Morgan Stanley: Prices for Rolex, Patek Philippe and Audemars Piguet watches will keep plunging due to a flood of supply — here are 3 real assets that remain scarce and coveted
The second-hand market for luxury timepieces had a huge bull run over the past few years. But according to a report by Morgan Stanley using data from WatchCharts — which tracks real-time watch market sales — prices of the most sought-after watches from top luxury brands have dropped significantly.
The most popular Rolex models saw their prices falling 21% since the peak last April. For Patek Philippe, prices of the most popular references plunged 19%.
“We have noticed a significant increase of watch inventory in the secondary watch market year to date as a result of secondhand watch dealers and individual watch investors off-loading their stocks,” Morgan Stanley wrote.
The downtrend could be here to stay.
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“Given the current watch inventory for sale and the worsening macro backdrop, we would expect second-hand prices to contract further quarter over quarter.”
With many financial assets deep in the doldrums and a recession looming in the distance, it’s hard to say when sentiment will change. But if you are looking for tangible assets, a few are still worth considering — even in today’s market environment.
Real estate has been a popular asset class as of late — perhaps because it’s a well-known hedge against inflation.
As the price of raw materials and labor goes up, new properties are more expensive to build. And that drives up the price of existing real estate.
Well-chosen properties can provide more than just price appreciation. Investors also get to earn a steady stream of rental income.
Of course, while we all like the idea of collecting passive income, being a landlord does come with its hassles, like fixing leaky faucets and dealing with difficult tenants
But you don’t need to be a landlord to start investing in real estate. There are plenty of real estate investment trusts (REITs) as well as crowdfunding platforms that can get you started on becoming a real estate mogul.
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The wealthy elites have amassed farmland since the beginning of recorded history.
Today, Bill Gates — the fourth richest person in the world, with a net worth of $116 billion according to Bloomberg — is the largest private farmland owner in the U.S.
You don’t need an MBA to see the appeal: Farmland is intrinsically valuable and has little correlation with the ups and downs of the stock market. And even in a recession, people still need to eat.
Between 1992 and 2020, U.S. farmland returned an average of 11% per year. Over the same time frame, the S&P 500 returned only 8% annually.
Investing in farmland is also becoming more accessible these days, even if you know nothing about farming.
Wineries produce investment-grade products in small quantities, usually a few hundred bottles. That means there’s a scarcity of valuable products in circulation, and availability only goes down as people consume it.
As a real asset, fine wine can also provide the diversification you need to protect your portfolio against the volatile effects of inflation and recession. As of right now, the S&P 500 is down 8% in the past year. Meanwhile, the Liv-ex Fine Wine 1000 has gone up 22%.
It offers plenty of growth, too. Since 2005, Sotheby’s Fine Wine Index has gone up 316%. Wine outperformed the Global Equity Index by 1.88% annually over the last 15 years.
You can invest in wine by purchasing individual bottles — but you’ll need a place to store them properly. Residential wine cellars often cost tens of thousands of dollars. If not stored at the right temperature or humidity, the bottle could be compromised.
That’s one of the reasons why investing in fine wine used to be an option only for the ultra-rich.
But with a new investing platform, you can invest in investment-grade wine too, just like Bill Koch and LeBron James.
More niches to discover
Of course, the search for tangible assets doesn’t need to stop there. These days, there are plenty of new ways for investors to fight inflation outside of the volatile stock market.
Traditionally, alternative investments have been the purview of institutional investors and ultra-high-net-worth individuals. But new platforms are demystifying niche markets and making it easier and cheaper to buy in, especially for non-accredited investors.
These platforms give retail investors access to a range of private market investments that typically have a low correlation to the stock market, with some requiring a minimum investment of just $500.
These include luxury vehicle finance, commercial real estate, fine art and even legal finance.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.