There's an old adage that the minute you drive a new car off the lot, it depreciates instantly. The same is true of fine Swiss watches. But not all watches are created equal and some hold their value and even appreciate. Most experts say that over time two always rise to the top as "investments": Rolex and Patek Philippe. Why? We think there are at least six reasons:
1. Demand through Popularity
Rolex is the best known watch and considered by non-enthusiasts to be the best period. Therefore it's the default anytime someone "not in the know" wants to purchase a special timepiece. In general, people will pay more for a watch they've heard is excellent. Note, however, that not all Rolexes are equally in demand: SS Sub's, Daytona's, Milguass GV are hot; many other models are not, such as the Explorer II and DateJust.
Patek Philippe is widely thought to be the best watch made by those that might be considered enthusiasts and so the same reasons apply.
2. Price Increases
The Swiss Franc has been on an appreciation tear against the US dollar in recent years (up 30 percent since 2007). That means retail prices are much higher than they were just a few years back. The same Submariner that could be had for $5,000 not too long not now retails for $8,000.
3. Marketing Excellence
Patek and Rolex could teach master classes in marketing. Patek has successfully sold the idea that watches are meant to last forever and are basically heirlooms to be passed on from generation to generation. Rolex has planted in the mind of consumers that its watches are impervious to extreme conditions -- be it the top of Everest or at the bottom of the deepest seas.
Both watchmakers produce just enough watches to satisfy demand and not enough of some models to make those timepieces highly desired and rare objects of aspiration. An excellent example is the Rolex Daytona: it's not unusual to wait 18 months to get one.
5. Retail Networks
Both Patek and Rolex are famous for how tightly they control their distribution networks and how difficult they make it for authorized retailers to discount their products. This drives the perception that the watches are a good investment.
6. Precious metals
The value of precious metals, notably gold, have risen significantly in recent years. That means that watches containing precious metals may enjoy significant appreciation simply because of their worth as precious jewelry.
Editor's note: The man pictured in the Rolex ad is Ed Viesturs, the world's greatest climber and first American to summit all fourteen of the world's 8000 meter peaks.