T
he luxury watch market has been experiencing a decline since 2022, but research suggests that high-end watches like Rolexes have relatively low volatility. A study by two Swiss finance professors found that luxury watches outperformed real estate and stocks in terms of average annual returns over the period from January 2019 to September 2024. The study's findings indicate that luxury watches could be an attractive option for investors looking to diversify their portfolios due to their low correlation with the stock market.

    The study, which analyzed various indices tracking asset performance, found that the watch market had the lowest volatility of any asset class at 3.90% annual volatility. This is lower than fixed income, which has a volatility of 5-8%. However, luxury watches are illiquid, meaning people don't sell them as quickly as stocks, which artificially lowers their risk.

    The study's results show mixed returns for luxury watches. While they underperformed equities and gold, they outperformed fixed income and real estate. Some brands, such as Audemars Piguet and Patek Philippe, showed average annual returns close to the global stock market performance. Brand knowledge and model-specific expertise are crucial when investing in luxury watches.

    The study's conclusion takes into account the decline of the secondhand watch market since 2022. The resale price of a Rolex Daytona peaked at $48,500 in March 2022 but has since dropped to an estimated $27,052. Despite this, some brands like Rolex and Vacheron Constantin showed returns over 50% after 2022. Audemars Piguet and Patek Philippe tripled in price between 2019 and 2022 but roughly doubled over the total period.

    Philippe Weisskopf, one of the study's authors, notes that while luxury watches may be a better long-term investment, the study should not be taken as investment advice. He also cautions that the watch market may not recover significantly due to global economic and geopolitical uncertainty.