7 Common Mistakes To Avoid When Investing In Luxury Watches


7 Common Mistakes To Avoid When Investing In Luxury Watches

It is easy to be swayed by headlines of record-breaking prices at timepiece auctions. But before you put your thousands down on the accessory, read these caveats first.

Published on 19 October 2016

One of Asia’s leading watch experts Su Jia Xian, better known as SJX, has joined WEALTH as a contributor. In his first column, he points out seven common mistakes of watch investing.

Just like any other forms of alternative investing, trying to make a profit from buying and selling timepieces is very difficult. Among the many reasons include the fact that the market is very opaque, prices are driven by tastes and fashion, and it is hard to predict what will be in demand next.

Another major cause is the fact that the watch industry does not mirror that of the stock market. Prices tend not to appreciate and depreciate quickly or consistently, and liquidity is low, to say the least.

Yet, it is undeniable that the last 10 years have been good for those who have parked their wealth in watches. Monitor the timepiece auctions and it is not uncommon to read about record-breaking prices.

But before you go out and part with your cash in exchange for that wrist accessory you are hoping will yield a good return, be mindful of these caveats.


Not buying what you like

As with all manners of hobby investing, the first rule of this game is to buy what you like. It acts as a safeguard against the possibility of the price not going up, which if it happens, will at least mean you have a timepiece that you actually admire and ranks high on the feel-good factor.


Following the herd

Just because all your friends are buying a certain watch, does not mean that you should too. Remember that market forces come into play. When a watch becomes highly coveted, its price will go up. Do you really want to pay for a piece which is increasing in price and is not proportionate to its actual value?


Ignoring value retention

Among the factors you should look into before you buy the watch is its brand, popularity and rarity. These contribute towards increasing the value of the watch as time goes by. For instance, it will be prudent to choose a limited edition over a piece that has uncapped production numbers. Opt for well-known independent manufacturers but be aware that most are essentially start-ups, and some will not survive.


Side-lining the importance of good value

It is easy to be dazzled by the complications and configurations of watches released today, but chances are, their prices will not be investor-friendly. Instead, take a step back and look for value for money. For example, at the moment, pieces made in the 1980s or 1990s with complications are worth considering. Their prices are low because they have been cast into the shadows, being small in size, something that’s unfashionable today. But tastes change and small watches may have their day in the sun.


Placing too much emphasis on high prices

If you are new to watch investing, it is easy to assume that an expensive piece is investment-grade. But chances are, they are not. Thanks to the dip in demand relative to supply as a result of weak economic sentiment, there are many bargains available in the market when it comes to timepieces made by modern watchmakers. Do your research and shop around; don’t obsess about the price tag.


Mass is not always good

The rarer a piece – perhaps because it was linked to a major event, or is made from a material that is in short supply – the higher the chances of healthy returns when you eventually sell it. Nobody can resist a good story and if you own a watch that went to the moon, for instance, you can be sure someone else will be willing to buy it from you.


Getting too caught up in modern watches

The razzmatazz that greet visitors at each of the two annual watch fairs never fails to impress. Manufacturers have been known to pull out the stops to launch their pieces, and it is easy to get swept away by the new and novel. But before you reach for that cheque book, know that vintage is very fashionable right now, and is more likely to cut you a better deal than the modern watches. There are conditions though. Original parts are always preferred, right down to the tags; big brands trump the small ones; know who the seller is to keep track of the provenance; and finally, do your research about the piece before buying it.

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