What Does It All Mean?
On November 11, 2014 Sotheby’s auction house sold the world’s most important — and valuable — timepiece for over $24,000,000. The Henry Graves Supercomplication, produced and delivered by Patek Philippe in 1933, captured worldwide headlines last autumn for it’s astounding selling price. If you follow auction results at all, there’s a real possibility you’ve see headlines of other vintage Patek Philippe or Rolex pieces selling at huge sums of money – sometimes in the millions-of-dollars range. These eye-popping auction results certainly bring attention to watches from casual observers and those with just a fleeting interest in watches, but the attention also brings along with the question of investment level collectibility.
Watches As An Investment
This question, whether or not watches — in general or specific models — are “investments”, is an extremely difficult question to answer. I am asked quite often about whether or not a watch is an investment. The question is often asked ambiguously, broadly covering all or most luxury watches. To which the answer is a resounding “no.” Most Watches, are definitely not investments. They’re investments the way that cars are investments. Even great cars can be bad investments. Let’s look at a 2013 BMW M5, arguably the best road going sedan in the world that year, it retailed for around $90,000 when it came out. A quick search on your favorite car-selling site will show that you can get that same car today, used and for significantly less. Of course, we’ve all experienced this with the cars we own so it isn’t much of a surprise that there tremendous depreciation here. But what if BMW decided it was never going to make another M5 and the last one rolled off the factory line tomorrow? Where would the market be on a car like that in another three or five years? Who knows.
The watch market is much more like the car market than a mutual fund. So if your intention is to acquire a random luxury watch because you believe it to be an investment that will appreciate over time, you will be setting yourself up for disappointment. Understand that most watches should be about the enjoyment of ownership (while retaining a healthy re-sale value), they should not to be thought of as assets in a financial portfolio from which you can expect a return on investment. Now, with that being said, I do believe there are some contemporary models that you can enjoy now and could potentially be the next generation of investment grade pieces. I won’t speak in absolutes here, but I find it very unlikely that we will ever see a piece as highly sought after as the Henry Graves Supercomplication, but that doesn’t mean that someday we won’t see another Rolex “Paul Newman” Daytona.
When I look at the current generation of watches, what do I see as being highly collectible and highly desirable in the coming decades? Two brands stand out: F.P. Journe and Patek Philippe.
Shocking, I know.
Fairly predictable, sure, but for very important reasons it should be predictable. Both brands are still family owned, still independent and constantly operate at the highest levels in the industry. I believe the smartest of smart money is in Patek and Journe. Let’s look at some models that are currently available today or are due to come out soon.
From Patek Philippe there are two models that debuted this year at Baselworld that I expect to be future classics. The absolutely sensational 5370P split seconds chronograph is by all accounts an instant classic chronograph complication by the master’s of chronograph complications. It’s beauty and functionality was an instant hit among press, enthusiasts and collectors. The 5370 follows in a long and rich tradition of uber-complicated chronograph application pieces by Patek Philippe over the years and fits nicely in their current collection amongst the 5204 (split second chronograph and perpetual calendar) and the 5950 (monopoussior split second chronograph). The design of the watch is so elegant and references the contemporary 5170 and the vintage and historic 1436. The 5370 is a can’t miss home-run.
The other model released at Basel this year was the controversial 5524G, the new pilot’s reference that created quite a stir among the industry. The 5524 is a large, gold pilot’s watch that seemed, at first glance, to be very un-Patek-like initially receiving mixed feelings. One thing was certain, it was captivating. So what happens with a piece like this in the context of long term collectibility? That’s a very interesting question; one which I’ve thought about quite a bit over the past couple of weeks. If it were any other brand other than Patek, we wouldn’t even be having this discussion. But because Patek makes so few controversial pieces, let alone “mistakes”, determining what actually happens with this model long term is fascinating. I believe the market will react one of two ways. The most likely scenario is the one where regardless of the reception the piece received initially, hardcore Patek collectors will be begging their Authorized Dealers for an opportunity to own this piece. And the much less likely scenario is that the watch is a flop, Patek quietly discontinues production sometime in the future and we all just move on.
Each scenario is completely fascinating. And while I fully expect the 5524 to be a hard-to-get model, I would anticipate Patek to allocate pieces slowly and in small quantities as long as the watch is in production, keeping demand high throughout the piece’s life cycle. But what if Patek did a short run with this model? What then? Does it become a piece so highly desirable in the future that we see eye-popping numbers at auctions 20 years from now? I don’t know, but I believe that one wouldn’t go wrong owning this watch. Patek collectors will be seeking to own this reference for years to come.
So that brings us to F.P. Journe. Francois-Paul is arguably the greatest living watchmaker and his creations are uniquely his own. The aesthetic presences of a Journe watch is undeniable. His Geneva atelier has consistently produced around 800 watches a year with a focus on impeccable chronometric performance and sublime finishing. Out of his current collection, it seems that the most desirable piece is actually his most basic reference, the Chronometre Bleu. The watch is visually stunning, and demand for it has skyrocketed over the last two years or so. I suspect that demand will continue to grow in the years to come. The other models I feel may end up being something special are the Chronometre Optimum and the, of course, the Grand Sonnerie Souveraine.
The Chronometre Optimum is a masterpiece, unlike anything in the watch world at the moment, and it addresses what Francois-Paul believes to be the most vexing issues in watchmaking: friction and constant power supply. The idea behind the watch is to create the perfect chronometer; the F.P. Journe Chronometre Optimum is an incredible attempt at solving these issues. The Sonnerie Souveraine was designed to be the best minute repeater possible. People love to play with minute repeaters so the sonnerie does the same yet at particular intervals automatically. The Grande Sonnerie fully chimes the time every 15 minutes while the petite sonnerie indicates the passing hour and quarters every 15 minutes. The steel of the case allows the sound to resonate better. It’s no wonder that the Sonnerie Souveraine is Journe’s personal model he wears constantly!
While no watch is ever a sure thing when it comes to investment grade status, there are some pieces on today’s market that might very well be worth the money today. Again, I’ve never recommended anyone purchase a watch for investment purposes, because at the end of the day, the money you are spending on it ought to be about the enjoyment of both owning and wearing the watch, no matter what the price. However, it will be interesting to see some of the high-demand Pateks and Journe models play out with consumers over the long term.