Watch collectors are obsessed with the concept “value,” but few of them can agree on a definition of the word. For some, it’s a straightforward question of monetary depreciation, appreciation, and the uncertain terrain in between. Vintage is hot right now; Rolex is hot; Patek is hot, and too many people are looking for “value” in terms that include the word “investment.” While watches can be stores of value on a limited basis, they are bad investment vehicles. 

Contrary to conventional media coverage and social media hype, watches tend to be awful “investments.” While an occasional celebrity-owned example, vintage rarity, or exotic collectible will make headlines for achieving hundreds of thousands or millions of dollars at auction, these are the exceptions. For every steel Patek Philippe 5016 or Paul Newman-owned Rolex that breaks records at Christie’s or Phillips, there are tens of thousands of models and millions of units that will gain no value regardless of age. This is simple math; billions of mechanical watches in existence means that the real money-makers are exceptional. 

Randomly speculating even on popular brands like Rolex, Omega, Breitling, and even Patek Philippe is a sure way to park money in an investment vehicle with far less of a projectable future than a simple aggregate of the S&P 500. Steel Rolex Daytonas are hot now, but 150 percent appreciation of a mass-produced watch in 18 months is not normal or sustainable. By the same token, used Milgauss 116400s aren’t really going anywhere on preowned exchanges, and they tend to trade close to retail. This is a decent way to enjoy your money without dissipating it, but it’s not going to make you rich or beat actual investment-grade assets when the time comes to liquidate.

In general, watches are as likely to lose value as to gain. People who paid over market for the Rolex Milgauss at launch in 2007 or the Deepsea D-Blue in 2014 still are sitting at inflation-adjusted market prices comparable to what they paid. That’s great if the watches were worn and enjoyed over those years, but it’s a terrible return when you consider that the S&P has grown 114 percent since the Baselworld debut of the 2007 Milgauss – and that includes the financial implosion of 2008-2009. 

Measure from immediately after the financial trauma hit, and a steel Rolex Daytona bought new in March of 2009 would not match the 311 percent inflation-adjusted value surge of the S&P 500 since that time.

Moreover, that Rolex would have required two mechanical services since the late 2000s, so deduct at least $1,800 and whatever amount you might have paid to insure your timepieces during the intervening period.

Other collectors will chase illusory investment value in vintage watches. Vintage can be fun, but it should be regarded as a hobby unless you’re a real pro who lives this stuff on a daily basis. Fail to note an incorrect signature on the underside of a Rolex 6263 dial or a doctored bezel on an old GMT, and you can lose luxury car money in a moment. Counterfeiting is easier on old watches because many of the crude vintage fabrication techniques can be reproduced in an attic. Frankenwatches, which combine brand-correct parts in model-incorrect assemblies, are everywhere. Expert vintage watch dealers tend to be brand or even model-specific, because this isn’t a generalist’s game. 

If you have a permanent pipeline supply of dead celebrity-owned 1960s Rolex watches to keep the cash flowing, great. But back in the real world, vintage is a treacherous place that’s becoming akin to the fine art market in terms of forgery, treachery, intrigue, and financial incentives to commit all three.

And for those who insist on riding the rocket, it’s true that a Patek Philippe Nautilus 5711 bought used for $20,000 in 2014 would be worth at least four times that amount today. But it’s not natural for the value of a modern mass-produced watch to spike by 300 percent or more in 24 months. If you can buy a steel Nautilus new at a Patek Philippe dealer right now, your $33,710 likely is safe forever. But will that watch still be worth anywhere near its insanity-level March 2021 aftermarket price of around $90,000 forever? I wouldn’t take that bet.

If your $90,000 Nautilus stabilizes as a $60-70,000 watch in a year or two, there won’t be much reason to celebrate. The S&P 500 has gained value in 40 of the last 50 years, and its average annual return on investment is roughly 10.9 percent over that period. With reinvestment of dividends, splits, and fewer parasitic maintenance costs than a watch collection, a simple basket of stocks can allow even the most insipid of investors to out-perform the long-term value growth of even rock-star watches.

The picture is downright grim for buyers of most luxury watches. The Omega Seamaster Diver 300M on a strap costs $4,900, but it becomes a $4,300 watch as soon as you leave the dealer. A 2001 version of the same watch is worth roughly what it cost in 2001, but that fails to factor inflation into the picture, and your $2,150 in 2001 money is $3,216 in 2021 purchasing power. Add maintenance and insurance, plus the opportunity costs of the stocks, bonds, commodities, or real estate you could have bought with the same cash, and you can see that even a watch that superficially “holds its value” is really a gaping wound in your wallet.

Matters are worse for those who choose to seek monetary value in high horology watches. My experience proves that value accrues to those with patience: the subsequent owners who view depreciation as an asset. In 2015, I bought my dream watch, a Jaeger-LeCoultre Platinum Reverso Number Two tourbillon. It was platinum with an 18-karat white gold ruthenium-coated dial, an 18-karat white gold tourbillon movement, and all of that was hand finished to the highest standards of the Vallée de Joux. That watch cost its original owner in East Asia about $126,000 in 2003 money. I paid $35,000 in 2015 dollars to own that watch, and I sold it for the same amount in 2018. 

The real miracle of watch “value” is the potential for extraordinary watches to become more accessible over time. This is relevant to those of us who envision value in terms of quality-for-money.

My haut-de-gamme Reverso’s depreciation was not unique; I’m writing this article with a formerly $400,000 Audemars Piguet on my desk. It’s a 10-piece titanium Jules Audemars 10-Minute Repeater Tourbillon. It’s 39mm, largely built by Audemars Piguet Renaud et Papi, and it’s gorgeous. We’re selling it for around $150,000. And that $400K was Y2K money; $619,000 is the equivalent purchasing power in 2021. 

Here’s another example: Arnold & Son. The integrated manufacture out of La Chaux-de-Fonds builds only 600 watches per year. Engineering house La Joux-Perret provides world-class design and technical support to its “house brand,” Arnold. And Citizen Group of Japan provides the raw financial firepower to ensure that Arnold watches are fully developed and delivered bullet-proof in a fashion that many Swiss independents can only envy. Citizen money also means that unlike many boutique independents, Arnold will be around to service and support its watches well into the future.

And yet, www.thewatchbox.com is selling an Arnold & Son TES Blue Tourbillon for $65,000 against a retail price of $162,200. This is a watch that was made – hand made – in 25 pieces with finishing worthy of Vacheron Constantin or Audemars Piguet’s marquee models. Such is the grim reality for most new watches, but it means that a savvy watch collector seeking quality will get a stunning timepiece at its true market-sustainable value.

In short, don’t invest in watches. Invest in stocks, bonds, and index funds so that you can buy watches.