Your Collection vs. Inflation - which wins?

[xpatUSA]

Here in the USA there's quite a bit of gloom and doom about our fine government's fiscal integrity. Assuming that predictions of high to hyper-inflation are correct, we are advised to get out of money and accumulate "hard assets" such as gold, Cambell's soup, bullets, blah di blah.

Under such circumstances, do you think that a wind-up Timex might be of similar value to an expensive high-end collectible watch?

Might a silver dollar be of similar value to a 14K gold watch?

By value, I mean how how many cans of soup it might buy . . .

[walkerwek1958]

Over the past few years, my collection/watch expenditure has beaten inflation by a country mile. I have watches bought 12-15 years ago that are now worth 2-3 times the prices I paid. Even factoring in maintainence costs I`m well ahead. However, everything I own has been bought second hand and I`ve never paid much over the odds to dealers.

Watches have shot up in price over the past 5 years and I expect this trend to level off. In some areas the second hand market is still catching up but again this will level off.

Some of my less fashionable watches are still doing OK.....in Yorkshire parlance 'they're eating nowt'.

Buy the right watches at the right prices and they can still be a reasonable....and highly pleasurable....investment.

Paul

[gentlemenpreferhats]

In an era of hyperinflation I promise you the barter value of your watches will be the least of your worries.

(though I still keep a couple of eco-drives juuuuuuust in case)

[java]

If you buy right. I think you will keep pace . It is quite hard to do better. Especially if. like me, you buy the watches you like.
My grandfather was a great trader and he always used to say to me "never like anything" it will only cost you.

[Neil T]

If you buy right. I think you will keep pace . It is quite hard to do better. Especially if. like me, you buy the watches you like.
My grandfather was a great trader and he always used to say to me "never like anything" it will only cost you.

I see now why you bought all the ugly watches you have.

[Corporalsparrow]

You know it's never occurred to me to check!

I find it very difficult to establish nebulous things like values of vintage watches. So much needs to be born in mind, the most important being condition. And one man's 'mint' is another man's 'restored'.

[Qatar-wol]

I just checked my records, and I found that I I sold a used but new to me Seadweller in May 2008 for £2150. I should have kept that.

(My book also lists the following sales - all used, unless stated.
IWC XV UTC on leather £1310 in 2008
Original run EZM-1 £1100 in 2006
Seiko Landmaster in titanium on bracelet - £250! in 2007

I'll stop there, It's making me cry.)

[James.uk]

i've sold very little and bought nearly everything used... i did buy a brand new SD once for £2440!

[learningtofly]

If you buy right. I think you will keep pace . It is quite hard to do better. Especially if. like me, you buy the watches you like.
My grandfather was a great trader and he always used to say to me "never like anything" it will only cost you.

He should have said "Never love anyone..."

The wrong watches at the wrong price are obviously going to be a money hole. Collectible (especially vintage) pieces will generally hold their own but nothing's certain and I suspect the WIS community is getting ever-smaller.

[James.uk]

i would have thought it was getting bigger..... far more men are interested in watches, and surely even if they are 'fashion watches' there must be an aspirational effect long term?

[TakesALickin]

Hard assets are the only fixed currency* in an economy that relies on money backed by governmental credit. Your watches retain their value relative to a fluctuating dollar, or pound, or Euro. Consequently, your watches don't fluctuate much in value, but your money can fluctuate quite a bit. The price of the watches can appear to have gone up, when what has happened in actuality is that the value of your money has gone down.

*I should clarify this. These fixed assets are still subject to the laws of supply and demand, and their true value can move based on those factors.

[jwg663]

He should have said "Never love anyone..."

The wrong watches at the wrong price are obviously going to be a money hole. Collectible (especially vintage) pieces will generally hold their own but nothing's certain and I suspect the WIS community is getting ever-smaller.

From the continued comments about SC, I suspect the watch buying community may be shrinking, especially in the over £2k area, but the
watch-watching () community is increasing, as reflected in the membership numbers of this forum.

As regards my modest collection; I have no idea whether they outstrip inflation or not. I have them to wear & enjoy. When (or if) I have
to dispose of any of them, then I'll find out.

Incidentally, Mrs. jwg663's store cupboard would cope with almost any eventuality, with the possible exception of a nuclear winter.
I don't know what she'd do when the tonic water runs out, though. She must have Schweppes in her Tanqueray.

[learningtofly]

i would have thought it was getting bigger..... far more men are interested in watches, and surely even if they are 'fashion watches' there must be an aspirational effect long term?

I don't think so, James, when every successive generation sees less use for a watch to tell the time. I fear we'll soon be an anachronism, like the watchmakers themselves!

[James.uk]

I'm not sure telling the time has much to do with it.

[java]

He should have said "Never love anyone..."

He probably meant that too. His other favorite saying, whenever he bought anything was "Don't tell your Gran, she'll want a new hat. "

[java]

I don't think so, James, when every successive generation sees less use for a watch to tell the time. I fear we'll soon be an anachronism, like the watchmakers themselves!

What do you mean soon. We are already an anachronism and have been for years.

[bigbaddes]

i have tried Campbells, what calibre do you normally shoot?

best at about 200 yards with open sights ruger .416 would be my choice!

[seffrican]

I don't know what she'd do when the tonic water runs out, though. She must have Schweppes in her Tanqueray.

Tanqueray really deserves Fevertree. Schweppes is OK for for the likes of Gordons, though.

I suspect gin will be a more easily convertible currency than watches when nuclear winter hits though.

[mindforge]

A watch is worth what any given buyer is prepared to pay for it at any given time - so how would you value a collection to check whether it has beat inflation/gained in value?

[Swissz]

Interesting read:

http://money.cnn.com/2008/04/08/life...tune/index.htm

http://www.cnbc.com/id/39342291/Vint...Time_And_Again

[xpatUSA]

A watch is worth what any given buyer is prepared to pay for it at any given time - so how would you value a collection to check whether it has beat inflation/gained in value?

The OP said "Assuming that predictions of high to hyper-inflation are correct, we are advised to get out of money and accumulate "hard assets" such as gold, Cambell's soup, bullets, blah di blah.

Under such circumstances . . ."

So, with paper money worthless, your collection is valued against things that you need to survive. So the liquidity of your trade goods comes into question. So, if I walk into a grocery store in search of Campbell's soup, which might the counter clerk favor - my proffered 0.999 pure silver dollar or my Patek Phillipe multi-jeweled wonder?

In other words, the valuation of your collection would be affected by liquidity, cuz if nobody wants a high-end watch in hard times your collection has zero value until life improves a bit and knowing the time of day regains some merit.

In the interim, while our fearless governments are printing money as hard as they can go, watches beat dollars anytime, IMHO :-)

[petespendthrift]

The last few years have definitely seen some changes in what our money can buy. Cost of living is definitely higher but it is not consistent across the board. I find property, cars and technology (computers, phones etc.) to have risen by a fairly small amount relative to my income. Food is a bit more expensive as well but luxury goods have pretty much doubled in price or more. Previously my wife used to buy big name handbags and shoes on a fairly regular basis and I used to buy a few nice watches. These items were not insignificant purchases but did not seem like a crazy amount of money to spend on a luxury item. These days we would not dream of spending the kind of money being asked for the same items even though we now both earn more than we did previously. The prices just seem so utterly outlandish and over the top that I barely even look. They are so far outside what we would want to pay that they would bring us no pleasure and the interest and desire for them is pretty much completely gone.

I think a lot of this is to do with the sales strategies of the luxury good manufacturers rather than the economy. If you ask 150% of what someone is comfortable paying and create desire people will buy but if you ask 300% of what they are comfortable with then people will write off the potential purchase as never going to happen and swiftly loose interest. I think middle income earners like my wife and me have been deliberately written off in a strategy that aims to ensure lower volume of sales combined with higher margins.

Many people say that the luxury brands are concentrating on growth areas such as Asia and Russia where people will pay almost anything to own aspirational goods but in fact there are no firewalls in a world economy and their growth is also slowing. Are we seeing the peak before the trough in luxury goods? The boom before the bust?

Inflation is measured across a wide range of goods associated with living costs. Luxury goods have risen well above inflation. The 'boom strategy' has caused watches that I previously bought in 2007/8 to now be worth considerably more than they originally cost but I think we have peaked and those who buy now will be buying at the top and residual values for watches bought in late 2010/11/12 will result in a loss. Further to that, if we do have another significant economic downturn I would imagine that many second hand luxury goods will appear for sale and supply will far exceed demand.

[markrlondon]

Are we seeing the peak before the trough in luxury goods? The boom before the bust?

It seems that this must happen eventually. The boom cannot go on forever. But when will the bust come? I wish I could tell. And does it need to be a bust or merely a slowing down. Or will what might otherwise be a slowing down actually precipitate a bust.

It would be great to be able to predict this sort of thing. ;-)

[robcat]

It seems that this must happen eventually. The boom cannot go on forever. But when will the bust come? I wish I could tell. And does it need to be a bust or merely a slowing down. Or will what might otherwise be a slwoing down actually precipitate a bust.

It would be great to be able to predict this sort of thing. ;-)

Exactly!

There's no doubt there's been bubble-like behaviour in the watch market. There's no doubt that prices can't continue at the same rate as the last 5-10 years, the question is whether we're going to have a "hard" or "soft" landing. I hope it will be the latter - prices will stop rising but level off. It would take a worldwide (not just EU/US) economic crisis to kill demand completely - then prices might crash.

The other point I always make in these discussions is that not all brands have been able to increase their prices as much as Rolex and PP. Consider than total inflation between 2000 and 2012 can be calculated at approx 40% for the period.

Portuguese Chrono SS (unchanged in that time IIRC)
1999 3275
2003 3670
2012 5500 (less than double in 13 years)

Aquatimer SS bracelet (updated twice since 1999)
1999 2525
2003 2530 (same version as 1999)
2012 4150

Big Pilot
2003 7100
2012 10500 (price increased a couple of times recently).

JLC Master Geographic SS strap
2003 5085
2012 8050 (essentially the same model)

JLC Ultra Thin SS Strap
2003 2795
2012 4650

Also I've got some old WOS magazines from around the same time.

AP Royal Oak Chrono
2003 9100
2012 16400 (slightly different model)

AP ROO Chrono rubber bezel
2003 9970
2012 18000

Clearly JLC and IWC haven't even managed to double their prices since 1999. Compare this with a Sub Date, which was about £2100 in 1999, Rolex have nearly tripled their prices in the same time. AP similarly haven't made as much progress as Rolex.

[Dave+63]

You'll probably all hate me for saying this but I can't wait for the day when prices crash by at least 50%. It'll probably never happen but would put a number of watches that I like but could never justify on price grounds back in to the market for me.

It's not just Rolex, Omega PP, AP etc but even Tag Heuers at over four grand (or five grand in the case of monacos) is ridiculous money for the stainless steel models.

[ach5]

The only two watches I have that have definitely gone up in value way above inflation are my two keepers.

Every other watch I have bought at either over the odds (because I just HAD to have it) or sold at a loss. Havent lost big money, but it all adds up!

[Gentlemanjim]

Interesting read:

http://money.cnn.com/2008/04/08/life...tune/index.htm

http://www.cnbc.com/id/39342291/Vint...Time_And_Again

Thanks for these links, one quote says a lot: Castellini started considering watches a serious alternative ................., targeting undervalued models.

Quite, but how is one to determine what is undervalued without the benefit of hindsight.

Best to buy what you like and if it rises in value then whoopee, you`ve won twice, enjoyment and value.

But I agree with the sentiments of the OP, if governments debase their/our currency by printing as and when, then convert it into something with more lasting value, so which is it to be, Campbells soup or a watch?

[Fords]

we (uk) are on the verge of an economic backlash regarding inflation from good old uncle Sam, inflation is increasing week by week, which is fine if you can afford it, it's left people in real poverty, but very slowly it's leaving middle income earners high and dry increasingly turning to there credit cards for a buffer, which only lengthens the slow strangulation of ready's available, the number of high class pawn brokers is increasing with loan's on item's from hundreds to millions, kind of eases the humiliation when the pawn brokers is not for the poor, we hock stuff, where as the wealthy release/liquidate asset's. god help the frank Muller in the window in the pawn brokers in Manchester i have a feeling it will be there for some time.

[markrlondon]

It would take a worldwide (not just EU/US) economic crisis to kill demand completely - then prices might crash.

My impression is that this could still happen. It might taske some sort of sudden(ish) outside event to prompt it but the ingredients seem to be there.