Buying a Watch as an Asset: An Honest Accounting

I sell watches for a living, which makes me exactly the wrong person to ask and exactly the right person to answer. Here is the arithmetic, without the marketing.

Someone asks me this most weeks. Usually it is phrased carefully — not "is this a good investment" but "does it hold its value?" — and what they actually want is permission.

I could give it. It would be commercially convenient and it is what a great many people in this industry do. Instead, here is the honest accounting, and you can decide what to do with it.

The short version

Watches are a poor financial asset and a very good place to put money you were going to spend anyway. Those are different statements and the distinction is the whole article.

Why the maths is against you

1. The spread

The dominant cost, and the one that makes everything else academic.

You buy at retail. You sell at wholesale. That gap — commonly twenty to twenty-five per cent on a modern reference — is paid the instant you take ownership.

Which means a watch must appreciate by roughly twenty-five per cent before you break even on a sale. Not before you profit — before you get your money back. That is a substantial hurdle before any other cost enters the picture, and it applies to every transaction, every time.

2. There is no yield

A watch produces no income. It pays no dividend, earns no interest, generates no rent. All return must come from price appreciation, which means the asset must beat inflation before it has done anything for you at all.

3. The carry is negative

Insurance and service are ongoing costs. A watch you own for a decade will cost you something in the region of one to two thousand dollars a year to hold, before any change in value — I have itemised it in the real cost of ownership.

Compare with a security: you are holding an asset that produces nothing and charges you rent for the privilege.

4. Liquidity is poor and worst when you need it

Selling a watch quickly means accepting the wholesale number. Selling at close to retail means waiting weeks or months for the right buyer.

And liquidity is correlated with the conditions in which you would need it. In a downturn, when discretionary spending contracts, the market for five-figure watches thins precisely when you might want to sell. This is the opposite of what you want from an asset held for security.

5. Condition risk sits entirely with you

An index fund cannot be scratched. A watch can be dropped, over-polished at service, lost, or stolen. Every one of those is a permanent value event and every one is your problem — see overpolishing for the most insidious of them.

6. Tax treatment is generally unfavourable

In many jurisdictions, collectibles are taxed on gains at rates less favourable than those applying to securities. Rules vary considerably and change; if this matters to your situation, speak to an accountant rather than to a watch dealer.

A watch must appreciate by roughly a quarter before you get your money back. That is the hurdle before any other cost enters the picture.

What about the ones that went up?

The fair objection. Certain references appreciated dramatically. That happened, it is documented, and it made some people money.

Three things about it.

It was concentrated. A small number of references from a small number of houses. The overwhelming majority of watches sold during that period did not appreciate, and their owners are not the ones writing about it. This is survivorship bias operating at full strength.

It was a liquidity event, not a property of watches. Very low rates, restricted spending, and a new wealth cohort arrived simultaneously and concentrated on a handful of scarce references. When those conditions reversed, so did much of the appreciation. I have set out the mechanics in why the premiums compressed.

The people who profited mostly could not have repeated it. Most did not buy with a thesis. They bought a watch they wanted, at a moment that turned out to be favourable, and were pleased. That is luck experienced as skill, and it is not a strategy.

The narrow cases where the maths does work

Being fair to the other side, there are situations where it genuinely functions. All of them are narrow and all require expertise rather than optimism.

Buying meaningfully below market

If you can consistently acquire at wholesale rather than retail, you have eliminated the largest cost. This is what dealers do, it is why we exist, and it requires access, capital, and the ability to authenticate and assess condition reliably. It is a job, not an investment strategy.

Genuinely scarce independent watchmaking

Output measured in dozens per year, with demand vastly exceeding it. Scarcity here is structural rather than manufactured, and the market behaves differently. But access is the binding constraint — the people who can buy at retail are the ones who already have relationships, and by the time a piece reaches the open market the appreciation has happened.

Vintage with documented provenance

The genuinely rare — original condition, verifiable history, significant reference. This market has behaved well over long periods. It also requires deep expertise, is riddled with misrepresented pieces, and rewards decades of holding rather than years.

Arbitrage across markets

Real, and it is largely how the trade functions. It requires infrastructure, capital and tolerance for risk. It is not something to do with one watch.

Notice what these have in common: each is a professional activity requiring specific expertise. None describes a person buying one watch and hoping.

The reframe that actually works

Here is how I would think about it, and it is the framing I use with clients who ask.

You have money you were going to spend on something enjoyable. Consider the alternatives.

Judged as an investment, a watch is poor. Judged as consumption, it is close to the best available — one of the very few discretionary purchases that returns most of its cost when you are finished with it.

That is the honest case. Not "it will make you money," but "it is a remarkably cheap way to own something you love for a decade."

If you are going to buy anyway

Some things reliably improve the outcome, and none of them require predicting anything:

1. Buy pre-owned. Someone else has already paid the largest part of the spread. This single decision does more for your economics than any reference selection.
2. Buy the best condition you can afford, and verify it properly. Condition differences widen over time and are what determine your exit. Grade it per component.
3. Buy at the real market price. Overpaying at purchase is a loss you have already taken. Work from sold comps, not asks.
4. Keep everything. Box, papers, links, receipts, service records. It costs nothing and widens your buyer pool later.
5. Do not polish it. Ever, unless you have decided consciously that you want to.
6. Hold it. Transaction costs dominate. Churn is what makes this expensive, not the watches.
7. Buy what you actually want to wear. The only genuinely reliable return here is the wearing. Optimise for that and the economics look after themselves; optimise for the economics and you will end up owning something you do not enjoy that also did not appreciate.

Why I am telling you this

Because the alternative is a client who buys on an expectation I encouraged, discovers in four years that it was wrong, and is right to be angry about it. I would rather sell you a watch you wanted for what it is.

And because if you take nothing else from this site, take this: the person selling you the watch should be willing to tell you the unflattering version. That is the test, and it applies to everyone including me.

This article is general commentary and education about the watch market. It is not investment, tax, or financial advice, and nothing here is a recommendation to buy, hold or sell any asset. Speak to a licensed professional about your own circumstances.