Illustration by Diane Fenster

 Fair market value. To qualify as a true collectible, an object must first be a repository of high intrinsic value to the collector. It must "sing to you. " Yet the concept of fair market value (an objective quantity on which the majority of potential buyers agree) cannot be avoided if a transaction is to take place.

Girard-Perregaux’s Three Golden Bridges Tourbillon is considered one of the most beautiful movement designs ever created.

Traders and auction firms remain the undisputed arbiters of baseline current market values. Specialty auction houses such as Antiquorum have, in particular, assumed a key role in establishing these ranges. However, we must be mindful of just what a hammer price represents: a market price set by the conditions of a specific time and place, with a specific set of buyers and sellers. Taken out of context, these numbers can be dangerously misleading.

As an example, the Audemars Piguet Equation of Time, which recently hammered for about $17,000, set an unrealistically low perceived market value for an otherwise outstanding model. Buyers seeking this price will find very few sellers, with most pre-owned mint and complete specimens being offered at nearly double the $17,000 figure. The rare 20-piece platinum model limited edition fetches more than its original suggested retail price of $87,500. The Jules Audemars Equation of Time, incorporates a popular complication, the perpetual calendar, with sunrise and sunset astronomic indicators, as well as the Equation of Time differential, all precisely calibrated for a specific urban location. Yet it leaves collectors of high mechanical complications scratching their heads about that anomalously low hammer price.

While they have not supplanted the powerful influence of traditional houses, the relatively new online auction and Internet-based community sales listing services have emerged as important venues for traders and collectors alike. EBay has begun to establish itself as a significant pricing agent, although it tends to commoditize the items offered for sale. As a venue, eBay best serves the dealer and trader whose priorities are turnover and sales, rather than the dedicated collector who places a premium on absolute provenance and completeness.

The rise of enthusiast-oriented online communities such as ThePuristS.com, focusing on the interests of the serious connoisseur, or Broadarrow.net, specializing in military timepieces, have provided some counter-balance to larger online marketplaces through their own community-driven sales listing boards. Their more congenial community feel and higher level of specialized collector sophistication tend to more fully and properly value overall condition and provenance for both buyer and seller. Ask the typical seller on an enthusiasts’ board about the item listed, and you will likely receive a complete ownership history, and possibly even a history of the type or brand. Sellers are usually aficionados and collectors themselves, deaccessioning to trim the collection or to finance the next major acquisition. Whereas on eBay, intrinsic value is merely one of several selling points, on the enthusiast venues, it assumes personal implications.

 

The Sky Moon Tourbillon from Patek Philippe features an asymmetrical design. (Click image for close-up)

Intrinsic value. These implications are as varied and complex as the movements of the watches themselves. To eavesdrop on the perorations in a connoisseurs chat room is to descend into a kind of bedlam populated by high priests of horology whose madness is mixed with a passion for detail that would stupefy even a bevy of clerics debating the Doctrine of Transubstantiation. The technical underpinnings occupy much of this discussion of a piece’s intrinsic value, but the emotional force that accompanies such opinion usually derives from less empirical factors. Following are the eight primary components of intrinsic value in the watch-collecting world.

 Branding and prestige. This component determines the lion’s share of "pedigree." High horology tends to be a very traditional field, and the history of a brand is critical to the brand value for most consumers, even more so for the typical collector or specialist. For the better part of the 20th century, three high horology brands have maintained the most consistent reputations for quality and the most durable air of prestige. Often known as the Big Three, they are Audemars Piguet, Patek Philippe, and Vacheron Constantin.

From a market liquidity standpoint, one can expand this select group to include Breguet, Rolex, and Cartier. These three easily rival the former brands in terms of liquidity but, from a strict high-horology standpoint, took second tier to the Big Three until the last decade or so.

 Historical considerations. Certain watches have captured the imaginations of collectors as result of their close association with historic events, individuals, or organizations. Examples include the Breguet Type XX, which was originally designed for the French Air Force, and the Rolex Comex models, associated with deep-sea diving.

 Social considerations. The cult of celebrity, like most other aspects of contemporary life, plays its part in horology as well. Gianni Agnelli, the Italian industrialist and style arbiter, established a fashion trend when he wore his Cartier fastened over his shirt cuff.

 Technical DESIGN. Among the most critical considerations from the collector’s perspective, the incorporation into its design of special or high complications—such as the tourbillon, the split-second rattrapante chronograph, the minute repeater or sonnerie—has a dramatic impact on a watch’s desirability.

 Functionality. Added functionality beyond basic timekeeping, but distinguished from high complications—such as that found in chronographs and dive watches, or the purpose-built performance of chronometers, as well as calendar complications—these petite complications can affect a piece’s collectibility, though usually to a lesser degree than the high complications.

 Aesthetics. Overall design can profoundly influence long-term value. Examples of design-driven classics include the Patek Philippe asymmetrical models and the Cartier Crash watch.

 Rarity. This valuation factor comes in two varieties: absolute and relative. Absolute rarity generally requires that the total number of watches extant be fewer than 100, preferably fewer than 10. Relative rarity is dependent on the relative relationship of demand and supply with respect to a particular model. The Audemars Piguet End of Days Royal Oak Offshore, for instance, was a limited edition of 500; yet it is very hard to find today, and generally sells at well over the original suggested retail price of $13,600.

 Condition and completeness. For collectors, the original box, manuals and other papers are important considerations in the collectibility of any specific piece.

Weighing these factors, well-informed collectors will generally seek those pieces that possess high intrinsic value first, rather than simply high current market value, thereby improving opportunities for the long-term appreciation and value retention.

Take, for instance, a watch such as the Girard-Perregaux Three Golden Bridges Tourbillon. New pieces of this remarkable watch continue to be in very high demand, with a long waiting list for delivery. Yet, in the pre-owned secondary market, excellent examples can still be found in the $30,000 price range. Applying our market value and intrinsic value templates, we find that from the standpoint of brand cachet, Girard-Perregaux is one in ascendance, with consistently increasing prestige and a reputation for quality and innovation.

Aesthetically, the Three Golden Bridges Tourbillon model range is widely considered one of the most beautiful movement designs ever created. From the technical perspective, the tourbillon is one of the most sought-after high complications, with an overall movement design based upon a widely regarded historical model, making this a highly desirable specimen for any collection. Finally, pieces from this model range are absolutely rare. Fewer than five pieces a year are made of the open-worked skeletonized version, and current deliveries are back ordered through 2007. Ironically, it might not yet be relatively rare, as the potential market for wristwatches in this price range is still small, though growing.

The Three Golden Bridges Tourbillon represents a tremendous reconciled value, combining high intrinsic value with a relatively low current secondary market worth; as a result, the watch enjoys high appreciation potential.

Historically, building any collection based on expectations of monetary appreciation has never been a good idea. First and foremost, a collection must touch one’s soul. But, as recent technological developments such as the Internet continue to narrow the divide that once separated collectors from around the world, increasing liquidity and access to information, we can take heart in knowing our well-chosen watch collections continue to show significant potential for value retention and appreciation, while our ongoing pleasure in the art and genius they embody multiplies many folds.