Rolex Investment Guide: Everything You Need to Know
Think the used car market is hot?
The preowned Rolex market is an inferno.
According to Bob’s Watches, the average market sale for a pre-owned Rolex watch has gone from $5,000 in 2011 to $13,000 in 2021. In fact, Rolexes were one of the highest-appreciating assets in the last decade overall, beating out gold, stocks, and real estate.
And while a used C8 Corvette costs 16% more than a new one, a Rolex Daytona can triple in value before you leave the store.
Those are some wild numbers — so is there an investing opportunity here? Should your portfolio include a Swiss-made watch? Why Rolex and not Cartier or Omega?
The Short Version
- Over the past decade, the preowned Rolex market has outgrown gold, stocks, and real estate.
- Some models are selling on the secondary “gray” market for triple their manufacturer’s suggested retail price (MSRP).
- As a result, there may be an opportunity for short-term investors to turn a quick profit if they can navigate the dealership experience and purchase a desirable Rolex at MSRP.
- However, in addition to the usual risks associated with speculative investing, Rolex flippers could face a lifetime ban.
Rolex was founded in London in 1905 by Hans Wilsdorf and his brother-in-law, Alfred Davis. The former, a 24-year-old watchmaker, was tired of timepieces that were attractive but unreliable, so he sought to design a luxury wristwatch that kept on ticking.
The pair soon realized that “Walsdorf and Davis” didn’t quite roll off the tongue, and that to be successful, they should switch to a name that was easy to pronounce in every language.
Wilsdorf liked how “Rolex” was onomatopoeic for the sound of a watch being wound. So in 1908, they trademarked Rolex.
In a bid to avoid eye-watering postwar taxes on luxury goods, Rolex moved its HQ from London to Geneva in 1919 where it remains today.
Rolex’s reputation for reliability exploded in 1926 when it introduced the dust- and waterproof Oyster model. The company would display Oysters in shop windows fully submerged, and even hired British swimmer Mercedes Gleitze to swim across the English Channel wearing one.
The company’s next big innovation came in 1931, when they released the Perpetual rotor — a self-winding mechanism that relied entirely on gravity to keep going.
Wilsdorf passed away in 1960 but his legacy of dependable luxury lives on. Today’s Rolexes are known for their beauty and (literal) timelessness.
But they're not the only nice watches out there.
Heck, they’re not even the nicest Swiss watches on the market.
Before making a five-figure investment, it helps to understand the asset we’re buying — and what’s driving the market.
Why are Rolexes so popular?
Yep, you read that right.
Believe it or not, Rolexes are actually pretty cheap for luxury Swiss watches. An entry-level Rolex 36mm Oyster Perpetual starts for around $5,800, and can find vintage Rolexes for less than half that.
In contrast, the entry-level model from Vacheron Constantin, the FiftySix, starts at $11,700. And if you found a Patek Philippe Aquanaut listed for MSRP, or Manufacturer’s Suggested Retail Price, (which you won’t, by the way), you’d shell out $21,650.
So Rolexes are, believe it or not, a relative bargain — which also makes them more accessible to a broader market.
Marketing and Brand Recognition
Compared to other luxury watchmakers, Rolex is practically new.
A mere 117 years of age make Rolex a pimply teenager next to Blancpain, Favre-Leuba, and Vacheron Constantin, all of which have been around since before 1755.
And yet, most folks only know of Rolex.
That’s largely due to its aggressive brand-building over the past century. Rolex has associated itself with famous athletes, Everest expeditions, luxury automakers, U.S. Presidents, and no less than four James Bonds (Connery, Lazenby, Moore, and Dalton). It’s also the Official Timekeeper of Wimbledon, the U.S. Open, and Formula One.
In fact, by the time Omegas appeared in 1995’s 007: Goldeneye, it was too late; Rolex had become firmly entrenched in our minds as the luxury watchmaker.
Rolex produces an estimated one million watches per year. That’s a lot of product for a global luxury brand — more than Lexus and Porsche’s combined global sales.
In total, it’s enough for the celebrated watchmaker to corner a whopping 25% of the market.
And yet, despite this stunning production volume for a handmade product, Rolexes typically have a waitlist. For rare and/or higher end models like a GMT Master II or a Carbon Daytona, the wait can be three or more years.
Some dealers seized the opportunity to employ shady sales tactics, forcing buyers to purchase several “lesser” timepieces just to “earn” a place on the waitlist for a superior watch.
Such greedy tactics aggravated pandemic-era buyers, who began accusing Rolex of using artificial scarcity toa drive up prices.
But Rolex was quick to set the record straight, telling Yahoo! Finance that “Our current production cannot meet the existing demand in an exhaustive way, at least not without reducing the quality of our watches.”
So while the scarcity may not be artificial, it’s still very real.
In summary, Rolexes are obscenely popular — and thus valuable — due to their relative affordability, brand recognition, and rising scarcity.
Which brings us to 2022.
Why Invest in Rolex Watches Now?
Due to their uncanny ability to hold their value — even grow a little — Rolexes have long been considered a pretty solid investment.
More recently, however, some would say they’ve gone from “solid” to “cheat code.”
“Rolexes have been a good investment over the years, but not like the last five,” Paul Altieri, CEO of Bob’s Watches, told the South China Morning Post. “Before you leave the store it’s worth double or triple what you paid.”
Will demand stick around, though? Will it sustain itself due to scarcity, like the used car market? Or will it level off due to outside factors, like the housing market?
Trends indicate the former case.
A report by McKinsey & Co. has named the pre-owned watch market as “the industry’s fastest-growing segment, reaching $29 to $32 billion in sales by 2025.”
At present, two-thirds of pre-owned luxury watch sales are going to “watch enthusiasts and impatient buyers” — the two groups most willing to pay a premium.
In summary, the market is scalding hot and full of hungry buyers. As Altieri said, some Rolexes can appreciate 300% by the time you leave the dealer.
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How to Invest in Rolex Watches
Let’s dive into Rolex Investing 101.
1. Know the Best Rolexes to Invest In
The first step to investing in a Rolex is to find the right model.
Rolex has a lineup of 16 different “collections.” Bob's watches has a list with prices. You can think of each collection like a different model of a luxury car that has further limited editions and customization options.
Now, which to pick?
Generally, steel sports watches as a fairly reliable bet. This includes the GMT-Master II, Daytona, and Submariner collections. The Datejust collection has begun rapidly appreciating in recent months, too.
Unfortunately, you can’t just walk into a dealer and buy one of these at MSRP. They’re appreciating so quickly because they’re so hard to get.
So you have two options:
- Buy a Rolex on the secondary market at a steep premium today, or
- Get on the waitlist to purchase a Rolex at or near MSRP within months/years
Since demand is unlikely to wane in the near future, waiting months or even years on the waitlist may actually make sense. You’re more likely to see positive gains if you buy a Submariner for $9,000 next year than if you buy one for $13,000 tomorrow.
2. Visit Local Dealers and Get On As Many Waitlists As Possible
Rolex Authorized Dealers, or ADs, get to choose their customers. As a result, your experience at a brick-and-mortar AD may vary wildly.
Some ADs may sell you an Oyster within 20 minutes of you walking in. Others will say you have to buy ten lesser watches (yes, ten) before making their “preferred client list” with the privilege of buying a Rolex.
The latter group isn't worth dealing with.
When an AD offers to put you — a totally new client — on a waitlist for a popular Rolex, it can be hard to tell if they’re being truthful. Sometimes they’re shooing you away, other times they’re being genuine and you might be 12 short months from owning a Daytona.
The two best ways to maximize your chances are to:
- Get on as many waitlists as possible, and
- Know your stuff, so they don’t immediately write you off
Again, it helps to be an expert in what you’re investing in. Check out these highly detailed buying guides from trusted resellers:
- Rolex Watches: The Ultimate Buying Guide by Bob’s Watches
- The Chrono24 Buyer’s Guides for GMT-Master II, Daytona, Datejust and Submariner Ref. 114060
- A Rolex Watch Buying Guide by Grayson & Sons
Consider also subscribing to the r/rolex subreddit, an online watering hole for enthusiasts and experts.
3. Keep an Eye Out for Deals on Trusted Online Resellers
As you wait to get off the waitlist for a watch near MSRP, it wouldn’t hurt to browse pre-owned listings. The two best sites are Bob’s Watches and Chrono24.
Sure, the secondary market is almost universally inflated, but the occasional deal does still come down the pipeline.
Trusted marketplaces are also just a good place to observe how Rolex values fluctuate, read blogs, and monitor new arrivals.
As for eBay, approach with caution. Selling fake Swiss watches is big business — an estimated 1.6 million fakes are produced each year.
Never, ever consider a watch that doesn’t have eBay’s Authenticity Guarantee. Even then, some collectors only trust the more experienced authenticators at Bob’s Watches and Chrono24.
4. Protect Your Purchase
Unlike stocks, physical assets like Rolexes are vulnerable to loss, theft, and damage. Therefore, you might want to consider storage options and insurance to preserve the value of your investment.
As a first step, see if your homeowners insurance is sufficient to cover the value of your watch. If not, you might consider raising your coverage levels or purchasing dedicated watch insurance from a company like Zillion or Jewelers Mutual.
You might also consider keeping your watch in a locked safe for around $200, or a safety deposit box at the bank for around $60 per year.
5. Know When to Sell
To start, Rolexes need servicing every ten years. If you’re planning to sell between five and ten years out, you might want to get preemptive servicing just so your watch sells faster.
As for timing the market, we’re obviously in a scalding hot market right now for flipping. If by some miracle you manage to find a Submariner at MSRP, you might strongly consider relisting it ASAP.
If you buy a Rolex at a market premium, you may want to sit on it (even enjoy wearing it) for a few months. Keep an eye on fluctuating values, sell during a demand spike, and hold during quiet periods.
If the market cools off after your purchase, don’t fret just yet. Remember that Rolexes hold their value exceptionally well and won’t stop ticking for a hundred years.
Is a Rolex an Investment?
Are Rolexes really the foolproof investment they’re touted to be?
Sure, some Rolexes can be flipped overnight for a 200% ROI, but that’s the exception, not the norm.
Here’s a hefty dose of reality that any aspiring Rolex investor will have to swallow before making an informed investment:
Rolex “Investing” is Highly Speculative
Sure, demand for pre-owned Rolexes is projected to remain high through 2025, but that’s all it is: a projection.
Like NFTs or Beanie Babies, the Rolex market could just as easily cool off. Regular buyers may get priced out, or short-term flippers may get bored and move on to the next hot market. It’s hard to predict with any accuracy where trends could go.
Read more>>What Is a Speculative Investment? Definition, Examples, & Impact
Picking the Right Rolex Can Be Tricky
Even if you find a Submariner near MSRP, you should know that not every Submariner commands high resale prices. Some variations of color, year, bezel, feature, band material, edition, appreciate more than others.
Plus, according to McKinsey and Co., 90% of pre-owned watches are actually sold below firsthand retail value, including many prestigious Rolex models. Predicting which variation of which collection will appreciate can be extremely tricky, even for enthusiasts.
Physical Assets Can Be Lost, Stolen, or Damaged
Worth a quick re-mention is that physical assets like watches need proper care, storage, and/or insurance to preserve their value over time — costs that you’ll want to factor into your expected returns.
You May Accidentally Purchase a Fake or “Refurbished” Model
The risk of buying a fake becomes vanishingly small if you purchase a new watch through an authorized dealer (AD) or a trusted online reseller like Bob’s Watches or Chrono24.
But if you buy a preowned or vintage watch, even trusted retailers may sell you a Rolex that has been refurbished or repaired with non-Rolex parts. The watch may look and function fine, but its value will be impacted if it was repaired with non-authentic materials.
Flipping May Get You Banned for Life
Finally, there have been isolated reports across forums and articles about flippers getting caught by their AD or manufacturer and being banned for life from ever buying a high-end watch again.
In fact, before aiming to flip a GMT-Master II, you’ll want to consider it carefully. Sure, there might be some profit — but there’s also the risk of getting banned by Rolex, letting down the watch-collecting community, and the guilt of feeding a cycle of greed.
The Bottom Line
In the end, there are two ways to “invest” in a Rolex. You can either:
- Buy one to flip, bearing the risks of a loss and a lifetime ban, or
- Buy one to keep, cherish, and pass along to your grandkids
I won’t tell you which way to go, but I will say this: If you invest well in the stock market, you won’t need to flip Rolexes — you can buy one to keep.
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