Watches

Watches Returns vs S&P

-4.10%

Versus S&P

-3.80%

10 hours ago

-4.10%

Versus S&P

-3.80%

10 hours ago

6m High

6m Low

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Luxury Watches

4,771.25

4,032.18

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S&P 500

4,796.56

3,900.79

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Luxury Watches

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S&P 500

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Does not follow the stock market

Sources: Timepeaks Luxury Index, SPX

    Reasons to Invest

  • According to McKinsey, the secondary luxury watch market was worth $18 billion in 2019 and is poised to grow to $32 billion by 2025.
  • Unlike many other collectibles, watches can be worn and enjoyed for years all the while they appreciate in value.
  • Nowadays, coveted watches tend to have waiting lists of up to 3 years (sometimes even longer). This high demand and low supply continues to push prices up on the secondary market.
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Highlights

Good For

Hedge inflation

Time Horizon

5-10 years

Diversification

Environmentally Friendly

Regular watches are simply a timekeeping device or fashion accessory. Investment watches, on the other hand, are luxury goods that retain or increase in value over time. Historically, high-end watches have only acted as a status symbol. But ever since the record-breaking $17.8 million sale of the Paul Newman Daytona in 2016, luxury watches have become a bona-fide alternative asset class. This, however, does not mean that all luxury watches make for good investments. So far, only limited edition pieces from the Holy Trinity (Rolex, Patek Philipe and Audemars Piguet) have consistently been shown to appreciate in value.

Limited edition timepieces can certainly appreciate in value, but investors should be prepared to hold onto them for a long time.

avg

+2.1%

Avg Annual Returns

Past 10 years

Ways to Invest

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Risk Score

6M Growth

Watches

Timepeaks Luxury Index

35

-4.14%

Art

Artprice Contemporary Index

32

+8.33%

Performance During a Recession

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Performance During a Recession

Common sense dictates that, since luxury watches are a non-essential good, people would buy less of them during a recession. But in reality, this has not always proven to be the case. In the midst of a financial crisis, luxury watch auctions still generated $88 million in 2018, up by $28 million the year before. Make no mistake: the overall luxury watch market does experience downturns during economic crises due to lower sales and exports. But the secondary market only tends to experience minor dips in comparison. One prevailing theory is that the limited edition luxury watches are recession-proof since they appeal to a wealthier class of individuals who don’t need a quick cash out.

Drawbacks

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    Drawbacks

  • Given the increase in speculative investing, some experts believe that the watch market is in a price bubble that could soon burst.
  • Investment watches that are worn often will require frequent servicing and could end up depreciating over time due to physical damage.
  • Wearing high-end luxury watches in public could invite unwanted attention from thieves.
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How You’re Taxed

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How You’re Taxed

Capital Gains

Capital Gains

If an individual intends to buy watches with the sole expectation to sell them for a profit, they should consider establishing a separate LLC for this. According to the IRS, “net capital gains from selling collectibles (such as coins or art) are taxed at a maximum 28% rate”. With that said, establishing a business entity comes with a few key benefits, like being able to deduct expenses and losses. Registered watch investors can also take advantage of like-kind exchanges, which allows them to defer taxes if they invest the proceeds in a similar investment. There are, however, strict requirements around like-kind exchanges, so please consult with a tax professional beforehand.

Brands to Keep An Eye On

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Brands to Keep An Eye On

Did You Know?

  • poitStar

    According to the Guinness World Records, the first wristwatch in history was made in 1868 by Patek Philippe for Countess Koscowicz of Hungary.

  • poitStar

    While the Omega Speedmaster Moonwatch Professional is the first watch to go to the moon, the Sturmanskie "Gagarin" Watch (as worn by Yuri Gagarin) is the first watch to enter space.

  • poitStar

    At a staggering $24 million, the Patek Phillipe Henry Graves Supercomplication is the most expensive watch ever auctioned.

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