A Deeper Dive: What’s the best watch to “invest” in?
While watches shouldn't be viewed as investments in the traditional sense, watches from certain price categories are more resilient to market fluctuations than others.
The Rolex Submariner ref. 114060. Rolex is the gold standard among watches with high liquidity. Credit to Hodinkee.
When making any significant purchase, it’s important to consider whether “it” is truly worth your money. Some expenses, like food and housing, are easy to justify, regardless of cost, because they fulfill essential needs. Others, like a new tennis racket or video game, might not be vital but at least are relatively affordable. Even certain luxuries such as a car or a treadmill, though also non-essential and expensive, distinguish themselves in that they demonstratably improve one’s quality of life.
But what about luxury watches? They are fundamentally non-essential and borderline archaic in the age of the Apple Watch. Most people aren’t inclined to wear the equivalent of a few months' salary on their wrist every day. And then there’s the hefty price tag that often accompanies them. So then, where do watches fit into peoples’ lives?
Ultimately, a nice watch should only be something you buy because it brings you joy. In a world where even a calculator offers more precise timekeeping than a chronometer, it is clear that people remain drawn to wristwatches for a variety of other reasons. Some appreciate the artistry and craftsmanship of a mechanical watch, while others treasure it for the commemoration of a milestone, or as a gift passed down from a cherished family member. To be honest, even someone with no understanding of a watch's mechanics can appreciate and find joy in the satisfying crunch of a well-constructed manual wind movement.
However, there is a wrong reason to buy a watch. A common justification I have heard from prospective buyers over the years is the belief that their purchase will be "an investment." These individuals believe that if they can find, select, and hold onto a watch at just the right moment, it will retain or even appreciate in value, making it a savvy financial decision. This is not necessarily false, since many Rolex models today still trade on the grey market above their retail price, so if you manage to find one at an authorized dealer it is still usually a worthwhile purchase.
Sometimes, the true value of a watch lies more in its emotional significance than in its monetary worth. Omega ref. 2802. Credit to Hodinkee.
But the truth is, watches are not true investments. Unlike traditional asset classes, watches lack the realistic growth potential and are far too risky for the average investor. Stocks increase in shareholder value and can pay out dividends; bonds offer guaranteed coupon payments and tend to be lower risk; and real estate steadily appreciates due to increasing demand and its relatively inelastic price. Secondhand luxury watches, while a unique asset class with the potential for high-yields, are very complicated and risky compared to these conventional investments.
Furthermore, the novelty and volatility of the secondhand watch market in recent years has meant that even the most popular Rolex models have begun to decline in value (granted, they’re still trading above their sticker prices). So what’s going on? Shouldn’t they hold their value?
Do luxury watches hold their value?
In short, I wouldn’t count on it.
First, 99% of watches lose value as soon as they leave the store, much like a new car depreciates the moment it's driven off the lot. Second, predicting which watches will "beat the market" (in other words, trying to find the next Paul Newman Daytona) is practically impossible. Lastly, trends in the watch world change rapidly and, on occasion, seemingly randomly. It's challenging to understand why some trends catch on and others don't, let alone predict what the future holds.
Watch prices peaked in early 2022, before declining rapidly over the next six months.
This unpredictability is evident in the decline of the secondary watch market. The WatchCharts Overall Market Index, which tracks 60 of the most popular watches from the top 10 luxury brands, has dropped to $62,091 as of this writing, down from a peak of $100,138 in early 2022. This 38% decline in just over two years means many who bought watches during that period have seen their timepieces' value plummet.
Before the COVID pandemic, it was generally accepted that most watches purchased at retail prices would depreciate, while watches purchased already pre-owned were more or less immune to large fluctuations in the second-hand market. This is no longer the case, with prices for even the most popular Rolex and Patek Phillipe models still in double-digit free fall.
Why it matters — and why it doesn’t
Fortunately, most people don’t (or at least shouldn’t) buy watches for their potential to hold value. Like any speculative purchase, you should be prepared to lose your money. Obsessing over whether a watch is a “good investment” will detract from the joy of collecting. The true value of a watch should lie primarily in its emotional significance, not its monetary worth.
A good question to ask yourself is, if the watch were worth nothing, would you still want to wear it?
That said, it is wise to be aware of (remember: not obsessive over) a watch’s monetary value. After all, you never know when you might need quick cash for an emergency—or a future watch acquisition. Key factors to consider include market value, liquidity, popularity, condition, and whether the watch comes with its original accessories. One of the most difficult factors to predict is depreciation risk, which is especially relevant for collectors looking to hold watches long-term.
The newly released Grand Seiko SLGW003. Will it keep its value? Credit to Worn & Wound.
Which watches maintain their value best?
While we can’t predict the future, we can analyze past data to better understand how watch prices have changed in the past couple years. According to the WatchCharts Price Range Index, watches priced between $10,000 and $20,000 on the secondary market have demonstrated the most stability over the past year. Watches in the broader $1,000 to $20,000 range also performed relatively well. In contrast, the least stable categories were those at both ends of the spectrum—watches priced under $1,000 and those over $20,000.
The data generally suggest that luxury watch prices tend to remain stable up to the $20,000 mark, beyond which they become more volatile and riskier to own. These macro trends have greater implications for businesses operating in the second-hand watch market, where understanding these patterns is critical. It also highlights the types of watches consumers are interested in and the broader market trends.
Here’s another way to look at it. If you had purchased a Rolex Datejust ref. 126334 at market price (around $13k) last year, it would have lost only 1.9% of its value as of today. On the other hand, if you had bought a Rolex Daytona “Panda” ref. 116500LN—one of the most coveted watches in the world—at a substantial $31k, you would have lost 7.0% year-to-date.
So the next time you're considering buying a watch, imagine it losing half of its value in one or two years time. Would you still want to buy it? Ultimately, beyond market prices and online opinions, you need to ask yourself: How much is it really worth to me?
