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Old 25 February 2008, 03:38 AM   #1
bgriz
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Rolex an investment?

I'm a financial advisor "by trade" and am curious to know who thinks of their Rolex as an investment? By definition from wikipedia: Investment or investing[1] is a term with several closely-related meanings in business management, finance and economics, related to saving or deferring consumption. An asset is usually purchased, or equivalently a deposit is made in a bank, in hopes of getting a future return or interest from it.

If you apply the actual definition one could say that most Rolex's are indeed an asset that will produce a future return (appreciate in value). The key here is TIME. A 16710 for example if held for 20-30 yrs may very well produce a sizable return from the original amount paid. However, if a 16710 Rolex takes 25 yrs to double in value.....you avg'd a whopping 2.88%/yr return from this "investment".

So, the argument can certainly be made that Rolex is indeed an investment. I would offer that it is generally not a good investment considering the same money put into a decent mutual fund would have made far better returns over 25 yrs than 2.88%/yr. There are of course exceptions with certain Rolex watches with new or hot models. I'm not telling you anything you didn't probably already know here, and most will probably reply with the same thing I would which is "I buy my watches to enjoy, if they happen to go up in value over time that is just a bonus."

What I really wanted to know is if people are actually buying these watches in lieu of investing in other more traditional investments? Too much time on my hands today....
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Old 25 February 2008, 03:48 AM   #2
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I bought my first Rolex in 1976 because of the hype. And later on I found out that these watches were a pretty good investment considering their super high resale value in the secondary market. Not only that, they were and still are very easy to sell.
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Old 25 February 2008, 03:53 AM   #3
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i am trying to convince myself that purchasing a sea dweller before the price hike (march 1) is a good investment :-) my thought process goes something like this: if i can get 10% of now, and purchase from an AD where there is no sales tax, then I will be way ahead once the 10% across the board price hike goes into affect. since i live in CA that would mean my watch would go up in value ~ 28% in one week (less whatever depreciation the watch suffers when i purchase it). I can't quite convince myself this is a good idea...

feel free to talk me into it ;-)
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Old 25 February 2008, 03:56 AM   #4
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Originally Posted by mborkow View Post
i am trying to convince myself that purchasing a sea dweller before the price hike (march 1) is a good investment :-)

feel free to talk me into it ;-)

Go for it...
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Old 25 February 2008, 03:57 AM   #5
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I don't necessarily think of a Rolex as an investment. Rather, I look at it as a reallocation of assets. If you buy right you can break-even in the event that you need to sell...although it seems that I only sell to fund another purchase :)
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Old 25 February 2008, 04:00 AM   #6
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Go for it...
x2!
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Old 25 February 2008, 04:05 AM   #7
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If you buy a nice Rolex, wear it for ten years and ...
sell it for a little more than you paid for it,
How much does the entertainment value count?
In my book it is a good investment in personal satisfaction.

But a nice 356
drive it for ten years
maintain it properly
double your initial investment.
Would a CD make more in 10 years?
Probably
Would a CD be a better investment?
NOPE!
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Old 25 February 2008, 04:05 AM   #8
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Interesting question. As a normal course of events watches represent a less than ideal investment IMO.
Having said that, there are those viewing a select portfolio of vintage pieces as investment grade timepieces. It's hard to argue with the run up in certain vintage Rolex pieces (as well as certain other makes). 20, 30 50%and more per year ain't to shabby no matter what the commodity.

Having said that one wonders what the investor/speculator does to the hobby in the long run. Many collectors have all but been closed out of many references that only a few years ago were easily within reach.
Some have speculated about a "bubble", but as yet pricing remains rather strong with the move now seemingly toward "complete sets".
As with anything geared toward financial gain, knowing when/what to buy and when to sit as well as having a well grounded knowledge of the subject is critical.
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Old 25 February 2008, 04:10 AM   #9
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They shouldn't be seen as investments, unless you are rationalizing a purchase. A Rolex is a luxury item. I know that I waited until I was financially stable before I started buying mine. Both of mine have increased in value, one doubled in value (it's been 18 years). Far less return than the DJIA or SPX. It's kind of like a zero-coupon bond. You buy it at a discounted amount, hang on to it for a long time and in the future hopefully it matures at full or higher value.
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Old 25 February 2008, 04:10 AM   #10
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Well commented Mike.

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Old 25 February 2008, 04:12 AM   #11
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The other benefit is that there is no capital gains tax. So that 2.8% become 4%. That is equal to ~5.5% return on a long term investment that requires paying capital gains.
At least I havnt paid capital gains taxes on my rollies. Oops, is the IRS reading this.....
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Old 25 February 2008, 04:14 AM   #12
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If you buy from an ivestment point of view, then you are an idiot... Also ROLEX is not all that magical when it comes to resale value either. Just like anything, people will try to buy it for pennies ..... many people offered me $2500 or less for my D series BRAND NEW SD ,,,,,so I responded back with "how about a night with your sister for $2K?"...

so you will take a big hit on it once you buy it...so don't expect it to be like gold, where you get current market value no matter what ..... Once you buy it, you are stuck with it .... so buy carefully....very carefully......Buying is very very easy .... Selling is a million times harder ........
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Old 25 February 2008, 04:15 AM   #13
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Quote:
Originally Posted by mike View Post
Interesting question. As a normal course of events watches represent a less than ideal investment IMO.
Having said that, there are those viewing a select portfolio of vintage pieces as investment grade timepieces. It's hard to argue with the run up in certain vintage Rolex pieces (as well as certain other makes). 20, 30 50%and more per year ain't to shabby no matter what the commodity.

Having said that one wonders what the investor/speculator does to the hobby in the long run. Many collectors have all but been closed out of many references that only a few years ago were easily within reach.
Some have speculated about a "bubble", but as yet pricing remains rather strong with the move now seemingly toward "complete sets".
As with anything geared toward financial gain, knowing when/what to buy and when to sit as well as having a well grounded knowledge of the subject is critical.
Excellent post Mike and 100% agree about your statment (well grounded knowledge of the subject is critical.)
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Old 25 February 2008, 04:27 AM   #14
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Quote:
Originally Posted by mike View Post
Interesting question. As a normal course of events watches represent a less than ideal investment IMO.
Having said that, there are those viewing a select portfolio of vintage pieces as investment grade timepieces. It's hard to argue with the run up in certain vintage Rolex pieces (as well as certain other makes). 20, 30 50%and more per year ain't to shabby no matter what the commodity.

Having said that one wonders what the investor/speculator does to the hobby in the long run. Many collectors have all but been closed out of many references that only a few years ago were easily within reach.
Some have speculated about a "bubble", but as yet pricing remains rather strong with the move now seemingly toward "complete sets".
As with anything geared toward financial gain, knowing when/what to buy and when to sit as well as having a well grounded knowledge of the subject is critical.

Good response. I also believe at times when the stock market is weak (like now) and interest rates are poor, a small percentage of the total $$ out there finds alternate places to go. This momentum speculating becomes somewhat of a self fulfilling prophecy of money going in because its going up, which causes more money to go in, which causes it to go up, etc, etc.
Bubbles always end with a burst. We can't be sure thats what we're seeing with vintage pieces, only time will tell.
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Old 25 February 2008, 04:34 AM   #15
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Rolex is a luxury consumer good, and should be treated as such. You don't buy it to make money. And, you don't buy it unless you have the $$$.

However, even though we can afford the cash, there is still a bit of sticker shock over spending $5k-$10k (or more) on a watch. It is much easier to spend that $$$ knowing that you can get that money back in four or five years if you need it, or if you just decide that you don't really want the watch anymore.
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Old 25 February 2008, 04:36 AM   #16
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Quote:
Originally Posted by steel4me View Post
If you buy from an ivestment point of view, then you are an idiot... Also ROLEX is not all that magical when it comes to resale value either. Just like anything, people will try to buy it for pennies ..... many people offered me $2500 or less for my D series BRAND NEW SD ,,,,,so I responded back with "how about a night with your sister for $2K?"...
Were those comments really necessary to make your point? And I certainly hope you didn't actually say that.

Sorry--that whole post is just irritating.
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Old 25 February 2008, 04:50 AM   #17
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I think there are only two current Rolex models that can be seen as true investment pieces: The SS Daytona and the Milgauss GV. You can sell those immediately after purchase for more than you paid.
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Old 25 February 2008, 04:53 AM   #18
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I don't consider a Rolex an investment but an expense. Also, you need to factor in the $500- servicing costs every 5 years.
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Old 25 February 2008, 04:56 AM   #19
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Were those comments really necessary to make your point? And I certainly hope you didn't actually say that.

Sorry--that whole post is just irritating.
+1.
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Old 25 February 2008, 05:01 AM   #20
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+1.
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Old 25 February 2008, 06:28 AM   #21
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So, the argument can certainly be made that Rolex is indeed an investment. I would offer that it is generally not a good investment considering the same money put into a decent mutual fund would have made far better returns over 25 yrs than 2.88%/yr.

You omitted one valid point. The $$$ tied up in the mutual fund cannot be used for the entire term. The Rolex can be used every day and still appreciate in value.
No I'm not poking holes in your sound financial advice, just justifying spending more $$ on Rolex -
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Old 25 February 2008, 06:35 AM   #22
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You omitted one valid point. The $$$ tied up in the mutual fund cannot be used for the entire term. The Rolex can be used every day and still appreciate in value.
No I'm not poking holes in your sound financial advice, just justifying spending more $$ on Rolex -
Actually sure it can. I can not only see the actual market value of the mutual fund $$$ on any business day, but I can convert it to cash anytime I like. There is no term nor is it tied up. All the better so one can liquidate and buy the next Rollie at any time.
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Old 25 February 2008, 06:43 AM   #23
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I view the money that I spent on my Rolex watches as investment in my happiness, and that's all that matters.

I have real investments in real estate, mutual funds, bonds and stocks.
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Old 25 February 2008, 07:01 AM   #24
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Sorry, but is just a watch.
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Old 25 February 2008, 07:19 AM   #25
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Hi Brian,
I collect vintage watches and wear and enjoy them.
I buy what I like, but I do buy with the thought in the purchase of ''will I get my money back/make a few bob if I sell later''.
I am not wealthy/rich I am on a modest income, so I don't want to throw money away.
Although I don't actually buy with future return as the main reason it is always a consideration.
I will one day sell my watches on and hopefully they will add a little extra cash to my retirement plan.
If I just put the cash in the bank it would get spent, but if I put the money in to watches I can't spend it and I get a huge amount of enjoyment out of them to boot.
Just my little eccentric view on my sad WIS life
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Old 25 February 2008, 07:28 AM   #26
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I consider my Rolex collection a fine investment.

There again I do live in the Bizzaro world.
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Old 25 February 2008, 07:30 AM   #27
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If we talk in terms of money return, rolex is not an investment, there are best ways to invest money, but if the talk about reallocation of assets, there are not so many goods in the world that you can buy, use and sell getting, at least, the same money you spent, maybe only rolex and ferrari
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Old 25 February 2008, 08:23 PM   #28
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Well, in my opinion a Rolex is DEFINITELY an investment, however, let me explain.

I am not talking about modern off-the-shelf Rolex.

Like any investment, you must carefully choose your asset, research trends etc.

Look at the stock market. This is a fickle environment where decisions and movements in a company have nothing to do with the earnings. The price can fluctuate dramatically simple because of panic and/or expectations.

The vintage Rolex market has been very strong for quite some time, and with more collectors/investors coming onboard it will get even bigger.

As with stocks, Rolex prices may fluctuate up and down, but rare, scarce and interesting watches will command high prices for a while longer.

Look at the recent prices of Comex, PN Daytona, DRSD, Moonphase etc.

I was offered a 1665 Comex last year for US$63k, but declined, now they are fetching US$150k+. Saw one for sale today for US$190k.

Plus if you like Rolex, it makes it easier to part with the money.

To be called an idiot is narrow-minded as well as ignorant.

My DRSD, Red Sub and Comex have DOUBLED in value in 12 months, not bad for an idiot!

However, I point out that I didn't buy them simply because of "potential" gain, BUT because I really like them too.


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Old 25 February 2008, 08:29 PM   #29
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I believe ROLEX will stop offering discounts on SS models.
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Old 25 February 2008, 09:28 PM   #30
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I don`t like to look on my watches in that way.Like Jason said,I like to think of them like "investment in my hapiness".
I`m aware that my Expy II will be worth of some serious money even twenty or thirty years from now,and I have nothing against it...
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