Investing in collectibles…I choose ROLEX

(article I) RE: Rolex Flippers & “Gray Market” sellers

(article II) RE: Rolex & the Grey Market

NOTE: This article may shock some readers, as they may feel that I am materialistic, ostentatious, and/or ego-driven.  This is not the case at all. In fact, other readers will say to themselves, “why haven’t I thought of this before?!”  I consider myself a professional opportunist (much like investor Jim Rogers) and I look for investment opportunities in unique areas, often not thought of or considered by common investors.

In the pursuit of diversification, the investor needs to be flexible, open-minded and opportunistic.  The investor should look for and invest in non-correlated investments.  We live and invest in a global economy.  What happens in Greece or Turkey affects the US markets.  Same goes for China, Germany, and Bangladesh.  Simply investing in an international mutual fund (or ETF) is not adequate diversification.  You may be diversified in terms of currencies, but not in terms of equity risk.  I no longer believe that international equity investments dampen overall portfolio volatility.  This is because every equity market in the world affects another.  Where does one go to adequately diversify equity risk?

I’ve written several articles on properly diversifying your portfolio; real estate crowdfunding and alternatives pt. I, alternatives pt II, alternatives pt III.  Beyond these investments I’ve found another often-overlooked, under-invested asset: collectibles.  Normally only the ultra-wealthy and ultra-sophisticated investors pursue this by purchasing artwork (Van Gogh, etc.).  I don’t fit in this category and frankly, I’m not a fan of art, but I have found an area of opportunity that I consider a very worthy, negatively-correlated investment that has upside potential: Rolex watches.

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Be sure and read the article provided by the link at the beginning of this post.  I’ve personally noticed in my travels over the past couple of months that authorized Rolex dealers have very lean inventories.  They sell out of sports watches (Daytona, Submariner, Sea-Dweller, GMT Master) and have waiting lists for their VIP customers.  I recently received a call from a dealer that a new stainless Submariner (with date) just arrived.  I purchased it immediately and since the dealer was out of state, they shipped it to me without charging sales tax.  I’m not only on their waiting list for several models, I’ve placed deposits on those future Rolexes, whenever they arrive at the dealer.  I’m not certain when they’ll arrive, some may be months away but I’ve secured the purchases with these deposits.  Get this; I don’t plan on ever wearing these.  In fact, I don’t even have them sized for my wrist (by removing links).   All of these Rolexes (in photo above) remain in brand new, unworn condition, stored in a safety deposit box at my bank.  These are buy-and-hold investments.  My anticipated holding period is 4-5 years and I’m certain they will appreciate in value.  Rolex Corp. increases their prices by 10-15% every few years and they are overdo for the next increase.   This increase automatically spills over into the pre-owned market.  This coupled with demand makes this a worthy asset class to consider.  In some ways it’s better and more fun than holding bullion.

In my previous articles on investment strategies, selling put options, etc.  I’ve offered examples in my posts of how I conduct these trades.  I’m now offering a realtime example, from a Rolex I have for sale on ebay.   I own a 1994 Rolex Submariner (with date) purchased new for $2850.  It was the first Rolex I ever purchased, I wore it for less than one year because I desired to keep it in mint condition.  By the time this auction ends it’ll bring north of $7000.   The near flawless condition of this time piece, given the age makes it a collectible.   Rolexes this nice and this old are very scarce because most owners keep them or pass them on to their kids.  This will make a nice gift for a parent to purchase for their son who was born in 1994.  This is typical scenario and motive for purchasing a vintage Rolex such as this one.

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For those intrigued by this article and this opportunistic investment idea I came up with; I’ll offer a bit of wisdom.  Stick with the Rolex and Patik Philippe brands.  Stay away from Tag, Breitling, Hublot, Omega.  These brands do not appreciate in value like Rolex and Patik do.  These are all great brands, high quality, Swiss made and perfect for everyday wear but they’re not investments in my opinion.   Anyone can go online and purchase these aforementioned brands for a large discount (anywhere from 20-35% off retail).  That is an indication they are not suitable investments (the same goes for when you purchase an automobile with huge rebates, the depreciation is horrid!).   Rolex on the other hand, very few are offered at a discount, even by “grey market” (not authorized) dealers.  The demand for Rolex remains high all over the world.  My good friend is a Delta pilot who flies international and he loves this investment idea and he’s been on the look-out for sports models at duty-free shops in European airports.  He reports back to me he is having difficulty finding any!  That provides me with confidence that I’m onto something here.

Any reader who currently owns a Rolex knows first-hand that there’s virtually no downside.  Rolex prices keep going UP, UP, UP.  Here’s another pearl of wisdom; forget about investing and collecting.  If you’ve always wanted a Rolex (to wear) but due to other priorities you procrastinated; there’s no better time than NOW to make that purchase.  In this case, look for a pre-owned Rolex.  Buy from a reputable source because replicas run rampant and you have to be careful!  A couple of pre-owned dealers that only sell 100% authentic Rolexes are: Bernard Watches and Bob’s Watches (I have done business with both dealers in the past and I receive no compensation from them.  These are not affiliate links, I want to provide my readers reputable dealers, that’s the intent).

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I purchased all three of these as pre-owned.  I switch them out for everyday wear.  There is nothing wrong with buying a pre-owned Rolex.  It’s unlike buying a high-mileage used car, fraught full of problems.  Rolexes are very durable time-pieces, most are devoid of any problems.  About every 6-7 years they need to be serviced, but other than that, no issues.  They all function impeccably well and they hold their value…..

Great Rolex Article: here

DISCLAIMER:  THIS IS NOT ADVICE!  I am not an investment advisor, nor a professional in the financial services industry.  Options trading, stock market investment and investing in collectibles (Rolex watches) do have risks.  This blog is for informational purposes only and the reader is 100% risk responsible for any and all trades and investments made.

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