Alternative investments - watches?

[seekingbalance]

Not sure where to post this, but in the absence of an Alternative Investments board...

I have been thinking of how to put some of my long term funds into some alternative investments.

A friend isn't a lover of watches and has five or six Breitling, Rolex, IWC type watches which he says have gone up very well in value, and he gets to wear them too.

I personally like the look of a nice watch but would never, for my own use, spend more than a few hundred, certainly no more than 5 or 6 hundred, and currently wear a great looking Seiko which was only £106. So, out of my comfort zone to some degree. For personal use, if they retain value as a worn item and not just bought new and kept in a box, I don't really like most Rolex, but also find Patek Phillipe a bit basic. But of course that is now what investment is about!

Does anyone have a view on this sort of thing? Where to buy, what to buy, new or second hand etc?

SB

[Tri2000]

I am not a collector of watches for investment purposes, but do own a few nice watches including a Rolex GMT which is my everyday watch. There is a fairly clear hierarchy of watch brands and in recent years you will not have gone far wrong by buying Rolex (at the accessible price range). Even some of their latest models are destined to be future classics, such as the Deep Sea Blue and Stainless Steel Daytona, both of which sell for over retail price should you find one.
For all used watches go for a "full set", meaning the box, all the papers and the other bits which came with it new such as hanging tags and spare strap links and a service record. Make sure it is from the authorised dealer network and not a grey import - or even worse a fake, as there are a lot around and some are very good.
For other brands I would avoid brand new and look for classic models of the recognised brands such as the ones you mention.
Join http://forum.tz-uk.com/forum.php and read what people say. Look (and maybe lust a little) at http://www.chrono24.co.uk/
I personally think you can tell a lot about a person from what they wear (and certain Seiko models are very well regarded). The more you get into it the more you will spot on the wrists of those around you - it really is quite an infectious hobby.

[seekingbalance]

Thanks. I'll have a look at those sites.

Reading up a bit I see that most places seem to suggest only truly rare and usually very expensive watches actually go up by any significant amount, so maybe not worth it, if just for investment purposes.

SB

[GJHarney]

A minority of rare watches like some rare cars will appreciate significantly in real term value. For the rest, and 'normal' high end watches (Rolex etc.) they should hold value at a certain level as most but not all models suffer an immediate new car-like depreciation and then bottom out, not the case if you buy pre-owned in the first place of course (which is normally where the value is to be found).

However while in that sense a quality watch collection could be viewed in the same way as physical gold holdings (with the added benefit as has been said of an actual wearable use-value), like gold there is an often ignored holding cost, sometimes if the value is such that you are using bank safety deposit boxes, but more likely from the regular service costs (and like a car you would do well to have a regular service history to maintain the best value). So you would then be looking at an outlay of between £400-600 for an Omega/Rolex level official service, and perhaps double that by the time you get to Philippe Patek territory (in fact think service costs for luxury car marques and you're about thereabouts for watches). And so back to the OP question about investment potential, those service costs are potentially going to eat up any real term value rises, but worse mean that your returns would be in the minus. That's fine if you are buying a watch to enjoy and wear of course, but as an investment for many watches it just wouldn't stack up in my opinion. Now rare/old bottles of whisky on the other hand, and assuming you are not tempted to drink them yourself...

[moorfield]

Captain Koons articulates better than I can the sentimental value that watches passed on from father to son can generate also.

[toofast2live]

I have several watches, purely for enjoyment but as someone has said, beware maintenance costs.

A year or two ago my dear wife brought me a cup of morning tea in bed and knocked a Tudor Hydronaut watch (purchased 2nd hand ten years ago for £500) on to the marble floor by the bedside table.

To get it ticking again and serviced cost, yes, £500!

I did of course complain to Rolex/Tudor that a premium sports watch, proudly advertised for scuba divers, should not stop ticking after a 30cm fall. What if that had been a scuba diver knocking into a rock while using his watch for vital timing information.

Deaf ears wiggled from across the plush service counter....

[JMN2]

I had a range of Rolex watches bought pre-used 4-14 years ago. I recently sold them to a New Bond Street watch-shop. The oldest one made almost 100% return, the more recent ones lost a bit each due to bid-offer spread, net net a slight positive return ie practically borrowed a few nice watches to use at no cost. Should go for Submariner, explorerII and Millgaus, not for Air-Kings.