Why the values of rare collectors watches don’t follow the stock markets
— Collectors are buying vintage watches, first and foremost, because they like them, and not to make money.
Whenever stock markets go up one may assume that, with all the gained
profits, investors will treat themselves or their beloved ones with
something special, something luxurious. And, if stock prices drop, that
the appetite for a new handbag, bigger car or valuable watch diminishes.
This
may well be true but I leave the calculation of these correlations in
the more capable hands of the CFOs of the world’s leading luxury groups
as they have a far better idea than me what the effect on their sales
will be when the Dow Jones gains 1%.
But when it comes to rare
collector’s watches, especially vintage pieces with history and
provenance, I am a firm believer that their values don’t follow the
market indexes. On the contrary, there are many more factors involved
that are not tied to the health of the world economy.
It is my
naïve understanding that stock prices are the result of rational
factors, either linked to the specific company or its market
environment. Analysts study both at length, and investors then either
buy or sell, always following some rationale. Even more extreme, today
we have automated trading where computers make the decisions on our
behalf, being more disciplined and quicker than any human being can ever
be.
But when stock markets violently drop within days, up to 10
percent or more, I hear often that this was the result of algorithmic
trading, executed by computers. And I wonder “have I ever seen a
computer selling a watch collection just because it has been programmed
to do so?”.
This self-winding quarter repeating watch with equation of time, day,
month and power reserve, acquired in 1817 by Charles-Louis Havas,
founder of the famous press agency AFP, will be on sale at Christie's on
May 16th 2016, in Geneva. © Christie's
Collectors
are buying vintage watches, first and foremost, because they like them.
Sometimes even madly love them. And this is the first, huge difference.
It is the emotion to own and possibly wear - not the mindset to make
money. Furthermore, an all-original 1950s chronograph may be unique in
its condition and the collector will likely be aware that he will never
find another, identical one. This can surely not be said of shares
where, the next day, one can buy back what one has sold on the previous
day.
The values of the most historic collector’s watches, no
matter if they are worth a few thousand dollars or several hundreds of
thousands, are more a consequence of the number of players and the
relative shortage of supply. And the world of educated watch collectors
is constantly increasing, day-by-day. It is true, however, that a
vanishing middle-class has an impact on our market, but it is the
middle-class in watches that is vulnerable, not the rarest and finest.
And I don’t mean medium-priced watches, I am instead referring to
quality.
This is why I am firmly believing that record low interest
rates, unsatisfying portfolio performance and an overall great level of
instability are all factors further supporting the values of vintage
watches and greatest, hand-crafted and limited contemporary
masterpieces.
It is too early to say what the leading auction
houses will present this coming spring season in Geneva, Hong Kong and
New York, but I am advising all of them to think twice if a watch is
really a rare and high quality collector’s item or “just” another
expensive commodity. Because whereas the latter group will likely suffer
in such times of turmoil, the first group will likely outperform and
fetch record results.
WorldTempus - Swiss Watch Authority
by Aurel Bacs
Source from: http://en.worldtempus.com/article/industry-news/watches-vs-wallstreet-why-values-rare-collectors-watches-don-t-follow-stock-markets-2453662
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