Time is Money and Luxury Watches Are a Smart Investment

The Swiss Seal of Approval New Data Confirms Luxury Watches as a Top-Performing Asset

In times of economic uncertainty, such as the current period of inflation, geopolitical tension, and fluctuating tariffs, blue-chip assets that hold and increase their value over time are increasingly appealing. Stock market and currency volatility, in particular, lead investors to look beyond traditional financial instruments when seeking a safe place for their profits. We have long maintained that brands like Rolex offer a strong investment. Now, a new study from Switzerland confirms this with clear data: luxury watches are indeed a very good investment, with the added benefit that you can wear and enjoy them. Brands such as Rolex, Patek Philippe, and Audemars Piguet are the best performers.

The new research comes from finance professors at the EHL Hospitality Business School in Switzerland. Their findings reveal that over the last six years, luxury watches saw less market volatility than real estate, stocks, and fixed-income bonds. This is a significant finding because it covers a long period that includes both boom and cooling cycles, providing a more reliable assessment than simple year-over-year reports.

Key Financial Findings

The study suggests that high-end timepieces can be an attractive option for investors looking to diversify their portfolios. Because luxury watches have a low correlation with the stock market, they are considered lower-risk investments. The watch market’s annual volatility—just 3.90%—is the lowest of any asset class reviewed, even lower than fixed income assets. Furthermore, the overall watch market outperformed both fixed-income and real estate investments during the period studied.

The Swiss study found that specific luxury watch brands performed much better than the overall market. For example, Patek Philippe and Audemars Piguet saw their values increase significantly between 2019 and 2022. Rolex, maker of iconic models like the Submariner and Daytona, showed strong returns even after the market peaked in 2022. However, while these top-tier brands have been outliers, the value of some other second-hand luxury watches has declined recently, meaning buyers must be selective.

Watches as a Store of Value

Financial experts caution that watches should primarily be viewed as “collectors’ items first and investments second.” Only certain brands, namely Patek Philippe and Rolex, have a consistent record of maintaining or increasing their value over time. Other assets, like property, can generate income through rent, making them “living assets.” Watches, in contrast, are more like a store of value that helps protect capital, especially against inflation, rather than a tool for active wealth creation.

A challenge with luxury watches is their illiquidity. The high price tags mean that only a small pool of people can afford them. The rarer the watch, the fewer potential buyers there are. This lack of immediate liquidity means the opportunity cost of having capital tied up can be high, as the investment might take years to increase in value, if it does at all. Therefore, a “wait-and-see” investment approach is best suited for those who are comfortable with their capital being tied up for an unspecified period.

Gaining Exposure Through Public Stocks

Investors seeking a more liquid way to benefit from the luxury watch market can consider buying shares in publicly listed companies. These include retailers and manufacturers like the UK-listed Watches of Switzerland (a major Rolex seller) and the Swiss-listed Richemont group (which owns brands like Jaeger-LeCoultre and Panerai).

A depressed share price in these companies may present a buying opportunity for long-term investors if profit margins are expected to improve. Investors who purchase shares in publicly listed companies should closely follow earnings reports and news updates that could affect the stock’s price. Some analysts argue that the present price levels could be a good time for long-term investors to enter, citing the luxury market’s history of recovering from quiet periods.

Exchange-Traded Funds (ETFs) for Lower Risk

Investors with a low-risk threshold might consider Exchange-Traded Funds (ETFs). These funds track a variety of companies and indices across different industries. There are specific ETFs that focus on the global luxury market, offering exposure to brands like Richemont. These types of funds are generally considered less risky than buying individual company shares, as they provide broader diversification and more consistent growth over time.

Financial experts all agree that luxury watches and related stocks should only form a part of a diversified portfolio. Investing in luxury stocks offers direct exposure to global economic cycles and consumer spending trends. On the other hand, investing in physical watches helps stabilize a portfolio and keep risk in check when the stock market is volatile. Having diversification is essentially a form of financial protection. Watches are also relatively easy to maintain, requiring little to no active management.

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Disclaimer: The information provided in this article is for informational purposes only and was obtained from verifiable sources at the time and date of publication. It is not in any shape or form financial or investment advise and should not under any circumstances be treated as such. This information does not constitute legal advice and should not be relied upon as such. RELOC8 ONLINE is not responsible for any errors, inaccuracies, or inconsistencies that might be present in the content published here and readers are advised to carry out their own research on the topics discussed before making deceisions that might impact their circumstances. For the latest information and most accurate details, please refer to our Latest News page or contact us directly.