This past weekend was an amazing weekend!
I GOT TO BUY MY FIRST ROLEX! and I got it by walking into a Rolex authorized dealer randomly – NOT BY GETTING THAT AWAITED CALL FROM A DEALER
It is a Yacht-master with everose gold / stainless steel that was just sitting idly in the store that generally remains completely empty.
They had put the watch out in the morning and the watch had sat there for a TOTAL OF TWO HOURS- before I saw it and made the decision to add to my watch collection.
I should have know it was going to be a great day when I saw a blue bird in my hike trail with my wife.
I was very happy to see that blue bird, but little did we know that we would see a Yachtmaster two tone (everose gold and stainless steel) when we make a random visit to an AD that I frequent to check if there is a Rolex that I like.
The price tag was hefty but having done some due diligence on Rolex market myself, it was a no brainer to swoop in.
Based on my due diligence, Rolex watches represent great investment opportunity to 1) hedge hyperinflation risk, 2) deploy large amount of capital into private assets, and 3) make money with asymmetric reward risk- I laid out my thoughts below.
HEDGE HYPER INFLATION RISK
I have been selling out of stock market – hyperinflation is real and while Fed denies it, the market will keep going up. Eventually Fed will have to acknowledge and raise rates- TERRIBLE FOR STOCK MARKET”.
Therefore I have been looking to reallocate my capital into real assets – high demand luxury watches fit into real assets. They are scarce and there is enormous demand. ROLEX fits this criteria.
DEPLOY LARGE AMOUNT OF CAPITAL WITH MINIMAL CARRYING COST
Sure you can buy homes and stuff – but owning homes is a fully time job and carries serious yield risk. Also, pricing has gone up a lot while Rolex retail price largely remains stable. I can also buy these watches without leverage – in the downturn, the carrying cost of these watches is almost ZERO- I can hold onto these watches through economic downturn and wait until the next upcycle.
By the way, what do the companies generally do in economic downturn? They reduce output to save CASH- economic downturn actually helps watch prices coming out of recession because THERE HAS BEEN LIMITED SUPPLY while newly enriched people (wealth is not lost but transferred during recession) want ROLEX.
Each watch costs at least $10k – you can create a diversified portfolio of 5-10watches – that is a ~$100k asset base right there.
That seems better than putting all that money into one condo or a house – with carrying costs that include maintenance costs and property taxes.
ASYMMETRIC REWARD/RISK
There is a lot of rumors but all of them only help the investment case here.
Rumor #1: Rolex is cutting supply now in preparation for a large price hike.
Rumor #2: Rolex is drying up supply now to authorized dealers because Rolex is entering direct boutique sales model.
Both are GREAT NEWS for buying ROLEX now because 1) higher price of retail price increases prices in the used market as they often trade at spread to the retail price and 2) ROLEX will tighten control of supply.
In CONCLUSION
Now I love watches and one reason why I am trying to add more is because I am also worried that I may not be able to afford these watches later in my life.
Key to having a good watch portfolio and mitigating downside risk is that you should buy a watch that you would love to wear even if the value does not appreciate – that is priceless.
In this case, the Two tone Rolex Yacht Master just checked off everything that I wanted.
Hope you enjoyed reading this and I also wish you the best of luck in your next visit to a ROLEX authorized dealer!
HAPPY INVESTING AND WATCH COLLECTING
I am ending this with my wrist shot- an absolute stunner!
