Author: Alex Ciani

The aftermath of the Geneva auctions week gets definitely the attention of most dealers and collectors alike.  Of course, I reckoned I’d have to write something about it to update my blog with something new. But as the days passed by, I got also really intrigued by the idea of trying to answer the questions that I am punctually asked by friends and clients every time a watch does not bring in auction at least the same price that everybody asks on the market: how can a Paul Newman sell for less than $ 250K? That watch sold for nothing, why? Is the market collapsing?

First off, I would like to give you a basic understanding of how auctions results should be interpreted. For this purpose, I have asked the four major international auction houses in the watch department – Christie’s, Sotheby’s, Antiquorum and Phillips – for their results in detail, and namely for their total sales before buyer’s commission, the exact number of lots offered for sale after lots withdrawn and the total of the low estimates of these watches, which we know of course generally also represents the reserve price offered to the sellers (except of course for the lots offered without reserve).

I thank all of them for having kindly submitted the requested information, albeit all in a different way: except for one auction house, the other three have provided partial data and, as I have realized sourcing my own information, did that apparently for a reason. Because, of course, the three numbers I asked for are all easily obtainable online, save naturally for the tedious task of extrapolating them manually. Honestly, I initially just meant to spare myself the leg work, but as I saw the info coming in different forms from different auction houses I couldn’t help thinking there was a reason for that.

The main piece of information all auction houses will make public is the total of all sales, inclusive of buyer’s commissions: the higher the number, the better the performance will appear and well, that extra 25% that’s added to the bill makes that number look even bigger. I do think that is an important piece of information anyway, because at the end of the day that is what the watches have really brought on the market. For example, if a steel Paul Newman sold for $ 160K hammer, therefore $ 200K including commission, it would be more appropriate to assess its market value around the higher figure, because that’s what the end user is evidently willing to pay for it. On the other hand, as a seller you will need to consider that you would be getting $ 160K selling that watch to auction. Auction sales’ outcomes are unpredictable, but there are stats that can help you steer your choice as a seller towards the safest direction: that’s when the other numbers come into play. So, let’s look beyond the two basics figures we’re normally offered: the total of the proceeds inflated with the buyer’s commission and, occasionally, the percentage of watches sold over the number of lots offered for sale.

The reason why knowing the total of all estimates is useful, is that it can be opposed to that of the total sales before commission. This percentage generally ranging from barely below the 100% threshold and somewhat more over it, will tell you the average ability of that auction house to score above the minimum promised to the consignor. Generally the reserve price is fixed somewhere around half of what the watch is expected to potentially express including commission, as that’s more or less as high a number that can be reasonably guaranteed the seller, yet allowing the deal to sound attractive to potential buyers. Needless to say, the lower the reserve price will be, the easier it’s sale is going to be and the higher the selling price over reserve ratio will prove: conversely, sellers will be less and less easy to convince to consign as the offered reserve price lowers.

Believe it or not, the lower the reserve price of a  lot offered for sale, the higher the odds that it’s going to perform well. So when your auction representative will push for a lower reserve price, he will actually be doing something that works best for you: he will leverage on the high estimate to convince you to let go, using it to raise your best hopes. This is where the average percentage above reserve an auction generally strikes can be an indicator of what you can expect: if your watch’s estimate will be $ 100K to $ 300K,  and auction house that generally scores 90% of the low estimate in total sales before commission, it is likely to either fail at selling your item or will sell it at the very minimum you were guaranteed (plus the commission, that goes to them) which in this case will be $ 100K; if their average is 20% over the the low estimate, that will suggest that the odds you are going to sell your watch for $ 120K or more are relatively significant.

I did run all these number for all the above mentioned auction houses and did get a good picture of what happened in this particular season. Although I will not share this analysis at this time, I do recommend that you do such study when pondering which auction house you will entrust with the sale of your watches. What I will share, however, is that one of them provided a detailed, already made analysis including all of this and even more data in a surprisingly exhaustive document; another one provided all the information I had asked for in a more informal way, allowing me to run the numbers without scrambling online and pull my own results; the third provided part of the requested info, just so there could be no complaints, yet presenting it in a way that certainly wouldn’t help to easily get a very clear picture; and the last one volunteered only their press release, a manifesto celebrative of their more significant sales and the total amount of the sales scored.

Including premium, not the naked figure. In a way, each of these auction house’s individual performance related in its own way to how the statistic results were disclosed. One last thing I think is worth noting is that everyone sold as an average  closer to the low estimate than the high, this time, something that everyone has noticed for sure. The market is apparently going through the expected slow down after a few years of consistent growth. Nonetheless, a total of 55, 717,756 Swiss Francs (roughly the same in USD) have been spent in watches during the week, excluding Christie’s Only Watch charity event, that bought another CHF 38,593,000 with the Patek Philippe 6300A-010 alone that sold for CHF 31,000,000. Definitely not too bad, I would say: this is obviously a market, and a serious one. I still can’t help imagine it aligning itself with that of contemporary art and vintage automobiles over time.

Let me try to explain why, in my opinion, watches offered at a much lower price of what we are educated to believe to be their market, occasionally sell for an even lower one, if they sell at all. The concerns that such events trigger, and the idea that these are  necessarily signals of a crashing market, derive from the generalized misconception that the vintage watch market is somewhat similar to that of the stock exchange. I have many a time received calls from clients who had bought a watch – mostly a model appealing a vast audience, like a Rolex Daytona – just a few weeks before, asking “what are they quoting now”, as if there were department in Wall Street for watch dealings or something, and I were their trade agent.

And other calls, at times even confrontational, if a watch similar the one they owned was advertised by another dealer or sold in auction for less than they had  paid for theirs. Again, all examples of how the expectation of new watch collectors are occasionally a bit confused and often, I will ad, because of what their trusted watch dealer has deemed reasonable- if not convenient- let them believe. The truth of the matter is that although high-end watches haves turned out to prove exceptional investments over time for many collectors, they haven’t done so for all of them. Inevitably what you buy, how long you hang on to it and at what particular time you sell it have a critical impact on this particular aspect, and selling your watch is not exactly the same thing as calling your bank investments’ desk agent and tell him to get rid of all your General Electric stock at the same price you’ve seen on the morning’s WSJ.

In auction especially, many factors come in to play. First of all, a good number of buyers is made of dealers. Dealers do generally buy their inventory at market price minus some 10 to 20%, but that doesn’t mean they will buy each and every watch of the same make and model they will run into: especially at today’s prices, they will likely have to wait until what they already have in-house is sold, to then replace it. Exceptions may happen when the “multiple” comes stupid cheap or, more likely, when its characteristics are so outstanding that he will buy out of pure passion alone: and that’s when extraordinary comes into play.

Second, non professionals and collectors still tend to be very shy about buying in auction, because the distance can make it hard to personally inspect  the desired watch and there is no return policy in case you just don’t like it; because of the payment terms that are likely to be less flexible than those offered by dealers; because of the pressure of having to commit to a price in a matter of seconds if you bid personally or on the phone; because of the occasionally unfriendly shipping and customs logistics that can come into play if they’re buying from another country. On top of it all, it takes at least two bidders who want that same watch, on that same day, in the same time zone, against all the similar lots offered by other auction houses, to compete on that same lot and bring the price up to real market values. Also, we must not forget how low reserve prices generally are. As you can see, there are so many factors that may affect an auction result, that I am more surprised when I see  watches selling exactly in their retail price range than the other way around.

One question that prospect clients invariably ask me nowadays, whilst going through the process of assessing if a watch is worth buying or not, is: “is the case polished”? This question is legitimate, since the market demands higher prices for untouched watches so – fairly enough – they want to know how the price they are asked reflects the actual condition of the watch, if they are getting the most possible for their money and if the watch they may be about to buy has the prerogatives necessary to be easily re-sold at some point in the future, possibly performing as a good investment too.

Yet, when I hear the question I can’t help rolling my eyes, thinking how ironic it is that so many people expect to make a selective choice based on a difference they obviously cannot see and, occasionally, even understand. I mean, when people ask me if a Rolex GMT has “its super dome” crystal, or a Submariner from the late seventies the “stretch” Oyster bracelet and the “red triangle insert”, they obviously don’t know what they’re talking about. So they want a watch with prerogatives that do not exist or would not be consistent with what they are wanting to buy, just because they heard someone mentioning those items. Likewise, the want a watch that was never polished, mostly because they heard someone saying that that is something you must want.

I know that as long as you’ll just give the answer they want to hear, based on what they heard in some casual watch talk or read on an occasional visit to a collectors’ online forum, you will eventuality score a sale: and some

watch dealers will do just that. Conversely, if you give them an honest picture of the watch you are representing, explaining all the pros and  the cons that make it a good collector’s piece altogether and actually a good deal in the bargain, next thing you know your prospect buyer will run to take the offer from the less honest guy.

Doing your homework every day can be boring at times, that’s out of the question, but if you want the reward that comes at the end, it is also an inevitable endeavor: you want to be a doctor, an architect or an attorney, there is no other way to access the stage and get that degree than going through all the motions involved. Trust me, you’re not getting that diploma from Harvard just asking around what a PhD is all about, and then showing up at the ceremony. If you want to be a true watch expert yourself, you need to devote many years to accomplish the goal, make a lot of mistakes and inevitably lose a lot of money, just like I and others like me have done. Or, you can decide to entrust a true professional to make the best choice for you. My advice is that if you are ill, want to remodel your home or need a good defense in a lawsuit, you better hire the most qualified and experienced doctor, architect or attorney money can buy: rather that look online or ask a multitude of amateurs, opinion makers, bloggers, aficionados and the like how your case ought to be handled, just so that you can at that point hire are a professional and tell him what needs to be done and how. This been said, let’s try to understand a little better what’s what and talk, this time, about where this “unpolished case” thing comes from, what it really represents and what it means in the evaluation of a vintage watch; why people would re-polish cases if everybody wants them unpolished anyway, and other fun stuff like that.

For Part II, click here.

The old fashioned way – almost abandoned, today – to rebuff scratched up cases or remove dents or nicks from beat up watches was an invasive procedure that could literally deform the original shape of a watch case, or at best remove forever that particular finish – whether sanded or lapped – that was unique to the factory’s specifications.

To a true lover of watch design like myself this practice was nothing short of sacrilegious and since the very early days of my career I started growing a particular passion for untouched – or barely touched – vintage watches. Only that condition would preserve the purity of the original design that determined the uniqueness of every model. Just like today, however, the buyer’s preference was determined by what the mass – driven by the market – privileged: back then it was the shiny, freshly re-polished watch. Trust me, refusing to re-polish an untouched watch – which I did several times – simply meant losing the sale and having to wait for another day and another buyer. And these clients were experienced, veteran collectors too! Only the least expert would let me decide for them, and accept to maintain their watch’s original condition even if that involved living with a scratch or a small dent on its case. I will keep blood chilling stories of beautiful, original dials refinished because of collectors’ intolerance to a small halo or patina for next time…

Some of my hometown’s biggest names in watchmaking would proudly include in the service a heavy re-polishing job that would often permanently remove all outer engravings, including case serial numbers and brand logos, like the Rolex coronet on snap on case backs. Sadly, even major manufacturers like Rolex and Patek Philippe would return watches with cases that were literally violated as part of the “official” service process, along with replacing original hands, dials and bezels with later replacement parts that would eventually devastate the integrity and value of the vintage piece. But all this for a reason: it was exactly what clients wanted. Slowly, however, things started to change in favor of preservation, and people – gradually absorbing the education offered from a handful of dealers – started appreciating the occasionally rough beauty of an unmolested watch over the glittering allure of the over-polished case. The request to service centers – factory authorized or not – to overhaul the movement without replacing any original visible part and leaving the case be started becoming so frequent, that they had to start considering to change their views on what was right or wrong regarding maintenance.

So we arrive to our days, when people on one hand ask: “has the case been polished?” – obviously unable to tell themselves, thus not having a real personal opinion or preference – and watch repairmen or service centers daring not touch a case any longer if they have the slightest hunch they’re looking at an untouched one. Unfortunately there are still a few out there that haven’t got it yet and never will, but they represent a truly sparse minority. In the meantime, however, re-polishing cases has not disappeared as a practice, but has evolved into a new concept that I like to think of as “sensitive” watch case restoration, something that a few extraordinary artisans have brought to a level of a real art. In fact, some incredibly talented hands today are capable of working on a previously devastated case and make it look like it was never touched in the first place. As a matter of fact, as far as I am concerned this is the only case in which this kind of intervention is justified. Different hands and different work styles offer different kinds of results, with a general tendency of the individual artisan to strive for a like-new effect as testimony of his/her professional virtues: I see it a little differently, but that’s something I like to share with my restoration clients only. In the meantime, new collectors keep on worrying about an issue that hardly exists anymore, just like traffic occasionally thickens for hours on a same spot, where there seems to be absolutely no cause for this to happen, other than for an accident happened hours earlier and yet not a single trace of it is still visible. Let me remark this: re-polishing the case of a vintage watch that has never been touched before is a very, very bad idea; likewise, leaving an already badly re-polished one…badly re-polished, is just as stupid, if you have a good opportunity to have it done right.

For Part III, click here.

What do we do, now? Keep paying a “never touched” premium to dealers who have learned the way to have their watches perfectly restored for a fraction of that? Or finally learn our own standards and go by those? Is it worth paying other people who will charge us money to tell us NOT to buy based on easily obtainable, public evidence – as that’s the easiest way to make profit at zero risk with zero investment – while exposing us to the same chances of buying a re-polished watch because they couldn’t tell themselves themselves anyway?

Or should we maybe finally accept the fact that what makes a watch truly valuable is its beauty, it’s perfect balance between original condition, organic aging and reasonable wear and tear for the life it has lived, over half a century or more, with no VISIBLE signs of bad restoration attempts to corrupt the picture? Because this is what we are really buying most of the time. And when the unquestionable, history proven, “virgin” condition of a watch is truly available, are we willing to pay the real price, which is three, four or more times the average market? And, do we even need to?

“Let’s stop asking questions the answers to which we would risk using against our own interest anyway; let’s stop allowing dishonest people to make profits by simply lying to our face; let’s stop paying last minute experts a fee for telling us things we could easily figure out by ourselves, as if they made a real difference anyway.”

Conclusion.

With the advent of “preservation” as the new standard, restoration too has changed gear to a point that today’s results were unthinkable just a few years ago. In the meantime, the general public has  only come to understand that a “polished case” is bad, even if just because back in the day “re-polished” meant a violated, vandalized case, awful to look at, even though today that’s really not the case any longer. How does that affect the market? Well, in the first place asking “has the watch been polished?” is likely to possibly provide the enquirer either with a lie or an incorrect answer, unless the watch has been polished by the very person who is offering it, in which case he would know: because in most cases it’s just simply impossible to tell. So, if you really care to know what you are buying, much smarter

questions would be: “does this watch show evident signs of poor re-polishing work?”, or “what quality score would you give the case on a 1 to 100 scale?”, and “is there any visible restoration attempt that corrupts the watch’s original condition?”. Questions that will more likely get a true answer on which a wise decision can be made. And if somebody tries to sell you the idea that they can tell if a case has been re-polished based on millimeters or milligrams differences, they’re just blowing smoke up your ass: a modern, electronic, numerically controlled milling machine has a tolerance of plus or minus 0,2% for a total potential difference in size of two different examples of the exact same finished product of a 0,4%.

Imagine what are the odds that hand finished parts, cut with analogically operated machinery at least half a century older could deliver anything even close to that “non” precision.

So here’s the deal: let’s stop asking questions the answers to which we would risk using against our own interest anyway; let’s stop allowing dishonest people to make profits by simply lying to our face; let’s stop paying last minute experts a fee for telling us things we could easily figure out by ourselves, if they only made a real difference anyway; let’s start instead developing a personal sensitivity that can finally allow us to make our own decisions, guarantee us that we will love what we are buying and, if we don’t feel technically and professionally prepared to make such decisions on our own, have the humility to go out there and trust a supplier who has the experience, knowledge and taste to make the best possible decision for us.

You guessed it, just like we do when we choose our doctor, interior designer or attorney.

Don’t trust blindly those who will always tell you what you like to hear, but try to appreciate and understand the truth. You will find herds of bottom feeders who will volunteer criticizing whatever you are offered from other dealers, and that for sure will protect you from making a bad deal or two. But they will never compensate you for all the good deals they will make you miss either, and that could be just as big, if not bigger, damage; instead, there are a few truly experienced dealers with their own – not yours – skin in the game, who have the experience and knowledge to walk you safely through a true extraordinary experience and, should they ever make a mistake, will not hesitate to own it and stand by it. If you don’t feel confident enough to choose the right watch for you, just try to wisely choose the right dealer: learn about his history, his reputation, his publications – if any – and ask him to help you understand your watch and investment with clarity, standing to his proven experience and not a bunch of controversial information based on online hearsay. Check out what his return policy is, and ask around if he’s known to truly keep his promises.

 

We’ve gone through the phases of watches that would sell only when well re-polished; then, only if with box and papers; then, only if with a “tropical” dial; now, only if “never polished”: what next? Are we ever going to consider watches that just look great enough and that’s it? And by the way, if you are looking at the photos I attached to this post and don’t really see a difference between the properly polished watches and the untouched ones, well…that’s what I’m getting at.