Rolex As An Investment = Bad Idea

[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.

[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.

[JParm]

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.

Agree.

[MJ8]

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.

Agree with this completely

[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

[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 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”.

[SilverFoxUK]

So what's wrong with someone who already invests in (e.g. the stock market, property, tax-free cash etc) also buying some watches, with the dual aim of enjoying them and diversifying their investment portfolio? As long as they accept the risk that SS Rolex/PP may not always be hot property (fairly low risk IMO), that seems sensible to me. I love wearing my SS watches, but am also pleased that I have spread my overall risk of my money, into something I also enjoy.

[Ian Macdermott]

In a doddery old mans voice.


I can remember the day when you just bought a watch for telling the time and wore it.

[Brew]

Sometimes a bit of rationalization helps take the sting out of the purchase price.
I can get my money back, etc. Whatever works for you.

[SkyJuice]

As the wise man used to say, don't put all your eggs into one basket.

[peterpl]

Originally Posted by SkyJuice

As the wise man used to say, don't put all your eggs into one basket.

This is true if you dont know what your investing in or you really dont understand the market of your investment choice.

If you truly know what your doing investing in a single market can pay you shitloads. I've personally done this in housing and made a motsa.

[Paul7]

Originally Posted by peterpl

This is true if you dont know what your investing in or you really dont understand the market of your investment choice.

If you truly know what your doing investing in a single market can pay you shitloads. I've personally done this in housing and made a motsa.

And lots of people all in in housing got hosed in 2007.

IMHO a fair statement would be a Rolex holds its value very well in comparison to other consumer goods people blow money on. I wear my dad's DJ that he bought in 1985, it is by no means a collectible but still worth three times what he paid for it. Not adjusted for inflation but still.....

Even if you wear it for 10 years and sell it for what you paid for it, what's wrong with that?

[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

[beshannon]

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 agree completely, very few still care about mechanical watches.

[Ian Macdermott]

Originally Posted by beshannon

I agree completely, very few still care about mechanical watches.

I agree as well that's why I have a good few 20 to 60 year old mechanical watches that are worth a few pounds but I still enjoy them just as much as my Rolex.

[brandrea]

Originally Posted by beshannon

I agree completely, very few still care about mechanical watches.

Agree with you brother, it’s a shame

[jps3b]

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 disagree Sir. I know you have an incredible reputation here on this great forum we all enjoy, but I think Mr. Wilsdorf would be very happy that all his hard work and innovation turned out to be a multi billion dollar company that millions continue to enjoy and pass down to younger generations. Just my humble opinion

[MR. STEEL]

If you can't afford 2 don't buy 1

[Atone]

Originally Posted by MR. STEEL

If you can't afford 2 don't buy 1

i agree, buy 3 or 4.

or just write a nonsensical post on TRF and call it a day . . .

[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.

[Andad]

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.

I take it you are not in finance for living.

[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 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?

[bobabreath]

True, not a great investment. But its one of few watch brands that has the ability to appreciate. Therefore, some will use it to make a profit.

[DP63]

I think it depends on the buyer/owner and their financial status, and is obviously down to the terminology used.

If you are a blue collar guy who doesnt do investments, in the true sense of the word, stock/share portfolios etc, who treats yourself on occasion, the difference between buying a car and it steadily going down in value compared to buying a watch that at the very least (today) holds value over 10 years and could potentially give you some quick cash in an emergency is what they would regard as an investment. I have a friend who justified his Sub purchase by stating it would never be worth less than he paid for it ... the fact that £5k 10 years ago is worth less than £5k today does not come in to the equation for him ... its still £5k and had he left that money in the bank 10 years ago, it would be fractionally more than £5k today. At present though, he would make money on his initial purchase price, hence why he calls it an investment.

Its the word "investment" itself that causes the disagreements and discussions in my opinion.

I buy my watches to enjoy, the fact that in todays market they dont lose money (not even the VAT) is simply an additional positive of ownership for me. I'm fully aware that things change as I've been around long enough to have lived through some serious changes in my life, and thats the key element for me, being aware. If its going to give me my money back and I've enjoyed ownership over the time I've owned them, great, if I make some money on them, even better, and if not (?), then it is what it is and there is nothing I could have done to change that, it wasnt the reason for purchasing in the first place .... I lost £33k on a pension portfolio during the financial crash .... nothing I could have done would have prevented that, smarter people than me never saw it coming, at least with the watches there is something in it for me over the period of ownership if my £6k watch is worth £500 at the end of the day, so be it.

[thesharkfactor]

Compare to buying a Breiting/omega/tag. Pay ££££ today for a new one, tomorrow used it’s worth ££.
Rolex pay ££££ today, tomorrow used is still ££££.
This is what folks are on about.

[peterpl]

Originally Posted by thesharkfactor

Rolex pay ££££ today, tomorrow used is still ££££.
This is what folks are on about.

That is a bad investment. LOL

if its ££££ you'd expect at least £££££ when you sell to consider it an investment.

[Chilly Coconut]

Originally Posted by peterpl

That is a bad investment. LOL

if its ££££ you'd expect at least £££££ when you sell to consider it an investment.

Really? Not all investments require appreciation in the principal amount to be considered good investments. When you buy a bond for ££££, if you buy it at par, you expect to get exactly the ££££ that you paid for it when you sell it at maturity. No more, no less. The investment return in that case comes in the form of dividends (income) paid over the life of the bond.

Correlating this to Rolex ownership, one could view the enjoyment of owning and wearing the watch as the “dividends”, or return, and if they were to sell it one day for exactly what they paid (the par amount of “principal”), they might feel that was a good investment in much the same way as the bond investment.

Don’t be so quick to laugh at others, especially when you’re at risk of exposing your own ignorance of a topic.

[peterpl]

Originally Posted by Chilly Coconut

Really? Not all investments require appreciation in the principal amount to be considered good investments. When you buy a bond for ££££, if you buy it at par, you expect to get exactly the ££££ that you paid for it when you sell it at maturity. No more, no less. The investment return in that case comes in the form of dividends (income) paid over the life of the bond.

Correlating this to Rolex ownership, one could view the enjoyment of owning and wearing the watch as the “dividends”, or return, and if they were to sell it one day for exactly what they paid (the par amount of “principal”), they might feel that was a good investment in much the same way as the bond investment.

Don’t be so quick to laugh at others, especially when you’re at risk of exposing your own ignorance of a topic.

That was a tongue in cheek reply but if your taking it seriously I wouldn't invest in bonds anyway. Why? Because that's not my specialty. Real estate is where the big money is for me. Goodluck with your Rolex investments.