Can normal people make money by trading watches to become rich?

Before we come to the answer of 'yes' and 'no', I would like to understand the basic rule of making money. One of the most common and easy ways to make money is "buy low, sell high".

So, if you want to make money by trading watches, the rule is to buy the watch that is under market price, then sell it at the market price, and you will make some profit. Then, keep repeating it, you will accumulate your wealth. 

It seems simple, isn't it?

No, it's not that easy and simple. Let's divide it into a few challenges:

1. How to find underpriced watches?

Usually, it comes to 2 situations, either they need money urgently or they don't know the market price of their watches.

In this explosive information era, we can know the price of a thing in seconds. Just go on google, you will find the retail price on the official website and authorized dealer's website, and the market price on marketplaces like eBay, Carousell and others. So, it's almost impossible to cheat people with the market price.

Let's say they need money urgently, so it's your chance to get it at a lower price. It works, but you have to be fast and you need to pay the cash upfront. You won't get back your cash until you sell it. So it connects to the second challenge:

2. How do you find those models that are easy to sell?

You need to do your homework and understand the market. You need to study the brand, the models, the mechanism, and the material, check them on websites and marketplaces and know how much they are sold for...That's a lot of work.

But if you do your homework, you will understand the demand for the model and the difficulty to sell the model. Then, you can better decide to buy or pass when you see an underprice watch.

Ok, now you have done your homework and got your underprice watch, the key thing comes:

3. How do you sell your watch profitably?

In old days, you can only do so by having a physical location. But now, you can sell it anywhere, rent a shop, build a website, list it on the marketplace, promote it on Facebook groups, tell your friends and family who love watches...

There are too many ways, but the key thing is how to get them to trust you. Trust cannot be bought, it can only be built by doing good things for long enough and maintaining a good reputation. It takes time and patience.

Now, you will have cost to pay, like rental fee, website builder, shipping fee, and platform commission fee...And don't forget taxes. You need to pay these fees and remain profitable, so it requires volume. The higher your cost is, the more sales you need to make to be profitable. 

If you can figure out these points, you can start making money on trading watches. But if you think you can make profitable sales on each watch, then you need to consider this fact:

How many watches actually increase their prices over time?

Actually, 99% of watches lose their value over time. For these watches, the longer you keep them or the worse their condition, the cheaper it becomes. 

It's just a supply-and-demand game. If many people want to buy it, the factory has limited productions (ex. 5000 pcs/year or 100 pcs/worldwide), then the price goes up. 

If many people want to buy it, the factory increases their production to sell more, the price won't go up.

If not many people want to buy it, the dealer will do promotions to clear their stocks and get back their cash.

So, to avoid the stocks stacking up too many and you having to do stock clearance with loss, you need to be aware of your stock level and cash flow.

However, if you want to focus on the 1% of watches that will increase their price over time, is it possible?

3 watch brands that have the most retained value are:

1. Rolex
2. Patek Philippe
3. Audemars Piguet

These 3 brands have the highest chance to increase their price or at least retain their price and can be treated as an investment. But, you need to take note that not every model will increase their price. 

Also, when the prices have gone too high, the bubble will burst. A great example is during about April or May 2022, the price of luxury watches has gone to its highest price point in history and the bubble burst. 

What happens next is a few months of consecutive price drops, people who want to invest bought at high points lost thousand to millions of dollars. 

So, that is like buying stocks, but harder to predict, because there is no financial report to base it on. It's all based on supply & demand and the market's hype.

Obviously, investing in luxury watches is not an investment that normal people can do, you need to have a huge capital to invest in luxury watches.

For normal people, flipping watches (buy low, sell high) is still achievable. 

Conclusion

Back to this question, can normal people make money by trading watches to become rich? 

I will say 'yes', but it's not easy. Probably less than 1% of people who buy watches are going to make money with it.

If you really love watches and want to make money by doing what you love, it's great. But you need to put in the work to learn everything about watches, start small and gain experience throughout the process.

If you don't like watches, and just want to make money through watches, it's possible too, but it's harder for you. It's because when you don't like 1 thing, it's harder to put in the work required to be successful. 

If you are simply a watch lover, I will say that collecting watches is actually a little conflict with making money, because many watches that you like will lose their value over time. If you want to make money, you can only buy hot Rolex, AP, and PP models, but not other brands.

So, if you care about watches more than money, just buy the watch you like, no matter what other people have to say about it. The key thing is you use your money and make yourself happy!

I wish everyone who is reading this blog to get what you want (money, happiness, friends...) in the journey of collecting watches!