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Market Timing
James D. Malcolmson
02/02/2004
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The auction houses that earn their keep from these sales are not complaining. "Last year’s world record was an exceptional watch and an exceptional sale," notes Ader, whose auction house handled the record sale. "I would not, however, say that it was an anomaly. It was the result of passion. When three or four people want the same item very much, the price can go up dramatically. There is a small, but still reasonable number of watches that can fetch exceptional prices."
 Passion, of course, is a frame of mind auction firms actively promote—and passion investing is marked by a far more complex set of emotions than the traditional pairing of fear and greed. Competition, pride and even hubris make themselves felt in an auction scenario. When the desire to best a rival bidder or gratify an obsession with a certain piece fuels the bids, the final price often more accurately reflects these idiosyncrasies than the presale estimate.
Rational Exuberance
Such circumstances are much more prevalent at the top end of the of the market, in the rare complicated watches likely to fetch mid six-figure prices and upwards. It is one reason the rest of the market, while appreciating, has failed to match the world-record price increases of some watches from the top houses.
Another reason: Collectors have become far more picky about what they buy. "Today’s watch market is maturing," says Schnipper. "In the 1980s, very few people were collecting wristwatches. Now that number has rapidly grown, and we can see shades of nuance in the way watches are valued. Much more information has become available as time has progressed, and the longer the category has functioned as a working market, the more awareness there is about what is truly rare."
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