Last week, a scathing critique came from The Swatch Group towards Morgan Stanley Investment Management regarding its research report, “Ninth Annual Swiss Watcher,” released on February 18. For many journalists and investors alike, the Morgan Stanley report is the most quoted report of them all from the watch industry.
In its nearly decade-long existence, it is, of course, the report’s potential effect on the latter – the investors – that has enraged Swatch Group. The open letter penned by the group’s communication department is anything but an example of Swiss, careful diplomacy. The letter has subheadings like “Lack of Reliable Data Basis, Questionable Methodology, Incorrect Findings, Negligent Conclusions, Damaging Statements, and Potential Conflicts of Interest.”
Another investment tool at the timepiece level is Chrono24, which has since 2003 enabled the sale of 1.6 million watches. With an impressive database and more than 500,000 current entries at the time of writing, the website, catering to both businesses and private sellers, has become a major reference, especially for the second-hand market. It has brought about a trustworthy system which, to me, seems far safer and more user-friendly than other sites, particularly when selling between private individuals (here I am not including sites like 1916 Company, whose business model includes acquiring stock, and whose trading authentication processes affect the price). I never really thought twice about it. A few weeks ago, however, I spoke to an investment banker with close ties to the watch industry. Over a cheese fondue (what else in Switzerland?), he questioned the Chrono24 model. In his opinion, it is way too easy to establish misleading prices on the site, especially when it comes to unusual models. According to his conclusion, anyone could potentially list a timepiece with several accounts, thus creating the equivalent of a price index for a certain model.
An old-school valuation tool is auction catalogues. A great reflection of the market – but how should one consider the brand effect, when brands’ biddings effect bidder behavior and final prices?
Morgan Stanley report, Chrono24, and auction houses. I am not by any means slandering these tools. But I am saying beware. At the end of the day, if you use them to predict economical values of the future, you will be disappointed. The future cannot be predicted. And remember that you can control your own narrative, but you cannot control history.
