Patek Philippe

So, why does a guy give up a watch that took his breath away (5070P) and trade it into an even more ridiculously expensive one (5970P)?  My thought process went something like this:

Emotional / Attraction

The blue dial of the 5070P is singularly stunning.  It was, by far, the biggest factor arguing against giving it up.  It has to be seen to be appreciated and along with the beautiful work of the numerals and markers it makes for a  true work of art.  However, over time I became increasingly bothered and distracted by the oversized case.  At 42MM  I was always cautious (I am not a "big watch" guy), but it felt good on my wrist and never looked out of scale when I wore it.  The problem for me was the big bezel.  It reminds me of rings around Saturn, or something.  I couldn't help but see it as a masterpiece painting that was overwhelmed by its frame.  I know a lot of folks love the "perfectly imperfect" look of this watch, and I understand that view, but I found my initial burning infatuation starting to cool somewhat.

At the same time I have been warming up to the new in-house 5170.  At first I thought the design was somewhat dry and uninspired, but after seeing some of the great pictures on this forum and learning more about the details of the new movement, I am really falling for it.  I will pass on the YG and wait for it to come out in other metals, but I definitely see one in my future.

The perpetual chrono, to my mind is where Patek is at its best and it is the quintessential "kick-ass" watch.  Granted, the minute repeaters are romantic and deservedly revered, but I think the perpetual chrono is where Patek has historically marked its technical and aesthetic dominance over its competitors.  Nobody touches them in this field and the 5970 is my favorite of all the references over the years.  I struggled quite a bit choosing between RG and platinum, but ended up deciding that if I was going to get a watch like this I was going to get in the king of the hill metal. 

Intellectual

Hard as it was to part with my 5070, it has allowed me to accomplish a few important things with respect to my overall collection strategy.  First, it gives me a beautiful and classical black-dialed dress watch.  I am a suit-and-tie businessman and most of my watches are worn in that capacity.  Second, I get an iconic Patek perpetual chrono (how can that be bad?) as the current top dog of my collection.  Further, in the event that the Lemania movement becomes an important collector piece in the future (I am skeptical of this), my collection has that represented with the 5970.  I have also freed up a spot for a simple chrono with the new in-house movement.

Finally, I see this as a can't miss investment opportunity (he said, tongue-in-cheek).  Follow my logic:

The reference 1527 perpetual chrono that sold at Christie's recently for $5.86 million was made in 1943. While the 1527 was a one-of-a-kind piece, the 1518 was the same watch with a different case.  According to John Reardon's "Patek Philippe in America", the 1518 sold for $1,500 in 1945. Let's assume this was the sale price of the 1527. This represents a 13.13% compounded annual return during the 57 years since 1943. Granted, my 5970P is not a unique piece, but most folks seem to agree that about 200-250 were made.  Let's assume that in 57 years 100 of them remain in a marketable condition. Dividing the $5.86MM by 100 still yields $58,600 which represents a 6.64% annual rate of appreciation.
• A $140,000 watch today, appreciating at 6.64% per year will be worth $5,464,819 in 2067 (57 years from now).  My kids/grandkids will marvel at my foresight!

So there you have it.  Emotional attraction coupled with impeccable logic  - the perfect choice! (Until the next head-turning beauty steals my heart.)  Thanks for listening to my story.

Steve

At best a 1518 will sell at auction for $200k .

 

Working with this figure makes a lot more sense and shows the poor investment potential of a watch

 

But I love your choice. It is a classic PP

 

Julian

Actually, your perspective makes my numbers look better.  If a reference 1518 is worth $200k today and sold for $1,500 in 1945, that is a compounded growth rate of 7.81%.  A $140,000 watch in 2010 growing in value at the same rate will be worth over $10MM in my 2067 scenario.  My kids may erect a statue in my name!

I'm kidding about all this stuff, of course - but it does illustrate the power of compounding over time.  Interestingly, I also noted that the average rate of inflation in the U.S. between 1943 and 2010 was 3.85%.  If the value of a perpetual chrono merely tracked the inflation rate, a 5970 would sell for $18,870 today, based on a $1,500 value back then!  We don't know how much, if at all, Patek's costs have risen in excess of the inflation rate, but I would bet that their profit margins are a lot higher now than they were in 1945.  That is the poweer of a brand. 

Interesting mathematical exercise in any case!

Steve 

.... which is, patek has made in total numbers, far greater than the total numbers of patek 1518 + 2499 all put together.  Not trying to shoot you down, your math calculation is fine, no doubt. 

Just assume all your numbers are correct ... personally, i think there is far more patek 5970P than what people might think.  Have you ever consider, that just maybe, patek 5970J is the least number in production ?

I am sure, your children and grand children will  marvel at your watch collection by 2067.  Time will preserve the value of your time piece, along with inflation, will give you a pretty good return but ONLY if  it is sold.

i do thank You for your illustration, Patek 5970P is indeed a cool piece.

 

 

That is exactly why I have a problem with PP....

Just because of this kind of post.

Where is the Passion, here, except for money, or for security?

But this is your point of view, and I wish you and your heirs all the best, and plenty of money.

Nicolas

This message has been edited by amanico on 2010-06-25 02:18:23

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Far to many are availbale on the grey market and figures are just assumptions.

With the 3970 as a similar watch additionally available on the secondhand market, it makes it all quite "ordinary" as an exceptional watch from the figures only point of view.

This would all just work, if quite a few of the perpetual chronos get lost, damaged completely, which is very unlikely.

Watches are and can be an investment, but the 5970 does not fall into that category.

In the best case you will get your money back.

My choise would have been the 5970 in a warmer colour, RG or YG as a watch to enjoy.

Regards

Moritz

Patek has and will produce in the future continiously perpetual chronos...


Regards

Moritz

is all that counts.

I think most folks here are masters of rationalization when it comes to buying another watch at this level because actually it doesn't make much sense to spend this type of money. Justification really requires no reasoning.....you have been bitten and it won't stop until you cave in, but if it makes you feel better by analyzing this or that so that it makes perfect sense to do it....well I'm all for it because I have done the exact same thing countless times as I am sure others here have as well. 

So, even though your well written Part 2 describes the process, save it for others..because this crowd knows, I know, and you know that all that really mattered is that you wanted it...period.  And for that, I congratulate you on a great watch.

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...but not if you treat watches as investment (only). But It's anyway more interesting to invest money in watches (your hobby) than in "dead" real estate or shares. On the other hand are shares or real estate maybe easier to sell.
But anyway, really nice choice

Cheers
Hans

However, I also do have some reservations regarding your last point....

It would be nice if watches turned out to be good investments, but it does
not turn out to be this way...

Best

Jewelry/watch isn't supposed to be a rational product.  You buy for the love and for the passion. 

You're almost analyzing your acquisition like a stock analyst! 

You had a fantastic watch and you have a fantastic watch!  Congratulations! 

This message has been edited by patrick_y on 2010-06-25 14:40:30

The rational thoughts will probably fade with time (in reverse order you gave I suspect) but if the watch gives you a smile each time you put it on, you've picked the winner. The memory of having owned the 5070p will no doubt be a pleasant one. All the best.

I guess my sense of humor doesn't translate well into writing. I was totally kidding about the investment analysis. It was an attempt to poke fun at those who attempt, in vain, to forecast the value of something as subjective as a piece of art as if it were a bond. I was also attempting to illustrate how absurd it is to try to rationalize something that is fundamentally irrational.
Believe me, I did it out of love for the 5970. The only truly rational part of the decision was the financial call to not keep both. In time, I fear it's the only pRt of the decision I will regret!

if you trully apreciate the 5970P ! I think you bought a beautifull watch and at the same time lost an awesome one! Sorry my friend!