Posted by William Massena on April 06,
1998 at 4:22:56:
If the Watch market was the Stock market
This is an attempt to look at some undervalued watches in today's
vintage watch markets and offer suggestions on what to buy for
your kids. Please note that this IS MY OWN OPINION AND THESE
ARE NOT AN INVESTMENT ADVICES, if you want to invest your money
BUY MUTUAL FUNDS.
The Vintage Watch Market Today:
It is very interesting to see that there
are large arbitrage opportunities in the watch market today.
Arbitrage is a financial term defined as profiting from differences
in price when the same security, currency, or commodity is traded
on two or more markets. In this case the commodity is watch and
the Markets are Europe, USA and Asia. The same Rolex will have
very different prices in each market. Some savvy watch collectors/dealers
(I won't give names), have been using these differences
in prices to buy low in one country and sell high in another.
For example; A Rolex Daytona may fetch between $5,700-$6,000
in the USA but $7,500-$8,000 in Paris and $8,500 to $9,000 in
Tokyo. Well, the risk are very low except for the currency risk
(which could be avoided by buying FX options but that is another
story). I believe arbitrage will disappear in the next twenty
years with the rise of E.commerce. The watch arbitrageur will
be left with very little easy opportunities and a huge amount
of miles on his frequent flyer.
Limited edition and reeditions: This is
a very interesting phenomenon in the watch industry and create
a discrepancies in prices. When Heuer reedited the Carrera 1964
at retail of $2,400 in SS, the original Carrera could easily
be found at $450 to $500 range but quickly jumped at $650 to
$700, this 44% increase was directly due to the advertising of
the new expensive Carrera. However, 6 months after its launch
the new Carrera was dramatically discounted by the grey market
at 55%. The same phenomenon happened with the price of the new
Breguet type XX and the price of the 50's and 60's
models.
These observations are not true for "replacement" models
such as the Daytona, Omega Seamaster, etc..
I believe that the vinatge watch market
today is still very much under the influence of the 80's
boom in watch collecting. However, there are two very distinct
types of vintage watch market: The below $800 (Hamilton and other
US brands) which is mostly a US markets and collectors are usually
older and have very little interest in the new watches, this
is a stable market where price increases are much more correlated
to the CD rate than the DOW. The 2nd watch market is adjusted
to the current watch market, where (future) collectors learn
to appreciate fine Swiss watches at they local watch store and
then after attaining a certain knowledge start to acquire vintage
pieces to give more depth to their collection. This market is
much more correlated to the local economy and therefore much
more cyclical. Today, we are at a peak in the vintage market,
however I believe that there are still some gems that will increase
in value and should be "forgotten" in a drawer and
could bcome an interesting sale at the Sotheby's auction
in 2023.
These are a few recommendations (please note that yours truly
is "long" in many of these watches):
Blancpain:
Blancpain has not very much of a history, but 3 models
from the 50's and 60's are worth holding or buying
but you must act fast since some of them are re-edited which
may create this price increase described above
Recommendations: Fifty fathoms, Air Command, Aqualung
Jaeger Le Coultre:
Jaeger le coultre still suffers from its reputation as the watchmaker's
watch. Its vintages models are still underpriced when compared
with Audemars or Patek. I predict that this will change and that
the prices of the vintage models will dramatically increase in
the next 25 years. I would recommend to strictly buy Jaeger Le
Coultre watch (and not just Le Coultre which where cased in the
US)
Recommendation: JLC 18K, SS Memovox,, JLC 18K and SS Automatique
(Futurematic), JLC World cities Memovox and high grade military
JLC.
Vacheron Constatntin:
Vacheron has been laggard in this bullish vintage market and
18K vintage VC can still be found at very interesting prices
way below PP and AP. I would recommend only high quality and
in pristine conditions VC
Recommendation: 18 K auto VC, large rectangle VC from 30's
to 50's, Chronometre Royal.
Patek Philippe:
PP is already fully priced, however there are still deals to
be made. The original P96 is still a a decent price and some
other rare models are still affordable. .
Recommendation: Pink Gold and YG P96, also the Amagnetic.
Rolex:
Rolex is the most difficult to predict. I believe that the Daytona
is overvalued. You do not get much for your money and whatever
goes this high must go down. However there are still some buy
such as some Oyster perpetual at reasonnable prices and the early
subs (James Bond, red submariner, etc..). I predict that if the
stock market crash so will the Daytona. My model show a high
correlation between the S&P and the Daytona price.:-)
Recommendation: BUY: less expensive Oysters, Red Sub, James Bond
Sub, Red Sea Dweller, Comex Sea Dweller (this ad has NOT been
paid by James yet!)
SELL: Daytona, (especially Paul Newman)
HOLD: Explorer I (1016, 6610)
IWC:
The Mark XI has already dramatically increased in price due to
the success of the Mark XII, I would recommend to look at larger
oversized IWC from the 50's and also at older IWC military
models such as the MARK X which are not often seen in marts
Recommendation: Large SS or 18K IWC (at less than $1K), Military
IWCs
Misc.
There are many brands that I did not mention because I am less
familiar with them and their prices. Omega is the most difficult
to predict as long as the Moon watch is around its price will
not dramatically rise.
Recommendation BUY: Omega moon watch, Older Zenith with El Primero,
Bulova Accutron, Hamilton electric.
So what about a TZ 500 Index?
I will try to do a Contemporary Blue Chip
Watch list soon.
Comments, criticism and other recommendations would be appreciated
William Massena
My 2c worth on Rolex stuff.
Posted by James
M. Dowling on April 06, 1998 at 5:59:47:
In Reply to: Blue chip Vintages (long Text)
posted by William Massena on April 06, 1998 at 4:22:56:
Hi William;
I ALWAYS TELL COLLECTORS TO BUY WHAT YOU
LOVE AND IF THERE IS AN INCREASE IN VALUE, LOOK ON IT AS A BONUS.
However, bearing that in mind, I would
like to commend you for your treatise and perhaps cover some
of the (still) undervalued (if not underpriced) Rolex watches.
You are right about early James Bond Subs
& Red Subs, I also think that all of the pre sapphire Subs are
currently undervalued.
There was a feature on Tom Ford, the design genius behind
Gucci's revival, in one of our newspapers. This is the guy who
designed the G watch. He was wearing a plastic glass Sub. It
is becoming a design icon and as such still has a way to go.
I always suggest buying Good Rolex Princes; I have bought and
sold these watches for over 15 years now and I have NEVER seen
them go down in value. The reason is that it is a watch that
appeals to non watch people. It is one of the few watches that
people always notice when I wear one. The most interesting thing
is that this is a watch bought mostly by non collectors. They
just buy it because they like the aesthetics.
Also look at the early cushions and octagons; not huge production,
a significant watch and easy to wear; so large market potential.
In the more modern stuff; the Mk1 GMT model 6542 has appreciated
50% in the last year; it still has a way to go.
In rarities the model 1530 (shaped like a quartz but with an
auto mvt) is worth buying in steel only. Made for less than a
year and sold only in the US; it has 'legs'.
I am sure there is more, but I need to
keep some stuff for myself.
Good luck & good hunting
James
PS Currently none of my reccommendations are available from my
web site.
About Love and Prince.
Posted by William
Massena on April 06, 1998 at 7:05:42:
In Reply to: My 2c worth on Rolex stuff.
posted by James M. Dowling on April 06, 1998 at 5:59:47:
Hi James,
I ALWAYS TELL COLLECTORS TO BUY WHAT YOU
LOVE AND IF THERE IS AN INCREASE IN VALUE, LOOK ON IT AS A BONUS.
I absolutely agree with you. During my
college years I dated the daughter of a famous Art collector
(who wore an Explorer I) who had bought paintings from Bacon,
Rauschenberg, Rothsko (sp?), Liechenstein while they were still
affordable. Once, I asked him how did he built his collection
and his answer was: "I tried to learn everything about Modern
Art, then I forgot it and bought whatever I felt in love with".
(I know it sounds like Jack Nicholson in "As good as it
gets")
That is definetely the way to look at a
collection.
About the Prince, I agree with you the Prince is definetely good
value for your money. BUT, after reading your book and some of
your articles I got somewhat scared of the Prince. It seems that
you need to know all the subtilities of this watch in order to
make sure than you are not taken. As you said in your interview
"you buy the dealer not the watch" but what if you
cannot "read" the man and James Dowling is not in the
room?
The Prince is a rather complex watch and at $7,000 I would not
like it to change into a frog!
William
