Recent years have seen increased interest in ‘passion’ investments, as the low interest rate environment has encouraged investors to seek alternative homes for their money. Investing in luxury collectibles has long provided an opportunity for wealthy investors to diversify their portfolios, while indulging a particular passion. And clocks and watches are a perfect example of objects that can bring great joy while also offering the prospect of a potentially rewarding return.
Investing in time
Most people who invest in clocks or watches are primarily motivated by the emotional thrill of owning a quality timepiece. This largely stems from the high level of artisanship involved in fine clock and watch-making, from the ingenious mechanisms found inside top-end timepieces to their exquisitely decorated exteriors.
This inherent beauty makes antique clocks the perfect ornament capable of bringing a heartbeat into any home, while high-value watches represent a stylish adornment to any wrist. In addition, vintage timepieces can possess both historic character and charm and, unlike other works of art, clocks and watches actually do something useful.
Iconic clocks and watches
While monetary gain may not therefore be the principal driving force behind many purchases, investment grade timepieces can and do change hands for vast amounts of money. For instance, the most expensive clock ever sold at auction – the Duc d’Orléans Breguet Sympathique created in 1835 – fetched an astonishing $6.8 million at a Sotheby’s sale in 2012.
Iconic watches have sold for even more substantial sums. A Rolex Daytona owned and worn by late US actor Paul Newman, for example, was sold by Phillips in 2017 for $17.8 million, while the Patek Philippe Grandmaster Chime 6300A-010 sold for a staggering $31 million at Christie’s in 2019, making it the most expensive timepiece ever sold at auction.
Determining value
As with all collectibles, the value attributed to a specific clock or watch ultimately depends upon buyer demand. However, there are a number of specific variables that typically affect how much someone is prepared to pay. A key factor will clearly be the manufacturer’s name, with prestigious luxury brands such as Patek Philippe, Rolex and Breguet likely to command the highest prices.
Condition is also obviously critical and, as a result, most serious investors will never wear or even try on a watch but instead keep it boxed as new along with all of the original documentation. Other key price determinants include rarity, originality and provenance.
A reliable investment
Although estimating past returns on any group of collectible items is a difficult task, the Knight Frank Luxury Investment Index does provide a useful source of information. And data from its latest index suggests the value of investment grade watches rose by 89% over the 10-year period to the end of 2020. More detailed analysis of the Knight Frank data has also previously shown that watches are a relatively resilient investment with lower volatility compared to most other luxury collectibles.
As with other types of passion investments, timepieces also provide comparatively low correlation to traditional asset categories, as their value does not tend to fluctuate in line with the stock market. As a result, investing in clocks or watches can help to increase diversification within an investor’s portfolio of investments.
Research is key
Passion investing essentially involves making money in an area that has long been a specialist interest to someone. Most clock and watch investors will therefore typically have spent years researching this area, extensively building up their knowledge of timepieces before using that expertise to spot potential investment opportunities. Anyone without that level of experience would clearly need to seek guidance from a clock or watch expert before looking to invest.
Time to take stock
While investing in clocks and watches can yield a great deal of enjoyment, as well as potential profit, it is certainly not for the faint-hearted. And there are clearly risks involved, not least the fact that prices can and do fall, as well as rise. Additionally, the market is relatively illiquid, which means it can prove difficult to sell quickly if there is a sudden need for funds. This type of investing should therefore only ever be considered as part of a wider wealth management strategy and represent just a small part of an overall portfolio.