What is a safe haven?
A safe investment is an investment that allows you to secure your assets despite periods of crisis. During periods of uncertainty, these values are more sought after.
Stock markets fluctuate widely, and the low returns on traditional investments are causing some people to rethink and diversify their investments, and gradually move away from traditional investments, which are mostly stocks and bonds.
Some investors, therefore, turn to so-called "alternative" investments. Alternative investments are not part of the traditional asset classes of stocks and bonds. In other words, as soon as individuals or institutions invest in something other than traditional investments, they are alternative investments. Alternative investments are divided into 5 main categories: real estate, hedge funds, commodities including gold, oil, wheat, etc... Infrastructures such as water, energy, transport, etc... And various collector's items such as vintage watches and cars, wine, and art.
For collectors' items, these types of assets are developing very rapidly in the company, and are known as "passion investments". This market is also booming, and numerous auction sales records are on the rise. Stories of investors who bought these passion assets and sold them a few years later for several million euros are pouring into the media. The attention that the press pays to these passion investments naturally fuels investor interest in these investments. In view of the exorbitant figures in the press, many people conclude that these collectors' items can earn a lot of money quickly and without risk. This type of asset can also be a hedge against inflation.
However, these media records should not obscure the fact that not all these types of assets sell at these prices and that some of them do not always find buyers. Only a handful are likely to generate high rates of return for their owners and therefore represent a lucrative investment. Passion investments include a variety of properties for all tastes and for all budgets. A recent trend shows that savers want to invest their money in profitable investments such as collector's watches. Indeed, seeing the evolution of the ratings of certain watches, it seems legitimate to be tempted by this type of investment.
But for watch collectors, the appeal of a watch is above all aesthetic and identity-related. The watch on a man's wrist is an extension of his personality and is also one of the few jewels a man can wear. Indeed, depending on the type of watch one wears or the brand one buys, one reveals a facet of their personality. Even if collector's watches are considered more like jewelry or even a fashion accessory, they have taken their place in society, which has evolved greatly in recent years. They are gradually becoming objects of speculation. Given the rising prices of watches and the desire to acquire coveted examples, the acquisition of these collector's items is becoming more and more like an investment.
BUT HOW DO YOU EXPLAIN THIS EVOLUTION?
Alternative investments, such as collector's watches, generally have a low or even negative correlation with stocks, bonds, and financial markets. A boom or a crash in the financial markets affects the value of stocks and bonds, but these fluctuations have little or no impact on some alternative values. This is why, during crises, we see an increase in the vintage market, as recently at the auctions last June.
Of course, buying a collector's watch as an investment is not without risk. Like any investment, there is no guarantee of an expected return. And we don't know what the future holds, especially in a world with as much uncertainty as today.
In addition, alternative investments face a liquidity problem. The latter assesses the speed and ease with which an asset can be traded on the market without having a major impact on the price. Alternative investments carry a higher degree of liquidity risk than traditional investments.
Nevertheless, in recent years, interest in alternative investments, and particularly in collector's watches, has soared. The explanation for this rise is due, on one hand to low interest rates, and on the other hand, to the extreme volatility of the stock markets, and perhaps also to the emergence of China and all its new millionaires.
