Rolex As An Investment = Bad Idea

[tjerem]

Originally Posted by padi56

Today Rolex are no longer seen as very fine watches to be bought to wear for many years.Now they are thought of as silly nicknames and little more than $$$$$££££, bet old Hans the founder of the RWC is turning in his grave

I hope you're being sarcastic. If you're serious, I whole heartedly disagree. Despite how ubiquitous Rolex is compared to other luxury brands, I would not relegate them to the status you do. Hans was no Voutilainen; he was primarily a businessman. Today, Rolex's business is excellent. Compare Rolex to, say, Parmigiani, which many consider to be better, but from a business perspective, what good is it if not nearly as many people know, or care, about it compared to Rolex? And even during his time, Hans focused on robust, sophisticated tools and celebrity branding; if he wanted Rolex to be "very fine" the way you might think of certain pieces like some Bovet, Rolex would have adopted the Tourbillion. And even so, Rolex holds value better than Breguet, from which the Tourbillion originated. When was the last time you saw Vacheron boasting of someone swimming with its Tourbillion or boiling a Patrimony to see if it works? Hans didn't create Rolex to be "very fine" the way you describe.

Moreover, anyone who knows the specs of a Rolex would say it's a "very fine watch" for its price point. In fact, it's arguably a bargain. Someone who doesn't consider it as such doesn't truly know about watches. And last time I checked, people who don't know about watches think Rolex is the best there is. So either way, I don't see how your statement is accurate.

Now regarding the investment aspect, while I wouldn't necessarily call them a "good investment," I'd say they are a good store of value inasmuch as I wouldn't judge any watch by its "investment" qualities but rather its value retention. Investments are assets, and considering the value loss of a Rolex off the shelf and periodic maintenance, unless you never wear the thing, it will be a liability that may have decent value retention. Obviously this is not true for all Rolexes, but this is the cautious view I maintain for any watch. If you truly want an investment, put your money elsewhere.

[Rocket launcher]

Buy the correct model and make £1000s by walking out the shop.....
Now that's a quick turnover and not bad for an investment
A 50th anniversary sub bought for £3700 is worth £12000 today now that's a good investment

[ROLEX MAN]

7% WHERE?

Not in Australia!

[TimeToWatch]

Originally Posted by Pay M3

Why do people continue asking this? All it takes is some simple math to realize it’s not a good investment and is in fact meant to be worn as a watch. This same argument gets made in other markets as well and it blows my mind.

8k over a 30 year period at a modest return of 7% with traditional investments will net you more of a return (roughly 55-60k) than your average Rolex unless you get lucky with a unicorn piece.

Stop worrying about this stuff and buy the thing.

Not that this should be taken as the norm nor your motivating factor towards making a purchase, but my collection is up 40% and the oldest piece I own was purchased in 2014...

I agree that watches are not an “investment” in the traditional sense, but substantial returns may nonetheless be made

[The Libertine]

Retains its value, yes. As an investment, no.

There’s a difference between the two that the uninformed often confuse.

[dtwer]

Originally Posted by nektar

And let's keep in our mind, that many people do not have experience on selling precious items, thus they do not have the patience or the means to negotiate. They just rush to get rid of them. How many in that forum have tried to sell their car by themselves? Not as many as we may think.. They go to trade in...

Never a truer word spoken.

I have sold several cars and motorcycles over the years. My conclusion: hardly worth my time. The number of tire kickers and flakers I had to deal with was hard to believe at times. I always made sure I was not selling out of desperation, still I don't believe I managed to get much more than what I otherwise would have by trading the vehicles in.

[nektar]

Originally Posted by dtwer

Never a truer word spoken.

I have sold several cars and motorcycles over the years. My conclusion: hardly worth my time. The number of tire kickers and flakers I had to deal with was hard to believe at times. I always made sure I was not selling out of desperation, still I don't believe I managed to get much more than what I otherwise would have by trading the vehicles in.

[liu_watch]

I think we are debating about the term “investment”. It means a different thing to people in finance vs non-finance. Some feel an investment must have an EXPECTED return greater than zero; some see an watch as an investment because it is an asset. Some may even include the intangible value. Regardless of the definition, a few facts:

-On average, the expected return of S&P 500 index fund over a 10 period is positive, despite that any individual stock may have a negative return.

-On average, the expected return of a given watch portfolio over a 10 year period is negative, despite that a lucky collector may have a positive return on his watches.

Therefore, it’s logical to conclude that “watches are not a good investment vehicle” - in the sense that if some wants to make money, do not choose watches. But I suspect when posts ask for watch investment ideas, s/he meant: which watch will likely keep its value, or if lucky, increase a little, despite his/her knowledge that a municipal bond is likely to outperform a watch portfolio.

[HappyFish]

Does anybody think that a Paul Newman Daytona will ever become "cheaper" again, or a Ferrari GTO 250, a Mark Rothko?! For sure a good investment even if you buy them at todays prices!

Only buy triple A`s, no B`s, no Panerai`s (since Richemont) ;-)

[904VT]

Originally Posted by Zakalwe

I honestly suspect that there’s a misunderstanding sometimes with investment questions between those asking and those answering.

I imagine many “Rolex as investment” inquirers are perfectly well aware that Rolex is not going to get you a return on your money in the same way as stocks or property might.

However, a watch that costs x, gives 10 years of pleasure as a daily wearer and can be sold for say x+10% is a great overall investment if not a sound financial one.

This. I think we as a community need to take a step back and recognize that when many say an investment, what they mean is won't depreciate like a Breitling. I think often times much is lost in translation and we have many where English is sometimes even their 2nd language. It's more likely some use the term investment incorrectly more so than those that actually consider their Rolex and an alternative to equities.

Relative to other watches, they are great investments (that doesn't mean they are bulls and bears of course) and I think that's all many mean.

Just my two cents

[DanMdR]

Not a terrible investment once you factor in 30% capital gains tax (Fed 15% + CA 15%) on any “traditional” investment.

[904VT]

Originally Posted by DanMdR

Not a terrible investment once you factor in 30% capital gains tax (Fed 15% + CA 15%) on any “traditional” investment.

Ouch it's that high in Cali? Wow. I'm sorry to hear

[DanMdR]

Originally Posted by 904VT

Ouch it's that high in Cali? Wow. I'm sorry to hear

Ya! And it’s my understanding that it’s not a “set” 15%. It just follows federal. So if Federal Cap Gains go up to 20%, CA will automatically go up to 20% as well.

[904VT]

Originally Posted by DanMdR

Ya! And it’s my understanding that it’s not a “set” 15%. It just follows federal. So if Federal Cap Gains go up to 20%, CA will automatically go up to 20% as well.

And it's not like we have a national pension funding deficit or fully funded personal retirement accounts now do we. That's a brutal disincentive to save. I'd just buy more Rolex lol

[Carry The Interest]

Originally Posted by 904VT

This. I think we as a community need to take a step back and recognize that when many say an investment, what they mean is won't depreciate like a Breitling. I think often times much is lost in translation and we have many where English is sometimes even their 2nd language. It's more likely some use the term investment incorrectly more so than those that actually consider their Rolex and an alternative to equities.

Relative to other watches, they are great investments (that doesn't mean they are bulls and bears of course) and I think that's all many mean.

Just my two cents

I agree with this. I don't view any of my watches as "investments" akin to what's in my stock portfolio. Rather, depending on the models you buy, they can serve as a reliable store of value.

Here's how I think about it:

In the past 12 months I've added a DaytonaC and BLNR to the collection. Let's just call that $21K total. If I needed to offload those, I would easily recoup the original cost, and probably turn a profit. Let's just say I get cost returned to keep it simple. I hit some tough times and have to sell both watches. At that point, I have back in cash the money I originally spent on them and got to enjoy wearing them during my ownership. So what have I missed out on? Only thing that comes to mind is foregone interest on that cash deployed (or opportunity cost). In other words, what's the profit I could have made by putting that money in market rather blowing the cash on watches? That tax-adjusted gain is all I have missed out -- pretty minimal downside risk. Furthermore, that argument could essentially apply to spending money on any other non-essential items (granted, watches tend to be bigger ticket items).

Some may call this particular example highly "selective." In other words, we're talking about two steel models that are high in demand in a watch market with frothy valuations on secondary/grey asking prices. How much does that all change when the economy is in the toilet? I'm sure the impact isn't nothing, but also not a total nosedive either. In addition to market conditions, the validity of this argument also rests on what types of watches we're talking about (both brand and material). I am sure other brands are not as optimal at storing value as Rolex. Within Rolex, I am sure the store of value argument becomes more shakey when you move into PMs. Those are totally valid points. The logic above is more so based on what's currently in my collection. Bottom-line: don't buy a watch if you're expecting it's value to appreciate over time (there are far more efficient ways of accomplishing that better). At the same time, I also don't make a purchase thinking that money is gone away forever (there is value to extract from the item, if necessary).

[DanMdR]

Originally Posted by 904VT

And it's not like we have a national pension funding deficit or fully funded personal retirement accounts now do we. That's a brutal disincentive to save. I'd just buy more Rolex lol

the question these days is, does Rolex keep up with inflation? Banks sure don’t.

[DanMdR]

Originally Posted by Carry The Interest

I agree with this. I don't view any of my watches as "investments" akin to what's in my stock portfolio. Rather, depending on the models you buy, they can serve as a reliable store of value.

Here's how I think about it:

In the past 12 months I've added a DaytonaC and BLNR to the collection. Let's just call that $21K total. If I needed to offload those, I would easily recoup the original cost, and probably turn a profit. Let's just say I get cost returned to keep it simple. I hit some tough times and have to sell both watches. At that point, I have back in cash the money I originally spent on them and got to enjoy wearing them during my ownership. So what have I missed out on? Only thing that comes to mind is foregone interest on that cash deployed (or opportunity cost). In other words, what's the profit I could have made by putting that money in market rather blowing the cash on watches? That tax-adjusted gain is all I have missed out -- pretty minimal downside risk. Furthermore, that argument could essentially apply to spending money on any other non-essential items (granted, watches tend to be bigger ticket items).

Some may call this particular example highly "selective." In other words, we're talking about two steel models that are high in demand in a watch market with frothy valuations on secondary/grey asking prices. How much does that all change when the economy is in the toilet? I'm sure the impact isn't nothing, but also not a total nosedive either. In addition to market conditions, the validity of this argument also rests on what types of watches we're talking about (both brand and material). I am sure other brands are not as optimal at storing value as Rolex. Within Rolex, I am sure the store of value argument becomes more shakey when you move into PMs. Those are totally valid points. The logic above is more so based on what's currently in my collection. Bottom-line: don't buy a watch if you're expecting it's value to appreciate over time (there are far more efficient ways of accomplishing that better). At the same time, I also don't make a purchase thinking that money is gone away forever (there is value to extract from the item, if necessary).

Your purchases in the last 12 months definitely seem to be more of an “asset” than a “liability”.

[alphasports]

Originally Posted by directioneng

I take it you are not in finance for living.

This. If the OP calls 7% average returns over 30 years "modest" then I'd love to know what he purportedly invests in.

[WJGESQ]

Originally Posted by Pay M3

Why do people continue asking this? All it takes is some simple math to realize it’s not a good investment and is in fact meant to be worn as a watch. This same argument gets made in other markets as well and it blows my mind.

8k over a 30 year period at a modest return of 7% with traditional investments will net you more of a return (roughly 55-60k) than your average Rolex unless you get lucky with a unicorn piece.

Stop worrying about this stuff and buy the thing.

Your forgetting the fact that you've also been able to wear and enjoy a classic and prestigious time piece and actually make money at the same time. There's value in that. Bottom line is there's not many luxury items you can buy, enjoy and not suffer horrendous depreciation. But an SS Rolex seems to be the exception.

[WJGESQ]

Originally Posted by alphasports

This. If the OP calls 7% average returns over 30 years "modest" then I'd love to know what he purportedly invests in.

NLY maybe?

[AK DeepSea]

I bought a BLRO and sold it for a 60% profit in less than 24hrs. That’s a good investment in my book.

[10klakes]

Originally Posted by AK DeepSea

I bought a BLRO and sold it for a 60% profit in less than 24hrs. That’s a good investment in my book.

I bought a BLRO last August and wore it since. I too could sell mine for a 60% profit tomorrow if I wanted. Even better imo....

[Chilly Coconut]

Originally Posted by AK DeepSea

I bought a BLRO and sold it for a 60% profit in less than 24hrs. That’s a good investment in my book.

That’s not an investment. That’s a trade.

[mikeyatc]

I see it as money that I can keep a close eye on.

[nektar]

Originally Posted by AK DeepSea

I bought a BLRO and sold it for a 60% profit in less than 24hrs. That’s a good investment in my book.

This is not an investment...


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[nektar]

Originally Posted by 10klakes

I bought a BLRO last August and wore it since. I too could sell mine for a 60% profit tomorrow if I wanted. Even better imo....

I did not buy a BLRO because I did not like it, and if I liked it I would buy to wear it and not flip it.


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[nektar]

I agree on the second part.


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[nektar]

In my opinion there is no way a modern Rolex is an investment. And it should not be. It is a nice watch, that attracts a bit of attention and made to be worn under any circumstances. As a reminder of the you events of your life. Good or bad.


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