Saturday, July 20, 2019

Watches do not make good investments

If you bought an expensive watch thinking that it is a great investment, you probably have been duped. This is because not all watches can appreciate in price. Rolex is probably the only brand that has consistently appreciated in price over the past five years and can appreciate over the next five years. This is because of the brand has been great at marketing, stimulating demand for its watches. At the same time, it has controlled the supply and distribution of its watches. For example, you cannot walk into any authorised dealer and buy a popular, stainless steel model. Unless you are a foreign tourist, you probably need to have a big book of business with the authorised dealer to get your hands on that popular model (with a slight discount) and flip it. 

Then again, what is your actual return on "investment"? Say you buy a popular stainless steel model, such as the Submariner, at USD8,000. But before that, you had to buy 3-4 pieces of Rolex in precious metals, making your outlay at 4 x USD10,000 plus USD 8K, USD48,000. When you eventually sell the Submariner at USD10,000, did you really make a 20% ROI? Other issues that will eat away your ROI are servicing costs, seller's commissioning, import/export taxes, etc. 

Moral of the story, you want a good investment, buy stocks. If you want people to know you have plenty of money on your wrist, buy a luxury watch.

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