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Smart Ways to Buy And Pitfalls of Investing in High End Watches

Contributed By: Edvin Ovasapyan

Born in Armenia and raised in Southern California, Edvin Ovasapyan is an investor, entrepreneur, and a consummate financial strategist. His studies began in accounting and pivoted to the pharmaceutical industry, where he remained for the over two decades. Edvin’s passion for cars and complicated timepieces developed when he was in his mid-twenties, and has flourished turning him into a sophisticated collector.

When he is not scouring the globe for his next acquisition of a business, a rare vehicle or a watch, Edvin is a diehard Real Madrid fan, cycling enthusiast, and most importantly, a very proud father to his two adorable children.

To many, investing in time pieces might seem like the perfect win-win situation. In theory, it allows for the purchase of a highly sought-after luxury item, the pleasure of owning and wearing such expressions of artisanship, and the possible profits when the item is re-sold on the secondary market. What’s more, investing in a time piece can be an investment in one’s self esteem, something to pass down to your children or other family members, or an addition to a well-cared for and curated collection. 

And we’ve seen how the time piece market has boomed in the last few years, fueled by limited production due to the pandemic, shifts in style and changes in patterns of luxury spending. Auction houses are continually breaking records, particularly with vintage pieces, some going for six figures. However, as profit when re-selling is not always guaranteed, investors must be savvy to ensure they don’t succumb to the many pitfalls of investing in high end watches. Here’s what you can do to avoid some of the bigger risks and mitigate exposure to market fluctuations. 

Investing in Yourself

It might be easy to forget, in a world where flipping luxury and highly-sought after goods such as sneakers is so commonplace, that these purchases can be solely for pleasure, too. If you are daunted by the prospect of re-selling, or are in the market for a new high end watch just for passion’s sake, there are some things you can do to maximize potential returns should you wish to part with it one day.

The first is to always be selective. Some might tell you to start with a certain brand or a niche market segment, or beeline for names such as Rolex or Patek Philippe, but if you are buying for pleasure, you should pick what you like. This serves the double purpose of you being satisfied with your purchase, whilst also passively increasing the value of less popular brands. The power of this mustn’t be underestimated and an unsuspecting underdog may surprise you in years to come. 

The second crucial piece of advice is to buy early. Provided you have the capital, don’t wait to see if others purchase or if it gains popularity: snap it up at market value to boost your chances of profit at resale.  

Purchasing For the Purpose of Selling or Trading

Although there is absolute legitimacy in purchasing watches to simply enjoy and wear, many have decided – particularly given the recent boom in profitability – to purchase a horological instrument and use it as a commodity to trade or sell on the auction market. 

If you do decide that you want to venture into this sphere, you will need to keep a keen eye on the market to see what is popular and trending, and snatch those models up as close to retail value as possible. Interestingly, the unlikely boom of the market for vintage and pre-owned watches during the start of the COVID-19 pandemic has largely been attributed to people having more free time to research the market and get to know what might be popular. With this increasing competition against other self-made watch experts in mind, forums such as Rolex Forums, Chrono24, eBay and TimeZone will be your best friend. Look at which pieces are selling and where, the asking prices and actual sale value. Staying ahead of the curve and avoiding inflated prices will allow you to make the most out of your purchase. 

If this is your first time entering this market, some other things to look out for include pre-owned and limited edition time pieces and watches with small production numbers or an interesting origin story or previous owner, as scarcity and exclusivity more often than not equate to value. You should also look to prioritize quality over quantity when building a collection, take excellent care of it and be patient when on the hunt for new pieces. Finally, quirks such as manufacturing errors should not always be a red flag. Consider the Rolex Daytona 16520, whose ‘Inverted 6’ on a small batch rendered it highly desirable, for example! 

Best Secondary Market

When it comes to re-selling your timepiece, the best platform to optimize your gains will be a respected auction market, rather than your traditional secondary watch dealer. This is because being in direct competition with other end users will drive prices and enhance your gains. You will also be able to gauge prices and see real time demand on your watch, rather than rely on what your dealer is telling you.  

When using these marketplaces, make sure to bide your time and not be put off by low-ball offers, and always factor in fees so you aren’t disappointed with your take-home profit.

Avoid Hidden Risks

As with any investment, there is capital at risk. But there are certain perils specific to the time piece market that you should be aware of, too. As mentioned, the pre-owned market is booming and is a great place to start for those with lower budgets. However, the risk of counterfeit or stolen goods or watches in poor condition is high. 

There is also a phenomenon of ‘Frankenwatches’, which are a low value combination of a number of different watches, pieced together like Frankenstein’s monster.  Needless to say, there is a distinct difference between desirable manufacturing quirks and damaged or fake goods! Protect yourself by obtaining the relevant paperwork, where you can, and doing your due diligence before purchasing. 

Above all, enjoy yourself when investing in time pieces. If you have the capital, these luxury and high end watches are a thing to be admired and enjoyed. And, of course, if you can do that whilst making some good profit too, then you’re a winner.