Our social circles are filled with anecdotal and conflicting investment ideas and information. From buying Byron Bay beach houses, luxury Birkin bags, stocks, gold bars and more – everyone at one time or another has been presented with opinions on what makes one thing a better investment than another.
Yet the data behind these anecdotes often tells a different story, transforming mighty myth into boring reality.
Luxury watches are one such point of fascination when it comes to investing, collecting, and wealth accumulation. And nowhere is this fascination more pronounced than when it comes to the king of watches: the Rolex!
Founded in 1905 but not officially named Rolex Watch Co. Ltd until 1915, over the last century Rolexes have become inextricably tied to ideas of luxury, celebrity, status, and wealth. Worn by everyone from James Bond to action movie stars like Keanu Reeves – the true value of Rolexes often transcends the dollars behind them.
Make no mistake though, they are expensive. Entry level Rolexes range from anywhere between US$6,000 to US$11,000. On the high end, some have sold for millions – like Paul Newman’s Rolex Daytona – which in 2017 was auctioned off for a staggering US$17.8 million!
Source: A Collected Man; The ever cool Paul Newman sporting his Rolex Daytona (ref. 6239) at the 1973 Cannes Film Festival.
Mind you, getting your hands on a Rolex isn’t as easy as simply walking into a Rolex retailer, handing over some cash and being on your merry way. From booking in-person appointments to excruciating wait lists, actually getting your hands on a Rolex – even one of those “entry level Rolexes” – can be a challenge.
The Rolex Grey Market
Intense demand coupled with an intentionally constrained supply has given rise to sophisticated Rolex grey markets. In a nutshell, a grey market is simply a ‘non official’ market of buyers and sellers conducted outside the authorised manufacturers’ core channels, such as an “official Rolex store”.
There are a number of advantages of grey markets, including the reduction of those pesky wait lists, the ability to easily buy watches online, and the potential to gain access to rare or otherwise unavailable timepieces.
There are negatives too. Grey markets can lead to price distortions – with popular Rolex models like the Daytona or Submariner often trading at a significant premium on the grey market, when compared to retail. Grey markets also mean that buyers aren’t protected with a typical factory warranty.
With all this considered, it should come as little surprise that Rolexes are viewed by many as a solid investment. This begs the question though…
Are Rolexes a Better Investment than Stocks?
The short answer is no.
By comparing the historical data of the Rolex Market Index to the S&P 500 Index we see that Rolexes have underperformed stocks on a 1 month, 3 months, 6 months, 1 year, 3 years, and 5 years time horizon(s).
| Time Period | Rolex Market Index | S&P 500 Index |
| 1 Month | -0.90% | +3.22% |
| 3 Months | -3.20% | +7.85% |
| 6 Months | -2.40% | +15.85% |
| 1 Year | -14.10% | +15.14% |
| 3 Years | +31.60% | +40.94% |
| 5 Years | +58.00% | +61.21% |
Data correct as of 7 July 2023.
Here’s a breakdown of what those indexes actually mean:
“The Rolex Market Index is an indicator of the financial performance of Rolex watches on the secondhand market. It is comprised of the top 30 Rolex models by transaction value. The index shows the average market price (in USD) of these 30 watches over time.”
By comparison “The S&P 500 index covers the 500 largest companies that are in the United States” and is generally considered the best barometer of US stock market performance.
There are however a few caveats to our “no” answer that are worth considering:
- While some coveted Rolexes might have increased in value at a faster rate than the S&P 500 Index, the same can be said for particularly exceptional stocks – think Apple or Nvidia – that have outperformed their benchmarks.
- If you own a particularly valuable Rolex, selling it at a fair value in a fair time might be difficult. Stocks by comparison can be sold quickly and are considered highly liquid.
- Even if stocks were to underperform Rolexes in the future, it is much easier (and cheaper) for investors to get involved in the stock market. With Syfe you can buy fractions of US shares & ETFs – starting from just US$1 or invest in 1,000+ Aussie shares from just 1 share. Learn more here.
- To be fair, you can’t wear a stock, but you can wear a Rolex!
Investing involves risk, including the risk of losing your invested amount. Any information that may be in this communication is general in nature only and is current at the time of writing. Syfe does not make recommendations of any kind or provide personal advice that take into account your objectives, financial situations or needs. You should therefore consider the appropriateness of the information in light of your own objectives, financial situation or needs before acting on such information, and/or speak to your financial or tax adviser for personal advice. Past performance figures are based on information provided by third parties and may not be accurate. Any references to past performance and future indications are not, and should not be taken as, a reliable indicator of future results. Syfe does not intend for any statement made here to relate to the acquisition or disposal of any shares in the companies or other financial products named here. Syfe makes no representation and assumes no liability as to the accuracy or completeness of the content of this communication.
