Time is Money: An Investment in Luxury Watches

Abstract

This study examines the risk and return characteristics of investments in luxury watches. The luxury watch market offers lower returns than equities but is less volatile. It also outperforms fixed income and real estate, with significant performance variation across brands. Illiquidity, analogous to other collectables, is an important feature, yet luxury watches enhance portfolio diversification and reduce risk. Additionally, the study contrasts the distinct features of investing in physical watches versus stocks of watch manufacturers, emphasising the importance of understanding market segmentation. These findings highlight the role of luxury watches as an alternative asset in diversified investment portfolios.