Friends and acquaintances avoid conversations with me about economics. The mildest of ideas befuddle them. Even so, you should become familiar with one or two simple concepts to become an informed buyer of vintage watches. The first is “liquidity”.
To give an example, let’s look at medium size businesses. I look at a scenario that has created problems for me as a consultant. (The names have been changed to protect the innocent.)
Ben’s father migrated to the US from Germany in the 1880’s. He started a small package goods store in downtown Dallas, which failed. That became a blessing and a curse.
Before the package store failed, Ben’s son, Issac, bought an engagement ring from a pawn shop (resale jeweler) for his girlfriend. She turned him down, rather, her parents turned him down and he kept the ring. He met another young woman and went through the same scenario. Now, he had two rings. He traded them for a larger diamond and sold it to a visitor.
With his father’s business failing, Issac took a space in his father’s store and began buying used jewelry. He then resold the used items for a profit. Over the next twenty years, the business grew into a prestigious operation. When Issac’s son and daughter joined the company, it grew rapidly. They bought a small manufacturer and hired a diamond cutter.
Issac died and left the business to his son and daughter. That came with an unexpected and devastating surprise. They had to sell the company’s assets for less than 50% of the inventory value and shutter the company. Issac’s children wound up poor. Why? They couldn’t pay the inheritance taxes and had to have an inventory liquidation sale and pull on a bank line-of-credit to come up with the cash needed to pay the IRS, who gave them a 30 day ultimatum to pay or have all their assets ceased. They couldn’t pay the bank and declared personal bankruptcy.
Several times, I begged Issac to take his company public and he refused. If he had, his stock would have traded on the American Exchange and his children could have sold stock to pay the IRS. Issac’s paper stock would have become liquid.
Double Auctions Create Liquidity
When eBay opened, several markets came into existence and provided liquidity for once unsaleable items. For example, collectors of porcelain dinnerware such as Limoges began to trade. Collectibles of various kinds had a market and you could get money for things that you didn’t dare try to sell in the past.
Put an item up for auction on eBay and someone would pay you money for it. That’s liquidity. Shortly after people first referred to eBay as a giant flea market, people began trading on the site. Buyers found bargains on eBay and relisted them. Subsequently prices rose.
Hamilton Vintage Watches
When I first joined eBay in January 2000, I found a large number of well-kept Hamilton Boulton watches at auction. The majority of them sold for $25. Within a year, they began selling for over $100. That allowed me, for example, to service the movement, refurbish the dial, add a new crystal and polish the case, then double my money – sometimes I tripled my money. That didn’t last long. I could not restore a watch and make a profit.
I tried other vintage watches such as Lord Elgins, Walthams, Bulovas and so forth. They did not sell for more than I paid and in most cases, I lost money on them. Why?
Like the stock market, people went for the pick of the litter. Hamilton watches rarely wore out or broke from normal use. The company sold more pocket watches and wristwatches than their competitors. Hamilton kept their parts interchangeable, maintained the same caliber movements for decades and marketed their watches so the original owners kept them as keepsakes.
Hamilton never built-in obsolescence. You couldn’t say that for any other brands regardless of price range. For example, Rolex won’t service your watch if it’s 10 years or older.
Things Have Changed
On-line auction listings at eBay over the last six years have fallen from 89% to less than 19%. The National Bureau of Economic Research produced an extensive report on this topic as of May 2013. The authors produced a number of sophisticated trends and analysis using mathematics and statistics. I hate that I can read and understand the paper. I have a simple one word summary of the findings: GOOGLE.
At one time, eBay cornered the market on commodity values of used goods. They still have a lion’s share of that information. In many cases, eBay is the only source of a product you might need, like a watch part or or movement. When a listing says “preowned”, the seller will place the item on-line as an auction – 5.97% of the time over a fixed price listing. That’s not much.
Fewer auctions mean fewer bidders for Hamilton vintage watches. Fewer bidders mean lower prices and lower demand. That’s one of the fundamentals of economics.
Why Google?
Ebay may have $60 billion in sales, but the Internet has at least $50 trillion. The latter is a guess. Regardless, if I want to find a price on an items, I can search Google and find it. Often, the item exists on eBay or Amazon, but not as exclusively as it once did. Individual web sites also compete with the big houses.
eBay registered and started operations in 1995 along with several other auction sites. By 2001, eBay had become the dominant auction site and had $9.3 billion in sales. That rose to $67 billion by 2012. It also became the predominant source of product pricing information for consumers.
By 2004, Google accounted for 87.4% of all Internet searches. Today, Google encompasses searches in all areas of information. Need a library book? Search Google. Want to look at the record of a meeting in Lancaster, PA in 1872? Google sent a team out and digitized the records in the archives of the City Hall and the Historical Society, so it could add to its database.
Want a price on a Hamilton watch, try Google.
Fixed Prices and Hamilton Vintage Watches
I have a couple of points to make in light of the current trends in on-line selling.
First, only sell your Hamilton watch in an auction format, if you need money fast. Then, lower your expectations on the amount of money you will receive. The value of Hamilton watches has tanked (no pun intended).
Secondly, I’ve done something I never thought I would. I warmed up to fixed pricing, but not entirely. I sell my watches in a Buy It Now with a Make Offer format. That gives a buyer the ability to bid.
With a fixed price, I still believe my watches are under-priced, because I compare my listings with other sellers.
I feel the price of a vintage Hamilton watch should sell for it’s parts value plus the cost of a complete service and a modest profit. That would put a good Hamilton watch in the $450 range. I don’t see much of that. I do see sellers getting $450, but those are for old, used watches in shinny cases with a decent crystal and dial. They might run, but not for long.
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| Old Hamilton Watch |
A complete service includes taking the watch apart, examining it thoroughly, cleaning it, oiling it, reassembling it and adjusting it to keep accurate time in any position you might move your wrist. I know sellers who claimed their watches are serviced and they are simply dipped in a solution in hopes that a slight surface cleaning of the movement will make it run again. Run long enough to sell. That often happens.
I see some ridiculous asking prices for watches, I don’t believe will run for long. I don’t see a value add. I don’t get upset, because it doesn’t do any good, but it sucks.
Summary
The purpose of this article is to provide information to help you make informed purchase decisions when it comes to vintage watches. Unless you are prepared to spend an inordinate amount of time fooling around trying to find a watch maker under 94 years old, find a seller who can stand behind his product. The other option, buy a new watch.
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| New Hamilton Watch |
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