Patek Philippe

Its been a lifelong dream of mine to own a PP MR. I have owned some nice patek complicated pieces in the past but nothing quite at this level of commitment.

Now I am back to daydreaming about the 5078, the ultimate combination of timeless beauty with the most difficult of complications. My problem is very practical one now: I have never spent this much on anything but a house and I don't know if I can 'afford' this watch. Yes, I can buy it with cash, and I don't have any immediate need for that cash (other than invested in some other asset), but it would still represent 7-8% of my net worth. I am quite young, in my late 30's, and I do have two young children that in 15 years will be going off to college, and the idea of burning one of their college tuitions on a wristwatch still is not sinking in. My professional career is secure and I have a good income that covers all our needs and allows for reasonable savings on an annual basis. My only debt is in my mortgage, which I have 50% equity in.

Further, my approach to watches is such that I do not need to have many. I have a less is more approach and prefer to have a 3-4 watches that I truly love and are the top in their respective purposes in my collection than a dozen that are just 'great'. So I do not feel a need to acquire several other lesser models for the price of a single 5078.

So, how do I know if I can 'afford' this watch, and whether the time to buy it is now?

I would love to hear from you, especially owners or those that have made similar decisions. Feel free to PM me as well ..

Dionigi,

On a practical level, while you may well be able to afford the purchase with respect to cash flow, 7-8% of net worth is too high for my taste.  Emergency needs arise, tuitions inflate faster than everything else, and disability insurance is never high enough.

On an emotional level, , you might consider whether fulfillment of a "lifelong dream" in your 30s would prove a hard act to follow in your 40s, 50s, 60s, and beyond.  Why not savor this particular expectation a bit longer?  Lifetime achievement awards are best received after a lifetime of achievement.

Park

I appreciate what you said.

Although I have had some early fortunate successes I am certainly far from lifetime achievements. It may even be in bad taste for me to think about putting such a large chunk of the little stash that I have accumulated thus far into a luxury object so early. You are definitely right about having a dilemma about what would come next. At the same time, couldn't it be said that these types of pieces are quite 'liquid' on the secondary market and could relatively easily be sold if need arises? And what about the idea of 'scratching the itch' early to see what a Patek MR ownership really is like, may determine that it is not for me after all and never feel the need again to go to such a high level?

You're talking about 7-8% of your net worth. I'm probably the biggest moron on this forum. Believe me or not but for me almost everything goes into this passion. As long as I can pay my bills every month I feel safe to spend the rest. 10K on my bank account or 10 K  for that new watch I'm saving fo ? . For me it's a decission I make in 0.2 seconds. I'll go for the watch. Some members on this forum are very wealty others are middel class (like me).  Some guys can buy a watch after a good business deal they made, for me (and a lot of others) it's a matter of saving. I don't have a huge collection and I do not have the tourbillons or minute repeaters but I am very happy with the ones I have ! When your grail is the 5078 I might compare it with my grail which I bought in 2006. My 5070R.

It took me years before i decided to buy this watch. Why ? Because for me that was a lot of money. I had to sell almost every other watch I had in my collection, a collection which started in in the early 1990's. When I do not include my house  I can tell you that it was a lot more than 7-8% of my net worth at that time. A LOT MORE !

Am I nuts ? maybe. But you can't imagine how much pleasure I got from that purchase.

Besides, I do ALWAYS look at the secondhand value of the watches I  would like to buy. Because there could always happen something that I need to sell one or more watches. I almost calculate in watches. When I need  4-5 K I won't take 5 K from my account, I would sell a Rolex sub   LOL.

So yes, I only buy watches with a very good resale value. Or I buy second hand. The only problem I have is that there a some watches out there which I would love to own but I can't because they don't fit in my ' good resale value' rule. One example is the Journe Chronometre Souverain. I would love it.

So, do I need to make money on a purchase ? NO that is not my goal but on the other hand I won't buy it when I know I will loose a lot on it, simply because I can't afford it, and there is nothing wrong with that.

Concerning your MR, If you can afford the loss you'll make if you would ever sell it (15-20% ??)  than go for it. If you think loosing 20% on that amount is way too much, than don't buy it.

 

That is ofcourse my own opinio, others might have a very different way of thinking

Well Bruno - thanks for your comments. I totally understand your passion.

With regards to the fear of potential loss upon resale, I can tell you it doesn't bother me that much. I recently lost a similar amount on selling a silly sports car (unfortunately another of my expensive habits) that I owned for less than 8 months. Obviously I don't feel good about that but I did get utility out of the car and I learned my lesson with that particular brand - buy preowned and be patient! This same lesson applies to watches, luckily I learned that one a while ago and always look to the secondary market first.

If you can accept the 'possibility' of 20% depreciation of a 5078P which kinda amounts to around $60-70k......
then you are ready to buy.
As I just said, it is just a 'possibility' and most likely, you may not even lose a dime.
So if you love the watch, go for it
If mentally, you are prepared for that 'depreciation', this watch only cost you that amount.
And if you wear it, experience it for a few years, I think it is worth the 'rental' fee.
You only live once.
Personally, I think it is better to experience this when you are in the 30s and actually after tasting it, you may eventually feel
that what you need is just a very simple watch. It's a whole process.
Hope you understand what I mean.
It's a good problem you have, enjoy
*CL

Well Bruno, I guess WE are the biggest fools on the forum. I am in the same camp as you and as long as my bills are paid, I put the rest of my money towards my passions. I don't golf, smoke, or drink fancy wines so watches do it for me. I also live in NYC so having a car is not really a major factor in mind. I also do not have children nor am I married so that may lessen my "responsibility" load.

I believe you can afford the watch, but are intimidated by its price; I would be too!! I think you are considering this purchase in a responsible manner and weighing your current options and costs. Your kids will not be going to college for the next 15 years and that is a significant period of time. Not making any significant purchases today because of an event in 15 years, will literally tie your hands until then. I know there is a "what if" concern where money is good now, but may not be good in the future. Therefore at what price point is it okay to spend money without feeling burdened by that 15 year date? Is it okay to purchase a $200k car that will depreciate once it is driven off the dealer's lot, as opposed to a $400k watch that will hold its value and probably appreciate in time. Based on your net worth, job security and that 15 year due date, you will have time to save for college costs.

Although watches should not be treated as a realistic investment, Patek Philippe will probably hold its value better than other manufacture. With a grand complication, you have a super high end watch and if you need to liquidate it for immediate cash, you can enlist the services of a high-end watch auction company. The nice thing about these grand complications is the application process, especially if you need to sell the watch. Assuming you are approved and acquire the watch, you will pay MSRP based on its current value at delivery. On the secondary market, people may have the money but their application was NOT approved, so you can demand more money for them to acquire your watch. If you are acquiring the watch on the secondary market now, then you will probably get a good deal in light of the world's current financial situation.

Putting off this purchase until you are 50+ for no other reason than, "you should wait until you are older and worked more so you appreciate the watch more" is unrealistic in my mind. I purchased my first Patek at 25 and had to liquidate most of my collection to afford it. It was a difficult decision, but I do not regret it at all. I worked hard to acquire those watches, and therefore worked hard to acquire my first Patek too. If you have attained this success at your age, then reward yourself now. Maybe in the future you want something EVEN MORE complicated? I am looking forward to the purchase of a 5110 or older Calatrava in the future. I just need to keep saving and enjoy what I have. I would go for it.

We have quite some things in common

 I don't golf, - me neither

don't smoke, or drink fancy wines -- I stopped smoking 12 years ago and I never drink any alcohol

 ...so having a car is not really a major factor in mind. -- we have 2 but it ain't Porsches and my girlfriends car is for free, she got it with her job

I also do not have children nor am I married so that may lessen my "responsibility" load.  -- I have a GF, we live together but children are not for us

 

 

I think your views reflect many of our fellows watch lovers. I think it is indeed a very practical view to adopt. We may go around collecting these beautiful pieces. But there will come a time where we will just reflect and say to ourselves why and if u are saddle with very expensive watches but with very limited resale values u are gonna be very disillusioned.. Going for the PP5078 is certainly a grail that many of us aspire. but how many of us really appreciate this and ask whether it is a practical watch to own.

Henry Hoe.

 

For myself, I am very simple minded. If I need to think about this question, then, I will not buy. It is just a watch! Just my 2 cents.

My simple rule is that if I'm agonising over something as much as you are clearly doing over this watch, then I cannot afford it.

Do you promise to forever love and cherish the 5078, till death do you apart? If answer is yes, then do it. Especially since you are not perturbed by depreciation, which in reality is like paying a lump sum settlement should you divorce.

Just buy it, in your 40 and 50s, you can always go for the 5074, should finances permit, and should your kids with win some mega scholarship.

Good luck.

If my past behavior is an indicator I am not sure that I could vow love for life for a 5078. It all seems wonderful in the mind but you don't really know until you live with it, right?!
This message has been edited by Superquant on 2010-12-04 10:21:32

Although I agree it is hard to know if attachment is long term or not without going through daily life together

In a nutshell, enjoy it whilst it last..

this is a very difficult decision to make - because purchasing the MR now has considerable opportunity costs because of the very high price tag. the 5078 is in the $600k USD if I am not mistaken. So you forego what that $600k would have made had you instead invested over 15 years, plus the potential loss should the 5078 ever depreciate in a slowing economy. 

 But, as you say it would represent 7-8% of your net worth- so that one metric it seems a no brainer to buy one.

 

if you doint mind me asking,have you been approved for a Patek MR via the application process ? IF so how many pateks bought did that require ?

Andy,

the 5078P I am looking at is about 340k, about 10% off list. I am not getting it directly from AD but rather from a trusted secondary source. To be honest I'm not into dealing with an 'application' process for spending this kind of money, it all seems ludicrous to me. Especially when there are more than one 5078P available at list price LNIB that I am aware of.

but I can make as many arguments in favor of this purchase as against it. I have wanted a Patek MR for years but have money tied too tightly into investments for me to divest and buy one. If you are like me you probably want a small and impassioned push in favor of getting one, perhaps from an enthusiastic owner who has perspective on ownership.  but then there is the sensible side, which counters with many arguments.

 

1. the Patek MR could lose value. Especially over time. Mechanical marvels were not always so sought after and valued, were they ? ie the Quartz revolution made mechanical watches seem obsolete for a time. The idea of paying 6-7 figures for a watch that could strike the hours and quarter hours and minutes was probably ludicrous when you could get a quartz watch, or casio, for as little as $50 that could do for more functions and alarm and temperature etc etc. The resurgence of the MR and mechanicals came when the US economy surged in wealth. Could the reverse happen, as it appears, heading into perhaps world recession, where mechanicals costing 6 figures be seen in very bad taste, and their prices drop to more down to earth levels ?

2. The Patek brand is lusted after partly because of marketing wizardry, not so much technological reasons. Many brands like Vacheron and JLC also produce as complicated and wonderful pieces technically, but arent quite recognized in the same league. I think there isnt a lot of difference in the major manufacturers as far as the wonderful limited pieces they can produce. What makes a Patek 5004 ( split second and perpetual calendar ) objectively worth $200k more than an IWC da vinci perpetual rattrapante, which has the same functions and thus is technically on par with Patek, but a factor of about seven times cheaper ?

3. wanting something because of exclusivity, and because a lot of other people want it, tends to lose lustre after a while of achieving it. Not saying this is part of your reasoning, but something I grapple with in coming to grips with purchasing something like this.

 

re: application process, I was told by my AD that Patek had sold a MR through his shop, and the typical MR approval came with a purchaser who was a collector, owned 9+ Pateks of various calibers and varying complications. ( All in I figure that would mean in terms of "investment" in Patek double to a few times the cost of the MR just for the opportunity to purchase one )

As long as you are not overly stretching, I think it is fine!

Best regards.

Baxter

1. You can afford a 5078

2. If you feel better having the watch and less cash, buy it                                       but

3. If you feel better having a bit more cash and no 5078, don't buy it.

I would buy - without any hesitatation but that's me. Hope to see some pictures soon.

Best, Kari

watch and believe me I am a fanatic.

It does not make sense.

Use the money for an investment and later on in life around 50 buy something.

julian

No message body This message has been edited by COUNT DE MONET on 2010-12-04 12:41:50

While I agree that one should be financially prudent when it comes to luxuries, I do not believe in the one dimensional view that all debts are bad and therefor must be satisfied before indulging in extraneous expenses.

Even in the case that I were not considering a fancy watch, there are much more lucrative investments to be made that yield more than the 4.5% interest I pay on my mortgage. So while you could make a perfectly legitimate argument that I should invest the money in some other assets rather than a watch, I do think that having some debt can be quite financially smart and allow for use of capital in better assets. This is especially true in the current macroeconomic environment where money can be borrowed almost for free on a short term basis.

I would question how many owners of 5970 and other six figure watches here are completely debt free when it comes to their real estate positions, but that will be the topic for another poll!

... so you do not do anything wrong.

I would not really see the 5078 as an investment, as it is not limited.

But on the other hand not every limited one will make a profit after selling.

So to judge a watch as a potential profit maker is really, really difficult.


If I would by such a watch I would be relaxed to get nearly the same money back, maybe a little more and to own something that keeps the value well.

And at the current economic siyuation it could be not the worst idea.

Not more and not less from the financial point of view.



From the enthusiast point of view ? : There is nothing greater than a minute repeater from PP !



The poll that you are suggesting is actually an interesting one, that I am asking myself also at times.

Regards

Moritz

have 1 5970p

 

but used the sale of other watches (incl profit on theire value) to purchase

also No mortgage, this was my priority in life to clear...hence the 70 hour weeks

then finally the 5970p have to have no impact or sacrifice for my family

and ..... it is relatively depreciation proof

I think personal circumstances are very important before spending this much money

if you are millionaire, and very liquid, why not...go for it

as for debt..

a mortgage is one thing, but borrowing money for "luxuries" ... no, I dont think so, not in my book anyway

best of luck

None of this really makes any sense, but it's not about making sense.  It's about what you want and you say you've got the money to do it,  but is it the responsible thing to do?

I don't hardly think the kids will starve, not go to college, etc.  You're a young man with a lot of years in front of you with still yet more earning potential so I wouldn't worry so much about that.

I certainly don't think this is a bad time to get it like others have said and they are out there.  An opportunity...waiting now.  Wait until you're 50?  No sir, not for me.  I want to enjoy it before I get too old to even hear it.  I guess you can tell where I lean on the subject.

The only real hard question is whether this is the piece, not a perpetual minute repeater or some other exotic.  And are you contemplating this because the stars appear to be lined up favorably with respect to availability and price.

Just remember, as each year passes there are more of these being delivered along with other big reference numbers, so there may be some change in demand and value as time marches on.

Best of luck with your decision.

i can almost always hear that voice, each time i buy a timepiece

I think there is some truth to your comment about 'the stars lining up' - the 5078P is available, it is the most 'affordable' grand complication from PP that includes a MR, and it also happens to be one that looks wonderful and has a case size that I like. So there are a number of things that are coming together that make it more tempting, surely.

Having said that I would be lying if I didn't say I have wondered many times what the intrinsic value is of the PP grand complications, and how much it truly costs to make a watch like a 5078P. I have never felt bad about paying top dollar for quality goods that involve a lot of human touch and artistry, but you have to question how much of the price tag here is labor and materials cost vs margin for the manufacturer and dealer. So these things all introduce doubts in my mind.

One thing I know is that I have owned some other complicated PP pieces including a 5970 and 5960 and they never really did it for me, sold them after a few months. Truth be told, I don't much like most of the PP collection, there are a few pieces that I think I love and then a bunch that don't do anything for me. But when it comes to MR I immediately think PP, although I know there is a good deal of hype and marketing that is creating that image in my mind ..