Why do Rolex watches go up in value? There are many factors that affect their value, among them is the price of precious metals. Rolex watches have increased in price as the price of precious metals has risen. The retail price increases help the company offset those costs. However, only a small portion of the price of a Rolex is based on the metal it uses. If you are lucky enough to buy a Rolex at retail, historically they have consistently increased in value in the long run.
A recent study showed that over the last decade as an investment, Rolex watches have outperformed both the stock market (DJIA), gold and real estate. It’s economics 101 based on supply and demand. The incredible demand for almost any Rolex watch far exceeds the supply. Rolex manufactures over 1 million watches annually and yet they still cannot keep up with the global demand.
Certain models have proven to stand the test of time when it comes to superior return on investment and resale in the secondary market. If you can buy one of these models at the fair market price, it’s almost certain you will not only enjoy wearing it but will sell it for more than your cost.
If you’ve ever contemplated whether a Rolex Submariner will appreciate, you’re not alone. Every vintage Submariner has appreciated significantly over time and modern subs are no exception. According to Eric Brahms of Mae Capital, LLC, “Vintage Submariners have always appreciated in value above their retail prices over time but in today’s market the modern subs appreciate above retail the minute you walk out the door.” James Bond made this model famous wearing it in 7 different films from the early 60’s-70’s until 1989.
The Submariner has always been designed for divers and was rated to depths of 200 meters and 660 feet of water resistance until 1968. Rolex has made numerous modifications over the last 60 years, changing the composition of their stainless steel, improving the bracelet and clasp systems, and replacing the aluminum bezels with ceramic, to name just a few. The Submariner has morphed from a serious diving watch to one that is worn primarily by fashion-conscious and profit motivated individuals. From being able to withstand a depth of 660 feet in the 1950’s, the submariner can now dive to depths of well over 1000 feet, with the likelihood that less than 1% of the submariners sold today will be used for that purpose.
GMT Master “Pepsi”
The GMT Master has been coined the “Pepsi” due to its original bezel being red and blue like the colors of a Pepsi can. It was originally designed for pilots and has a 4th GMT hand that when used in conjunction with the rotating bezel, can show the current time in 2 time zones. Like the Submariner, it is unlikely that many GMTs sold today are being used for their intended purpose. This particular model has also been manufactured since the 1950’s and is still manufactured to this very day. Rolex has kept the GMT current with all sorts of bezel and GMT hand color variations. Even though it is still called the Pepsi, you can find GMT’s with blue/black bezels and green/black bezels in addition to the classic red/blue colors. This model was made famous by Tom Selleck in the Magnum PI TV series and was also worn by Fidel Castro and Dizzie Gillespi, to name just a few.
The GMT Master in any variation has stood the test of time and the fact that Rolex still produces this model after 70 years is a testament to how popular and successful it is for the company.
When you think of a Rolex the first model that comes into everyone’s mind is the Daytona. There is no other model that Rolex produces that appreciates more quickly, is more recognizable or in higher demand than the Daytona. If you “get the call” from the Dealer that the watch you have been waiting on for over 3 years has come in, it’s like hitting the lottery. A $13,000 stainless steel model sells for over $40,000 in the secondary market, and sometimes for as much as $50,000. There aren’t too many investments that will guarantee a 300% return in five minutes, but the Daytona is one of them. In 2022, a Gold Daytona with a Green dial that retails for $35,000 can be flipped immediately for $135,000. These watches are no longer limited to collectors and fashion-conscious individuals. With margins and returns like this, you have investors stepping in with deep pockets, looking to buy up every model they can get their hands on. This inevitably drives the prices up further and results in a feeding frenzy.
Vintage Daytona’s that sold for $1,500 in the 1970’s are now selling for $90,000. Using a similar formula, if you paid $150,000 for your home in 1972 it would need to be worth $9,000,000 to have a comparable return on investment. You read that correctly. The Daytona has appreciated 60 times its original value in 50 years and that’s not even considering if it was ever owned by a celebrity or has an exotic or rare dial. The world’s most expensive wristwatch ever sold wasn’t made of gold or platinum; it didn’t have any precious diamonds or rubies either. It was a stainless-steel Daytona owned by Paul Newman and it sold at auction for 17 million dollars and Eric Brahms of Mae Capital, LLC personally attended the Phillips auction in NYC, bidding on behalf of his clients.
It is a smart move to reach out to a knowledgeable watch dealer, such as Eric Brahms, if you are interested in purchasing a Rolex. With his knowledge and expertise on which models to buy, you will be sure to bring home a valuable time piece that will not only bring you years of enjoyment but may also turn out to be the single best investment you have ever made in your life.