investment watches

Its been a while since my last post here and so I thought I'd whack something together which I was thinking about a topic that came up in an internet discussion. The topic was "will this watch make a good investment".  Note: not this watch

but it sure is a nice watch.

Anyway, I see this being bantered around on various watch discussion sites where an amount of intellectual self delusion goes on (commonly I call this watch wanking).

A well known watch review site did an article (here) about the resale values of Rolex models and identified some pretty stand out models. I thought I'd discuss a the stand out model of the Daytona 116520 White.

As you can see from their chart (which I've edited to remove distraction) that seems to have grown in price from around US$13,000 when new to nearly US$30,000 now.

A KingWang type would just leap on that and go WOW ... I can make a packet on a watch.

Lets just do a little more analysis depth than that simplistic wanking, hmm? So to be able to get that sort of growth you had to know in advance which watches would go up and which would not. Notice that the Cellini Time actually went down in cost over the time between release and used price researched for their article (2020).

Now the Daytona was made in 1963, which means that you'd have had to keep it not only in good order, but either proof of service or a recent service done if you wanted to get that money. Such things are  not free. Financial people call this "cost of carry".

Now lets look at what would have happened if you'd put $13,000 down on something else, lets say good old fashioned gold. Now how much gold would you get in 1968? 

Back in 1968 gold was about US$39 per oz, that $13,000 works out to be about 342oz of gold (people didn't buy fractions of an Oz ) or nearly 11kg - that should suddenly scream out to you how much that actually is.

So now, if you'd put aside that gold, what would that be worth today? Well at US$2,424 per oz at the moment of writing means you would have US$829,008. Yes, thats eight hundred and twenty nine thousand and eight dollars.  That is because gold has risen like this since even the 70's

So you could now go out and buy 27 Daytonas and still have change.

Amusingly gold isn't even considered a good investment ... 

To make matters worse the inflation adjusted value of the Daytona that you spent half a  median house  price buying has not even kept place with inflation, because that would mean it would cost $102,472.13 in todays purchasing power ... making the current price about a third of what you'd paid for it.

Watches as an investment? Laugh ... I nearly shat.