Hodinkee

As tattooed rockers, tech bros and Instagram influencers pile into the tweedy world of watch collecting, prices for sought-after classics from brands like Rolex, Omega and Patek Philippe are shooting up. In some cases, they have doubled in just a couple of years.

These next-generation collectors see old timepieces not just as a subtly stylish way to dress up a T-shirt and jeans, but also as a hot new asset in their investment portfolios. In a market where stocks, bonds and real estate seem at an unsteady peak, do vintage watches present a Bitcoin-in-2017-like growth opportunity? Or are they in a Bitcoin-in-2017-like bubble?

Time — elegantly monitored — will tell.

Even though his investment in watches has doubled in value in just 18 months, Peter Goodwin, a private investor in Charlottesville, Va., who also collects watches, said he is concerned about frothiness in the vintage market.

“It’s much like momentum investing in stocks,” he said. “People see the rise in Facebook shares, they see Mark Zuckerberg, and they want to ride it up. It is the same with the trendy watches we read about in the auctions — the Paul Newman Rolex, the Omega Speedmasters, some Submariners. You see them rising and you want to jump on.”

“The question,” Mr. Goodwin said, “is when does it stop?”

That’s a risk that newcomer watch geeks like Shahien Hendizadeh, a recent business school graduate in Los Angeles, are willing to take.

“Buying a good vintage Rolex is just like purchasing stock in a company like Nestlé or Google,” Mr. Hendizadeh, 25, said. “It is the quintessential blue chip.”

After taking a face-plant on a long-shot $2,000 investment in American Apparel stock, just months before the company declared bankruptcy, he bought a 1982 Rolex Submariner for $13,000. It has appreciated perhaps $10,000 in two years, he said.

And in the event of an economic downturn, fine watches may turn out to represent a safe-haven asset, like metals or gems, for investors looking to diversify their portfolios. Or they may just be another of-the-moment asset that 1 percenters, flush with cash, have inflated to unsustainable proportions.

Watch collectors hide in plain sight. John Mayer’s watch collection is nearly as famous as his guitar work. His bank vault contains a vast array of collectibles, including sapphire-encrusted gold Rolexes and Luftwaffe watches from World War II, that he has said is valued in the “tens of millions.”

Silicon Valley heavyweights like Kevin Rose, the Digg founder, and Matt Jacobson, Facebook’s employee No. 8, have museum-worthy Rolexes and Patek Philippes, helping to establish a head-turning timepiece as a tech-world style flourish to rival the hoodie.

Ellen DeGeneres wore a holy-grail Paul Newman-model Rolex Daytona from the 1960s, now worth perhaps $250,000, while bantering with Jerry Seinfeld in an episode of “Comedians in Cars Getting Coffee” last year. (Adam Levine and Ed Sheeran have been spotted wearing Paul Newmans as well. One also made a cameo on the wrist of Pierre Png’s character in “Crazy Rich Asians.”)

In professional sports, high-end timepieces have long seemed as indispensable as a shoe contract for stars with seven- and eight-figure incomes. Top athletes including Rafael Nadal, Dwyane Wade and LeBron James have served as celebrity ambassadors for brands like Richard Mille, Hublot and Audemars Piguet.

Star players who have been traded have been known to trade a Rolex to a player on their new team to secure their old jersey number. And in recent years, several have morphed into certifiable watch snobs. Howie Kendrick of the Washington Nationals, for example, counts understated heirlooms, like a 1959 LeCoultre Deep Sea Alarm and a 1960s Breitling Superocean, as key elements of his off-field uniform.

If you’re still 1 percent-ish but would prefer to dabble, there’s good news. The Watch Fund, run by Dominic Khoo, a shareholder and watch specialist with the auction company Antiquorum, offers people a chance to invest in rare and limited-edition watches at prices that can be 50 percent or more below retail. Those who have bought in have seen at least double-digit returns since the fund’s inception six years ago, Mr. Khoo said.

Star power and funds like Mr. Khoo’s add credence to the idea that fine watches are a soybean or a copper, another investable commodity. But does that make them a good investment?

What even makes a watch valuable? Consider the bezel insert from a 1957 Rolex Submariner. A bezel insert is the featherweight aluminum disk with numbers on it that surrounds the dial of a diver’s watch.

On Submariners made in the third quarter of 1957, the bezel insert was made with an unusual red triangle at 12 o’clock and slightly different typography on the numerals. Because it is rare, that insert is so sought after by collectors that it can fetch more than $30,000 these days, said Eric Wind, a dealer of fine vintage watches in Florida, up from maybe $10,000 just a few years ago.

None of this necessarily makes sense. It’s not like a vintage watch is better than a new one. In fact, it’s worse in almost every way.

A new Rolex Submariner, for example, is a modern update of a decades-old classic that seems to be every budding watch geek’s first serious timepiece. The new Sub is a marvel of mechanical engineering, with a high-tech ceramic bezel that is virtually guaranteed not to fade, a solid-steel bracelet as rugged as a tank tread, and a crystal made of sapphire that is all but scratch-proof. It’s a watch that feels indestructible enough for a pleasure dive in the Mariana Trench.

No one would ever say…

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Peter Bordes

Exec Chairman & Founder at oneQube
Exec Chairman & Founder of oneQube the leading audience development automation platfrom. Entrepreneur, top 100 most influential angel investors in social media who loves digital innovation, social media marketing. Adventure travel and fishing junkie.
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