The sorry truth about luxury watches as an 'investment'
🔸 Plus: Half of all Premier League teams will be owned by Americans 🔸 Warren Buffett saw a deepfake video of himself and didn't like it 🔸 The ex-CEO of Starbucks has some complaints 🔸
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Are luxury watches a good investment?
Sylvester Stallone popped up on my Instagram the other day, trying to convince me that buying a luxury watch is a good idea.
Addressing the camera, he told an anecdote about being stopped on the street while wearing a Rolex:
“I was passing this guy once on the street and I was wearing a Rolex and he goes, ‘Wow, man, what that watch cost?’ I go, I guess at that time, ten, twelve thousand dollars. He goes, my watch cost $3, and we have the same time!”
Many people in the comments under the video pointed out that $3 watch guy made a good point, and it’s not clear that Sly — whose luxury watch collection is vast, according to Wrist Enthusiast — really got it.
Stallone ploughed on:
“And I go well that’s the point, it’s not about the time. It’s about the sense of accomplishment that you say, OK I am going to reward myself for perhaps doing something right in my life. And that’s what watch collecting is to me.”
Stallone is selling 11 watches at Sotheby’s, including a Patek Philippe Grand Master Chime “still sealed in its original packaging and estimated to sell for as much as $5 million”. Stallone says he has never actually touched the watch, which he was only allowed to own after he wrote letters of “appeal” to the board of the company(!)
Luxury watches are to men what luxury handbags are for women: Their owners insist they are an investment while their partners insist they have lost their marbles.
So Moneyin2 decided to do some research to answer the question: Is buying a luxury watch a good investment?
The answer is no
The watch market used to be shrouded in secrecy — it’s dominated by private Swiss companies — with the only hard data coming from export shipments. But recently, several entrepreneurs started tracking prices and units sold at the retail and second-hand level, and now we have good data on the price of watches globally.
The news is not good.
During the coronavirus pandemic, when everyone was stuck at home, bored out of their brains, prices for watches went through the roof. But as soon as lockdown ended people lost interest in buying watches online. Here’s what happened to prices over the last five years, according to WatchCharts:
Even in China, which once drove the luxury market, sales have collapsed. Swiss watch exports to China are down 42% this year, according to the Financial Times.
The market is flooded with unwanted inventory, according to City AM:
“…a large volume of their stock trades below retail price – some of it quite considerably below retail price – and their customers aren’t really aren’t buying those watches.” — Joel Faith, director of Atlas Watches
Sellers have developed tricks to sell unwanted watches, City AM says:
A popular way to do this is for retailers to sell “bundles” of watches to buyers containing a hard-to-obtain timepiece from brands like Rolex and Patek Philippe. This could lead to the lower-priced watches being “dumped” on the second-hand market, hurting brand value.
Stallone is right in one sense. If you want to reward yourself with a beautiful object that will last a long time then there are worse things you could do than buy a fancy watch.
But don’t kid yourself that it’s an “investment” — there are more watches on the market right now than there are blokes wanting to buy them.
If you are serious about investing, here’s our step-by-step advice:
And for dessert …
Half of all Premier League teams are owned, or will soon be owned, by American investors. The New York Times has a really interesting deep dive into the economics of football.
The former CEO of Starbucks decided to give his successor some unsolicited advice on Linkedin. And then he slagged off the mobile ordering platform.
Trading platform Robinhood received notice that the US Securities & Exchange Commission was preparing to take legal action against it for selling crypto. The SEC largely regards cryptocurrencies as unregistered securities.
The investment firm bidding to acquire Everton FC was accused of fraud. Leadenhall Capital Partners claims it gave 777 Partners more than $600 million in loans but didn’t know that 777 had already pledged assets as collateral for the loan to other lenders.
Legendary investor Warren Buffett saw a deepfake AI video of himself and did not like it. “As someone who doesn’t understand a damn thing about it, it has enormous potential for good and enormous potential for harm and I just don’t know how that plays out,” he said.
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Photos: Rolex; Charanjit Chana via Flickr.