Paul Boutros fell in love with watches as a child in the 1980s, after a magical visit with his father to the Wempe boutique on Fifth Avenue in New York. “I would look at my dad’s New York Times and Wall Street Journal,” he said. “Then I would call the numbers listed for the brands that were advertising.
“So here’s a 10-year-old kid contacting Audemars Piguet and Patek Philippe, requesting catalogs, just trying to learn as much as I could.”
Over time, Boutros — now deputy chairman and head of watches for the Americas at Phillips auction house — built a watch collection with his father. Years later, after his dad’s death, he retrieved the safe-deposit box where that collection was stored.
“I was overwhelmed with emotion,” he said, “realizing they were the source of my happiest memories with him.”
These days, collecting luxury watches is more popular than ever, both as a passion and an investment. Thanks to smartphones, no one needs to wear a watch anymore; and yet interest continues to surge, particularly among high-net-worth individuals who have come to view watches as another asset class.
“We steer clear of calling watches an investment,” said Boutros, “because watches can go up or down in value.”
But for those who derive pleasure from collecting unique timepieces, there are smart ways to make sure the value is commensurate with the enjoyment.
“I see watches as a store of value, like money you put away over the long term,” said Amin Majidi, owner of Parthian Watch Co., an independent vintage-watch dealer. “But the only two drivers I can think of are scarcity and desirability.”
Enduring appeal
The history of wristwatches traces its roots to the mid-1800s, when they were worn almost exclusively by women as jewelry. Men mostly sported pocket watches until the later years of the 19th century, when some in the military began strapping them to their wrists to help synchronize maneuvers during combat.
In 1905, Hans Wildorf co-founded a wristwatch manufacturer, later named Rolex. World War I helped usher men’s watches into the mainstream. The coming decades were the boom years for wristwatches until the “quartz crisis” of the 1970s, when cheap, accurate, battery-powered quartz watches put many makers of mechanical watches out of business.
In an era where virtually everything is electronic, there’s something enduring and romantic about a machine that requires the owner’s input. “It’s comprised of gears, springs and levers; and if you wind it, it’s going to do its job beautifully,” said Boutros. “I often say to people, there’s no other object made by man that can approach perfection in terms of human craftsmanship like a very fine mechanical watch.”
Now, automatic and mechanical (self-winding) watches garner the bulk of interest from collectors. In our hypertechnological age, no one needs a watch, much less heirloom-quality timepieces that in some cases are handmade. But that may explain why interest in these marvels of engineering has surged.
“It’s mechanical, it makes a ticking sound,” said Majidi. “You feel the winding of the oscillating weight. It runs out of power, and you have to wind it. It’s almost like a living creature on your wrist. Also, for a lot of men, it’s their only piece of jewelry.”
Watches as part of a portfolio
The 2017 sale at auction of Paul Newman’s 1968 Rolex Daytona for $17.8 million marked the beginning of the modern collector’s era. The Newman purchase helped raise awareness about the investment potential of watches, said Boutros, for whom the sale represented the first auction he led at Phillips.
“Our advice is always: Buy watches because you love them. If they go up, you consider that a great bonus,” he said. “If they go down in value, hey, at least you have something that you love, and it will still have a significant percentage of its original value.”
When considering watches as an asset class, it’s worth thinking about what percentage they should represent in a diversified investment portfolio.
“There’s no right or wrong answer, because part of it depends on the net worth of the individual and their liquidity needs,” said Thomas Ruggie, founder and CEO of Destiny Family Office, a central Florida-based multifamily office. “However, most people who are collectors fall in the range of somewhere between 10 and 20 percent of their assets.”
Parthian Watch’s Majidi frames a well-curated watch collection as a core asset that can be passed on as generational wealth.
“I have one client who thinks of it exactly that way,” he said. “He is a successful guy in a financial company that sold to a big bank. So he’s retired at an early age, and he keeps track of his watch collection side by side with his assets portfolio. He looks at it as a cash substitute with low volatility that he is accumulating to pass on to his grandchildren.”
With future value in mind, Phillips’ Boutros recommends buying watches that have a following and are desired by people with all sizes of wrists and a style that appeals to people from all kinds of cultures. An example he cites is the Patek Philippe 5970, made from 2004 to 2010, a perpetual calendar with chronograph.
“That is a watch that is 40mm; it is well-proportioned; and it has a timeless look because its design architecture is based on the original from 1941, the first perpetual-calendar chronograph. They didn’t change the design.”
In 2004, the 5970 listed in the Patek Philippe catalog with an $89,600 MSRP; that same year, New York magazine wondered, “Can a watch really be worth $89,600?”
Today, examples retail for around $230,000 on watch collector sites such as Chrono24.
While most watch-collecting journeys begin with new watches, most serious collectors eventually are drawn to upper-end ones from previous eras. At Phillips, Boutros said, any watch made before 1985 is considered vintage. “That’s when computer-aided design and computer-controlled machinery came into the production of watches,” he said.
Destiny’s Ruggie, however, cautions investors from convincing themselves that collecting rare watches, even knowledgeably, is equivalent to stock-picking or buying bitcoin.
“Cryptocurrency has a created a lot of wealth, in particular for some of the younger generation,” he said. “Those same people have a mindset of ‘Hey, I want something tangible I can invest in, that is going to go up in value very quickly.’ That’s just not always going to be the case.”
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