The crisis in Ukraine
Luxury watches have proven to perform superbly in good times with bull markets and upward curves. The only time watches prove to perform even better is in times of crisis. Bear markets are uncertain times with unpredictable fluctuations in the financial markets. Historically, the watches here show no volatile trends. On the contrary, luxury watches have shown strong upward trends in times of crisis. A safe haven if you will.
Ukraine – A sad and tragic test for the watch market
While we are all fearing the outcome and sympathizing with the Ukrainian people, the luxury watch market is undergoing another severe pressure test. The invasion of Ukraine is expected to deliver hard blows deep into the international and domestic financial markets. How deep and hard these blows will be, we can only guess.
At the time of writing (28 February 2022), it is less than a day since we heard the correspondent on the Danish television station TV2 report how the Russians were rushing to “empty” shops of luxury watches while the ruble was still worth something. Now, fortunately, we are living on the other side of this war. On the safe and thankfully peaceful side. However, it is to be feared that we too will need to seek safe havens from various investments and exposures. We do not expect the euro or any other major currency to suffer the same fate as the ruble. On the other hand, we still see a trend in favor of watches as capital preservation for many people who are not normally interested in luxury watches on the private front. This search is driven by the need for safe capital preservation while desiring a high rate of return along the way.
Historically, our investors have seen double-digit returns on their portfolios in recent years. This has been true both in good times before Covid-19 and in times of crisis during Covid-19. So, the market has already spoken: luxury watches are a good place to be while the storm rages on the planet – and currently here in Europe.
Once and for all, we are doing away with the idea that low risk can only mean low return. Our investment exposures have shown the exact opposite in recent years.