When people think investing they typically think traditional means like stocks, bonds, and real estate. But increasingly people are opening their minds to alternative investment classes. Things ranging from cars, watches, bourbon/whiskey, wine, and cryptocurrency.
Why are more and more people seeking alternative investment vehicles? Some of it has to do with the fact that since Richard Nixon took the gold standard off the dollar, cash has been printed faster than it can retain value. So little by little cash is becoming devalued. You can see the effects COVID-19 has also had on businesses accepting cash. People carry less of it, and are resorting predominantly to digital payment processing.
The devaluing of the dollar is only one of those factors. Another is the growing untrust of the government. When the masses start losing security in the government and banks they pull funds to store their capital in other places. Historically that option would have been in gold bars stored in a security deposit box at a bank. Now there are many more options. The reason cryptocurrency is becoming more popular is because of ease of transferring funds, and being deregulated. This goes back to lack of trust in the government. Bitcoin has proven to have gained traction here which in turn opens minds up to all sorts of options for generating returns.
This is where luxury assets have exploded. In particular, timepieces. Not all watches, timepieces. The difference lies in the brands (mostly Swiss made) that have a market demand, and are made with materials that have intrinsic value like gold, steel, platinum, etc.
Timepieces traditionally were a luxury hobby. Something fun the elite and well off would participate in to enjoy the finer things in life. Sometimes certain collections and pieces would yield a return on investment. For example, if one purchased a Rolex Daytona back in 1990 and sold it today, they would make a nice profit. But this activity was never focused on as an investment strategy. More like a hobby where it didn’t matter if some money was lost and some was gained.
As the luxury watch industry continued to manufacture pieces that kept consumer interest, and more and more people got into timepieces analog in nature (even in a digital age), we saw prices continue to creep up overtime on many brands. More and more people were experiencing returns on their investments on pieces they were buying which led to more faith in the industry being worthwhile beyond a hobby.
Savvy seasoned business moguls and investors making it publicly known they love timepieces and trading them as an asset has also boosted engagement. For example, Kevin O’Leary from Shark Tank is an avid collector and has said timepieces have been his highest generating ROI asset class he’s owned in the past 5 years.
The numbers make sense too when you see pieces like the steel Patek Philippe Nautilus with a blue dial which had an MSRP of $30,000 double in a short period of time to approximately $65,000 and then discontinue and sky rocket to an average of $90,000 in less than a year. 20-200% returns on investment in less than 12 months are extremely tough to beat. Especially with something that is hard backed. By this I mean the timepieces are investments you can hold. Not just a piece of paper or an intangible commodity.
Another aspect of alternative assets that seem to be favorable is you can enjoy them. Drive them, wear them, brag about them, and drink them.
The mobility of money especially in the luxury timepieces class is also unrivaled. The ability to take a roll of 3 watches while traveling anywhere in the world across borders and chasing out if needed is easy. If you needed to flee the country for some reason, this would be more convenient than going to a bank and taking out a large withdrawal or getting access to your security deposit box.
You can also purchase these pieces in different countries, take advantage of the exchange rates, and supply that doesn’t exist in your country, then get tax credits off when you leave to make the buy prices untouchable and your profits excitable.
If the numbers and thoughts of knowing the specialized knowledge of the models that work for this seem overwhelming to you, no need to fear!
You can literally get started with as little as $2000 investing in these fine mechanical works of art, and the brands, models, and references that continue to appreciate can be found here at Watch Trading Academy, as well as on platforms and blogs that keep their ears and eyes on the market. With the plethora of models and brands and information, it can seem confusing, but once you actually get your feet wet in this space, I promise you you never regret it.
So start seriously considering alternative assets as a portion of your investment portfolio as they can help you achieve your life goals while having fun. And you’re tapping into a space not yet saturated by the masses.
Cheers watch clique!