I am thinking of buying an audemars piguet royal oak, the “entry” model costs around 25k.
I like swiss watches a lot , but also see it as an investment. It can take years to get one, and one could usually sell it for more than what it costs.
What do you guys think?
Good idea? Or rather invest the money into the stock market?
Disclaimer: I’m not learned in the ways of collectibles and others will have better insight for this specific item than I do.
My stance with regards to art and collectibles is that only people with enough knowledge of their market can consider them as investments. On top of that, to be considered an investment, the watch would need to be insured (it can be stolen or lost), either as part of insurances one would have taken anyway (houshold, for example), or on its own for risks that wouldn’t be covered by it.
For a 25K current value watch, I’d personally write it as an expense with emotional value (something that could remain in the family, being gifted from parents to children). If that value is enough to you to warrant the purchase, then by all means, go for it. If it isn’t, I would abstain.
It wouldn’t change much in regards to computing my net worth for FIRE purposes: if I were to consider such a watch as part of my investment porfolio, that’d mean I would either be willing to sell it, or consider it solely as a “gifted upon death” part of my investments.
If you’re willing to sell it for a profit, and know how to actually make that profit, then that would be an investment. Otherwise, I’d account for it as “gifted at death”, which means it wouldn’t increase your own financial independance and, frankly, be part of a part of wealth where a 30K difference shouldn’t move the needle much, unless you are at risk of it reaching zero (and you having to sell the watch anyway).
Edit: to put things into perspective: people regularly and without much of a second thought put out a 20-30K premium to get the car that fits their perceived status (or level of comfort) versus one that would reliably get them from point A to point B. I would consider this purchase on the same level than this (which is beyond the things I would personnaly do), with notably less exposure to depreciation and more chances at asset appreciation. In short: it wouldn’t make me more financially independent but may increase my enjoyment level of my current life, in which aspect it could be worth it (or not. It wouldn’t, for me).
A mechanical watch should always be treated what it is - jewelery that tells time. Buy it because you want it, never as investment. I admit, I dislike the AP RO design, an 70s design with angles, integrated and boring, even if extremly well made. It’s a one-trick brand that rides the success of instagram pumping the model into ‘cult’ status for some unknown reason in recent years. The symbol of ‘success’, ugh. The type of people bragging with an AP are fickle and likely to move on to another brand, model, refference. Big risk of AP overplaying the RO with 120+ models currently available and nothing else, unlike Patek, VC and ALS they compete with.
Generally the whole luxury watch industry is on a downward pricing trend, sure some desired references are still above retail but they too are declining. Buying from a boutique new, good luck getting a desired size - oh no sir, 41mm is out, but we have this lovely 37mm with diamond bezel for you! - material and dial combination as first time buyer without connection or history. If you can buy the desired references for retail, sure. You likely wont, though. See Chrono24’s chronopulse index declining, watch individual reference prices. In a declining market actual sale prices on these sites are lower than what they are asking for, too. That shouldn’t matter if you buy to own and wear, because you want it.
Are you comfortable wearing a 25-30k watch on your wrist? Or just to lock it away in a (p)leather box and look at? Same as 1k shoes, are they for display or too expensive for you to actually use? These are questions you should answer for yourself. It should never be an investment other than into your happiness. Buying watches for display, flipping or hoping for price rise - those times are thankfully mostly over for this cycle.
If buying for a flip, as much as I despise the practice, it doesnt concern me so sure you can make a buck. Noone knows the future, the new AP CEO might pull a Patek 5711 and discontinue SS models, and go with precious metals only, making the entry price at 40-50k for men sizes. If that does happen, expect the price of 41mm SS models to go 60-80+% on secondary markets.
Edit: 1000% this ^^
Better to donate the money to some charity, instead of donating them to a Private Equity fund.
Others have given their view on the investment angle. I wonder if you can actually manage to get on a wait list for a steel RO at all, which I highly doubt.
Thanks for all your comments.
I am aiming at the 41mm steel version, whose price on the secondary market is still like 10k above the initial purchase price. At least according to Watchchart.
It can take multiple years to get one fresh from AP. Guess I wont be able to resist should that really happen.
Collectibles, like just about every other market, ride on demand. So to understand these kinds of tangible investments, you have to take a close look at the driving factors behind demand.
Some factors that contribute to demand for collectibles:
- Primary marketing (A company actively markets the item).
- Secondary marketing (An interest group, such as a group of merchants or collectors, actively markets the item).
- Trends (Cultural and/or technological developments create a short- to mid-term demand).
- Cultural significance (the item has significance or sentimental value in society).
- Technology loss (The technology needed to produce or reproduce an item no longer exists due to failed knowledge transfer. This could be the case if, for example, a watchmaker fails to find apprentices. It could also be the case if).
- Manufacturer dissapearance (the item can no longer be produced profitably, or cultural or political changes make its manufacture unsustainable).
All but the last two criteria represent artificial demand. While artificial demand is certainly your friend as a collector as long as it lasts, it is difficult or impossible to predict how it will develop in the future because it is dependent on the input of energy.
The last two criteria are non-artificial. In my opinion, the most important criteria in determining the potential future value of investments are cultural significance (which creates a long-term market), technology loss, and manufacturer dissapearance.
You also have to take into account the supply side. In the past people bought watches, bags and sneakers to wear them. Today people line up to buy these items and store them in a mint condition in their cellar.
You have to wonder where the prices will go when all these people decide to sell.