Timing is everything

Wristwatches have been popular ever since they were worn by soldiers in the First World War. Like art, the finer specimens are coveted and can sell at auction for hundreds of thousands of dollars. That makes them objects of value for collectors and investors who know what they're buying. "Even through this market, I've noticed prices on the finer things are very strong," says Michael Larsen, a senior specialist with auction house Bonhams & Butterfields in Los Angeles. How do you make sure that an expensive watch is worth buying and holding?

Sean Silcoff
Globe Investor Magazine online, February 19, 2009

Do your research

"Buy vintage, buy condition, buy rarity," says Larsen. These are the three things that make a watch valuable. But first, do your homework. Donald McLean, a watch expert with Waddington's Auctioneers in Toronto, suggests cracking The Rolex Report by John Brozek, and the annual Complete Price Guide to Watches by Cooksey Shugart.

Simply the best

The best watchmakers are mostly Swiss and include some of the world's best-known luxury brands: Patek Philippe, Rolex, Vacheron Constantin, Breguet, Cartier, Officine Panerai, Jaeger-LeCoultre and Ulysse Nardin. "It's men's jewellery, if you will," says Larsen. "Lots of bells and whistles-that's what men want in their watch and what makes it collectible and desirable." Rolexes are the world's best-known watches, but Pateks sell for the most money. "At a Bonhams & Butterfields auction in New York last summer, some Rolexes sold for less than $2,000 (U.S.), and most watches went for under $10,000 (U.S.)-but by far the most expensive item was a rare, 1954 Patek watch with a chronograph and its purchase receipt. It sold for $264,000 (U.S.)."

No guts, no glory

A serious collector will buy only watches that have mechanical movements-parts, gears and springs-and will eschew quartz. Of special interest are automatic-wind watches, which contain a counterweighted rotor that winds itself as the wearer moves about. Also important is the number of jewels, or tiny synthetic rubies, that are used as bearings in the watch, reducing friction and extending the wear. More than 15 is good; 20 is better.

It's complicated

A vintage watch's value goes up in concert with the number of "complications"-that is, mechanical functions other than basic timekeeping. Each complication-whether a date tracker, a stopwatch, a moon or star chart, or a repeating chime-adds to the watch design's intricacy and underscores the superior quality, craftsmanship and mechanical brilliance of watchmaking in the pre-digital era. A specially commissioned 1933 Patek Philippe pocket watch with 24 complications sold at auction in 1999 for $11 million (U.S.), a record price for a watch.

Keep it original

Alterations are a bad thing, says Larsen. Nothing sinks the value of a vintage watch like tinkering. If the dial has a bit of wear on it, that's okay, as long as it hasn't been refinished. Adding diamonds to a vintage Rolex-a typical modification-will lower its value, as will altering the original bracelet or replacing the bezel (the band of metal that holds the stone in place). And the last thing a buyer wants to see is that the inside machinery has been replaced by quartz.