Time and Money

A Guide to Investing in Watches

Fine timepieces are risky investments— but there are exceptions, especially right now, explains prominent horological expert Elizabeth Doerr.

I’ve been in the world of ne watches for more than 30 years. In all this time, established collectors have viewed timepieces as items of personal enjoyment—rarely investment-class assets. The basic reasons for this are simple: Like an automobile, once a watch is bought and removed from the store, its value decreases signicantly. And, if we’re talking vintage watches, the unwritten ground rules for high-grade collecting can be confusing, time consuming, expensive and untransparent.

“I’ve frequently gone on the record over the years with my view that watches are not investments,” says Gary Getz, a prominent watch enthusiast and collector and a recently retired business-strategy consultant. “That’s not to say that the values of some watches may not go up over time, but to me that’s both unpredictable and entirely secondary to the importance of watches as works of mechanical art and personal enjoyment.”

Aurel Bacs, head of Phillips Watches in Association with Bacs & Russo, concurs. Elaborating on after-market price structures, he says: “The price- nding process, the mechanisms or dynamics in how watches have a price, have a value, is nothing more than supply and demand, much like buying a share

Rolex Cosmograph Daytona

In 2017, Phillips sold a Rolex “Paul Newman” Daytona—that was owned by Newman himself— for $17.8 million.

on the stock market or real estate to rent out. Watches, like art and any other collectible, do not have a stream of revenue. And therefore no analyst in the world can ever tell you this watch is worth $10,000 or $100,000 or a million. Who decides these prices? The buyers, the bidders and the sellers do.”

A new era, though, seems to be afoot.

Hyper-Sensitive

As the digital era has progressed, certain watch models, brands and even provenances have become “hyped,” causing a new arm of watch collecting to open up that follows a di erent path: one heavily in uenced by marketing and a new ideal of rarity. It is chie y populated by a newer consumer group with more discretionary funds to spend than ever before.

Capitalizing on this, major auction houses began placing focus on two blue-chip brands with high reputations when it comes to both craftsmanship and comparatively high overall production numbers. Rolex and Patek Philippe have long been household names and are the poster children for the Swiss watch industry, but these new circumstances have elevated their status in unimaginable ways, culminating in Phillips’s 2017 sale of Paul Newman’s

UR-112 personal Rolex Daytona Ref. 6239 for $17,752,500—a watch model that was somewhat unpopular at its debut—and most recently the brand-new Ti any & Co. Double-Signed Patek Philippe Nautilus Ref. 5711/1A-018 (the so-called Ti any-blue Patek) in December 2021 for a whopping $6.5 million (both prices including buyer’s premium).

“We produce 150 to 160 watches per year, and we will not raise that,” insists cofounder and head watchmaker Felix Baumgartner.

Never a manufacture to be outdone, Audemars Piguet set a record in 2021 for one of its watches sold at auction with a unique Royal Oak Concept Black Panther Flying Tourbillon that hammered at $5.2 million for charity.

“And it wasn’t just us,” Phillips’s Bacs remembers. “There was the $31 million for the Patek Philippe Grandmaster Chime at 2019’s Only Watch auction. Watches were on everyone’s minds: the press, TV shows, blogs, social media. . . . It was everywhere. It became mainstream popular culture to the extent that when I was in Cambodia on a bike riding through a rice eld, somebody stopped me and said, ‘You are the man who sold the Paul Newman.’ ”

Viral Virtuosity

“The digital era brought with it online enthusiast forums in which certain watches became ‘hot’ pieces that ‘serious’ collectors felt they should have,”

Chronomètre Bleu

The French watchmaker, located in Geneva, is one of today’s most in-demand independents, according to the author.

Getz, a serious collector for decades, explains, “setting the stage for Phillips and others to create a sense of rarity around certain makers and references among a broader audience. It wasn’t very long ago that the discussion among enthusiasts wasn’t about making money, but about not getting hurt by buying pieces that matched one’s individual taste but su ered badly in value should the need arise to sell them.”

From 2016, the secondary market value of stainless-steel Patek Philippe Nautilus models, a watch that has existed since 1976, upsurged in an unprecedented way: a true phenomenon that just three short years later saw these models selling on the pre-owned market for twice their retail prices and (much) more. In my estimation, there are two big reasons for the extreme hike in value: rstly, the new marketing direction of auction houses and other preowned sellers focusing on unique or low-volume series; and, secondly, provenance and the evolving tastes of today’s consumer, notably their focus on sports watches. By 2019, bitcoin was also surging, meaning that new wealth was coming into the hands of younger consumers looking for a place to spend it—and a way of displaying it.

The pandemic followed on the heels of the bitcoin craze, bringing about a perfect storm and solidifying the new feel for watch collecting and investing: “Pandemic spending” caused blue-chip brands to sell out just as production ground to a halt and supply shortages were the order of the day. The recently wealthy now had to look beyond Rolex, Patek Philippe and Audemars Piguet toward the rare and unique world of the high-end independent brands for investment-worthy timepieces. Enter, stage left, the independent makers.

Off the Radar

An independent watchmaker is generally defined as a high-end boutique maker with low volume, handmade products—and, crucially, a free-spirited approach to the craft. These can be individual people or small companies. Historically, the independent watchmaker has generally had a much harder time getting attention. However, six months into the pandemic, the independents experienced an unprecedented rise in both sales and fame with more consumers (finally) discovering the compelling niche end of the market.

“It comes back to real values and real watchmakers and watches and less to big brands who spend millions on marketing,” Urwerk cofounder and head watchmaker Felix Baumgartner says regarding the phenomenon. “Responding to the demand also creates frustration and is a challenge for us today. But I keep my feet on the ground, as is my nature—I am the son of three generations of watchmakers—we produce 150 to 160 watches per year, and we will not raise that. We know who we are, and we know what we want.”

This newfound wider-spread popularity for a stratus of the watchmaking world hitherto basically unknown—except among a small group of passionate collectors—has remained in place, with the must-have indies still in high demand and no increase in production in sight thanks to a wise retention of basic ideals. Today’s in-demand independents include Urwerk, MB&F, Akrivia, F. P. Journe and Phillipe Dufour—the last being widely considered the “godfather” of the independent-watchmaking market.

Flipping the Coin

In the watch world, these new investors of recent years are known as “flippers” (or sometimes “spec collectors”). They look to make short-term gains by buying in-demand watches at retail (or below) and “flipping” them immediately for profit. While a handful of flippers have always existed, they were never enough to upset the natural order of things or prevent dyed-in-the-wool collectors from getting timepieces they have wanted. Now, however, availability is scarce for even established collectors.

“Investors and flippers feed each other as the hype engine creates fear of missing out among less-informed buyers, and flippers benefit,” Getz explains. “I also think we are seeing the effects of watches moving from being a niche interest to a mainstream luxury category, with all that implies regarding the status associated with certain watches and the ability to profit from a manufactured sense of scarcity.

“We’re already seeing this cooling off, and I suspect that some portion of today’s luxury-watch buyers will soon move on to their next categories of status purchases; but at the same time, as with vintage cars, it looks as if excellent examples from certain brands and important references have made a permanent and sustainable jump in value that won’t abate anytime soon.”

This cooling off has seen prevalent secondhand dealers very recently laying off employees or declaring bankruptcy and, as WatchPro even wrote, “Prices for the 50 most tradeable luxury watches have slumped by at least one-third in the past year.” Despite how that sentence looks, this “slump” isn’t really a slump but rather a correction, bringing us closer to normalcy in the watch industry: a microcosm that is driven more by passions than full-blown fiscals.

So, the ultimate question: Should you get into watches for investment purposes right now? The short answer is, you’ve missed the peak of the unprecedented surge, but there isn’t a bubble to burst here because watches have never “bubbled.” If you’re new at it and expect watches to hold their value, you will be best served buying Rolex, Patek Philippe and Audemars Piguet’s Royal Oak models. These historically blue-chip brands are three of today’s most desirable makers of luxury sports watches.

Sure, bets on this don’t exist—but if they did, I’d also certainly put my money on anything by independent makers Philippe Dufour and Akrivia, if you can get your hands on one (and I wouldn’t be so sure of that).

“Yes, watches can be an investment, but not an investment like a pension fund, real estate or even the stock market,” Bacs says, reiterating a position that most watch-industry lifers share. “The investment is a human one. As in, the pleasure of engaging with watchmakers and peers and hanging out with watch crowds. And, the pleasure of actually being all alone with your beloved watch. There’s the investment of your time and, of course, your hard-earned money. But the dividend is not cash. The dividend is the smile you get.”

Southern Trees by Charles Gaines

This stirring exhibition by the contemporary American conceptual artist, depicting 150-year-old pecan trees, has been on display at Hauser & Wirth on New York City’s 22nd Street.