Luxury watches as an asset class, natural disasters' affect on GDP growth, CEO characteristics and default risk, and investor bias in forecasting volatility
I hold a PhD in financial economics from Penn/Wharton & was in the institutional investment business for nearly 40 years. The watches as an asset class paper is idiotic. There is not enough supply to create broad availability, construct index funds, or from which to build viable derivative securities. Watches could be an asset but no significant institutional investor could hold them in enough quantity to affect the performance of their funds. They're a curiosity at maximum. The authors obviously have no experience in institutional investing or in the necessary conditions for assets to be widely held across portfolios - namely in the characteristics of an asset class.
I actually agree with most of what you said, DrT. As I stated in the description, luxury watches are low in liquidity and popularity as an investment class, which reduces the available information on watches.
I agree that we should not attempt to construct public financial products of luxury watches (ETFs, derivatives, etc.). I also do not believe that it is a viable asset class for institutional investors. However, for a wealthy individual ($10mm+ NW), owning five to six figures in luxury watches may be a great portfolio diversification tool. While only a few percentage points of their NW is in watches, it may have a greater diversification benefit than having that investment in even more equities.
I hold a PhD in financial economics from Penn/Wharton & was in the institutional investment business for nearly 40 years. The watches as an asset class paper is idiotic. There is not enough supply to create broad availability, construct index funds, or from which to build viable derivative securities. Watches could be an asset but no significant institutional investor could hold them in enough quantity to affect the performance of their funds. They're a curiosity at maximum. The authors obviously have no experience in institutional investing or in the necessary conditions for assets to be widely held across portfolios - namely in the characteristics of an asset class.
My main takeaway was to be able to tell my wife buying more watches is a legitimate investment backed by academia 😂
This is hilarious. Just don't allocate to much of the portfolio to luxury watches!
I actually agree with most of what you said, DrT. As I stated in the description, luxury watches are low in liquidity and popularity as an investment class, which reduces the available information on watches.
I agree that we should not attempt to construct public financial products of luxury watches (ETFs, derivatives, etc.). I also do not believe that it is a viable asset class for institutional investors. However, for a wealthy individual ($10mm+ NW), owning five to six figures in luxury watches may be a great portfolio diversification tool. While only a few percentage points of their NW is in watches, it may have a greater diversification benefit than having that investment in even more equities.