Just when luxury mechanical watches were deemed a thing of the past with the entrance of smartwatches, they have had a phenomenal renaissance over the past 6 or 7 years, regaining their status as precious possessions that hold very little functional value, but very high sentimental value. We live in a day where vintage plays its role as a consistent trendsetter - an antithetical observation to say the least. While many will argue that we have way too many brands right now, too manly everyday watches being sold at premiums with the label of ‘limited edition’, and absurdly high premiums being paid for rare watches at auction, I would argue that watches are an asset class…and like any asset class, you’re going to buy, hold, transact, hedge, and leverage.
A portion of my collection not in the safety deposit box: L-to-R: Panerai Luminor PAM00088; Panerai Luminor 1950 Carbotech PAM00661; Panerai Radiomir PAM00187, IWC Big Pilot 2009-01; Rolex Explorer II 42mm 216750-002; Seiko SRPC91; Apple Watch Series 1 Edition 18K 42mm
Diversity of Time - Singularity of Desire
Sure - I love Rolex watches and have a number of them, but so do a lot of other people. I happen to love Panerai watches a bit more - a lot of people don’t - they’re too big, too bold, too crude, too Sly (as in Sylvester Stallone who really brought the brand to prominence). And that’s fine, because as many people drool over Rolex watches, there are millions of “Paneristi’s” out there and there are also millions of people who love the classic $300 Seiko diver - it’s reliable; it’s replaceable; it’s comfortable. There are too many things in this world that we’re told we should like - whether that’s political ideology, Netflix shows, or electric cars. Watches still enable to like what they want even if nobody else does not - the watch snobs of this world have a place….and it’s at stuffy tradeshows like Baselworld (RIP). Watches come in all shapes, sizes, colors, and functions…and you can lust after all of them.
Richard Mille v. Audemars Piguet
Richard Mille is a genius who has created incredibly technical status timepieces that are seen on the wrists of celebrities spanning from motorsport to NFL football to Olympic track stars. Richard Mille’s watches are considered modern (not a lot of history), but cost more than most peoples’ homes, but as one prominent collector once said, owning a Richard Mille is not just about having something really valuable…it’s about belonging to a club.
On the flipside, Audemars Piguet, a company with a very rich history and depth, is doing things that are equally dazzling - check out what they’ve done with their all-ceramic Royal Oak with integrated bracelet. Or, check out their new concept pieces - they are complex, hold an incredible amount of precision, but can still grab the guy who has been collecting for 25 years, or the guy who just won the lottery and wants the flashiest, most complicated watch he can find.
To me, part of the phenomenon that has re-elevated high horology to new heights is this commonality of audience with complete divergence of provenance.
Rolex and Patek Philippe
Rolex and Patek Philippe have a lot in common - they are both family-owned businesses who maintain a death-grip on distribution, but have a history behind them that tugs at the heartstrings that spans history. Consider this, Lyndon Baines Johnson wore a Rolex Day-Date, which is now known as the Rolex Presidential - it is a solid gold watch that was a status symbol then, and remains one today. But, that’s not the most interesting part. The Rolex Presidential has been unofficially known as the official watch of Hip Hop (Tupac always wore won) and the NBA - it is not uncommon for an NBA Draft Pick to walk out of the ‘green room’ wearing a flashy suit and a blinged-out Rolex Presidential. To think that a watch has maintained status for such a long period of time while remaining relatively unchanged in look is impressive, but to see the diversity of people that embrace that status symbol is even more impressive.
Patek Philippe is another beast of this asset class of timepieces. I want to point out something that happened last week with Patek that just speaks to how crazy the world of high-end timepieces have become.
On January-22, Patek Philippe announced it would be discontinuing its beloved Ref 5711 Nautilus. Ok, so what? The 5711A (stainless steel version) retailed for $30,600 - a high price for any watch let alone a stainless steel one, and it’s not like you could actually buy one for retail price as the demand was astronomical.
But…what if I told you that within 48 hours, pre-owned versions of that people were asking in upwards of $120,000 for that now-discontinued $30,600 5711A. Point being, prior to it being discontinued, these watches were trading on the grey market for around $60,000. If you had timed it right, you could have paid a massively inflated price and still doubled your money.
The Bottom Line:
This Patek 5711A phenomenon is not an isolated incident - there have been similar watches that have shot up in value in a short period of time, and there will be more. But keep in mind that we are talking about a watch, not a tech stock. But after the shenanigans of the stock market over the past week, which asset is more stable? - the one with tangible presence and complete transparency as to what it is, where it’s been, and who wants it….or the ticker floating across your screen with no transparency with billions on one side of the trade driving it to fail, only to be caught by the upward recoil of billions supported by the clever retail investor?
You tell me.
