For rock stars, athletes and tech bros, vintage watches are the new bitcoin
John Mayer’s watch collection is nearly as famous as his guitar work. But are vintage watches really the hot new investment asset they look to be?
As tattooed rockers, tech bros and Instagram influencers pile into the tweedy world of watch collecting, prices for sought-after classics from brands like Rolex, Omega and Patek Philippe are shooting up. In some cases, they have doubled in just a couple of years.
These next-generation collectors see old timepieces not just as a subtly stylish way to dress up a T-shirt and jeans, but also as a hot new asset in their investment portfolios. In a market where stocks, bonds and real estate seem at an unsteady peak, do vintage watches present a bitcoin-in-2017-like growth opportunity? Or are they in a bitcoin-in-2017-like bubble?
Time – elegantly monitored – will tell.
Even though his investment in watches has doubled in value in just 18 months, Peter Goodwin, a private investor in Charlottesville, Virginia, who also collects watches, said he is concerned about frothiness in the vintage market.
“The question is when does it stop?”
“It’s much like momentum investing in stocks,” he said. “People see the rise in Facebook shares, they see Mark Zuckerberg, and they want to ride it up. It is the same with the trendy watches we read about in the auctions – the Paul Newman Rolex, the Omega Speedmasters, some Submariners. You see them rising and you want to jump on.”
“The question,” Goodwin said, “is when does it stop?”
VINTAGE WATCHES ARE HAVING A MOMENT
That is a risk that newcomer watch geeks like Shahien Hendizadeh, a recent business school graduate in Los Angeles, are willing to take.
“Buying a good vintage Rolex is just like purchasing stock in a company like Nestle or Google,” Hendizadeh, 25, said. “It is the quintessential blue chip.”
After taking a face-plant on a long-shot US$2,000 (S$2,722) investment in American Apparel stock, just months before the company declared bankruptcy, he bought a 1982 Rolex Submariner for US$13,000. It has appreciated perhaps US$10,000 in two years, he said.
And in the event of an economic downturn, fine watches may turn out to represent a safe-haven asset, like metals or gems, for investors looking to diversify their portfolios. Or they may just be another of-the-moment asset that 1 percenters, flush with cash, have inflated to unsustainable proportions.
Watch collectors hide in plain sight. John Mayer’s watch collection is nearly as famous as his guitar work. His bank vault contains a vast array of collectables, including sapphire-encrusted gold Rolexes and Luftwaffe watches from World War II, that he has said is valued in the “tens of millions.”
“Vintage watches should show off their age.”
Silicon Valley heavyweights like Kevin Rose, the Digg founder, and Matt Jacobson, Facebook’s employee No. 8, have museum-worthy Rolexes and Patek Philippes, helping to establish a head-turning timepiece as a tech-world style flourish to rival the hoodie.
Ellen DeGeneres wore a holy-grail Paul Newman-model Rolex Daytona from the 1960s, now worth perhaps US$250,000, while bantering with Jerry Seinfeld in an episode of Comedians In Cars Getting Coffee last year. (Adam Levine and Ed Sheeran have been spotted wearing Paul Newmans as well. One also made a cameo on the wrist of Pierre Png’s character in Crazy Rich Asians.)
In professional sports, high-end timepieces have long seemed as indispensable as a shoe contract for stars with seven- and eight-figure incomes. Top athletes including Rafael Nadal, Dwyane Wade and LeBron James have served as celebrity ambassadors for brands like Richard Mille, Hublot and Audemars Piguet.
Star players who have been traded have been known to trade a Rolex to a player on their new team to secure their old jersey number. And in recent years, several have morphed into certifiable watch snobs. Howie Kendrick of the Washington Nationals, for example, counts understated heirlooms, like a 1959 LeCoultre Deep Sea Alarm and a 1960s Breitling Superocean, as key elements of his off-field uniform.
"How could a steel Daytona break US$400,000?"
If you are still 1 percent-ish but would prefer to dabble, there’s good news. The Watch Fund, run by Dominic Khoo, a shareholder and watch specialist with the auction company Antiquorum, offers people a chance to invest in rare and limited-edition watches at prices that can be 50 per cent or more below retail. Those who have bought in have seen at least double-digit returns since the fund’s inception six years ago, Khoo said.
Star power and funds like Khoo’s add credence to the idea that fine watches are a soybean or a copper, another investable commodity. But does that make them a good investment?
What even makes a watch valuable? Consider the bezel insert from a 1957 Rolex Submariner. A bezel insert is the featherweight aluminium disk with numbers on it that surrounds the dial of a diver’s watch.
On Submariners made in the third quarter of 1957, the bezel insert was made with an unusual red triangle at 12 o’clock and slightly different typography on the numerals. Because it is rare, that insert is so sought after by collectors that it can fetch more than US$30,000 these days, said Eric Wind, a dealer of fine vintage watches in Florida, up from maybe US$10,000 just a few years ago.
None of this necessarily makes sense. It is not like a vintage watch is better than a new one. In fact, it is worse in almost every way.
THE VALUE OF HAVING A SOUL
Which is, naturally, why old watches are considered cool: They have patina, provenance, soul. And for a generation of men (and yes, vintage watches seem to be an obsession largely for men, with apologies to Ellen) who value the analog-chic of antique mechanical watches, just like vinyl records and selvage jeans, that is key.
“Investors are not collectors, and collectors are not investors.”
“Vintage watches should show off their age,” said Nelson Murray, a 31-year-old photographer and budding collector in San Francisco. Vintage sport watches, like his Rolex GMT-Master, a classic pilot’s watch from 1980, “evoke a sense of adventure and a kind of dare to add more dings and scratches to them as evidence of a life lived”.
Benjamin Clymer, the founder of the watch site Hodinkee, which has evolved from a one-man watch blog to a market-moving editorial and e-commerce site selling new and vintage watches, has been practising a form of horological arbitrage with his collection for years.
In 2012, for example, he bought a Patek Philippe Nautilus, a triumph of 1970s mod design that conjures images of Concorde flights and fondue parties, for US$18,000. That watch is worth at least US$75,000 today, Clymer, 36, said. That is not his only home run as a watch investor.
“I have a distinct memory of a friend who is now one of the great vintage dealers in the world calling me crazy for spending US$30,000 for an early 1950s Omega Speedmaster,” he said. “The same watch today would be well north of US$100,000.”
With wrist shots flourishing on Instagram and watch sites like Hodinkee, Worn & Wound and Monochrome spreading arcane watch knowledge to the masses, collector demand is spreading beyond behemoth brands like Rolex and Omega to lesser-known makers like Universal Geneve.
One particularly coveted version of that venerable Swiss maker’s Compax chronograph famously graced the wrist of Nina Rindt, the fashionable wife of the 1970s Formula One racer Jochen Rindt. It began trading as high as US$45,000 recently, up from maybe US$2,800 in 2011, although the market has cooled of late, Wind said; the same model might trade for US$20,000 to US$30,000, he added.
“I have never met someone who bought hundreds of watches that he liked, and sold 100 per cent of them for a net absolute gain.”
But no watch has exploded in value like the Paul Newman Daytona. It is an auto racer’s chronograph that once was considered something of an afterthought in the watch world. Joanne Woodward accidentally made it iconic when she bought one for Newman, her gear-head husband, in the late 1960s for about US$250.
Those were the days. After Newman’s own Paul Newman attracted worldwide headlines by selling at auction for US$17.8 million after a mere 12 minutes of bidding in 2017, every Paul Newman suddenly seems to be trading like a Picasso.
A coveted version known as an Oyster Mk 1 “panda” went for more than US$750,000 at a Phillips auction in Geneva this past spring, a figure that shocked Clymer, who once owned that very watch.
“The Oysters are something really special, and go well beyond ticking the box for a rich guy to prove he’s cool,” Clymer said. “I bought this watch in the twos, sold it in the threes, and I thought I was the smartest man in the room. How could a steel Daytona break US$400,000?”
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS
Not every old watch has value. Anyone who scoops up a cheap boxful of half-working Bulovas from the 1950s at a flea market is likely to end up with a cheap boxful of half-working Bulovas from the 1950s.
Already, some sure things, like certain Daytonas, are looking like slightly less than a sure thing.
“The market for Daytona just got a little silly for a while,” Clymer said. “We saw references worth US$20,000, US$25,000 in 2011 to 2015 all of a sudden worth US$50,000, then all of a sudden worth US$80,000. And now those same references are worth US$65,000. That’s still significantly higher than they were, but they’ve come down from the stratosphere.”
During the bear market of 2008 to 2009, too, prices for some high-flying vintage models, including Paul Newmans, dipped by 30 to 40 per cent, said Matthew Bain, a dealer of fine watches in Miami Beach. But, like stocks, they bounced back to new highs.
The rebound may seem intoxicating. But people who think of their watch collection as an alternative to an E-Trade account may be in for a rude surprise when they discover that watches often come with sizeable dealer fees, not to mention substantial outlays for insurance, secure storage and other hidden costs, Khoo said.
“The market for Daytona just got a little silly for a while.”
“Investors are not collectors, and collectors are not investors,” Khoo said. His Watch Fund has a database of “more than 9,000 watch collectors worldwide,” he said, and “I have never met someone who bought hundreds of watches that he liked, and sold 100 per cent of them for a net absolute gain.”
In other words, newcomers to the watch world may want to heed the warning attached to brokerage advertisements on television: Past performance is no guarantee of future results.
Or, they may just want to buy whatever looks cool and leave it at that.
By Alex Williams © 2019 The New York Times