Diary of a Patek Philippe collector – why write a watch blog? (31st May 2020)

Why write a blog? It is an interesting question. I have collected watches since I was 13 years old. However, only in the last year have I started writing a blog. Why do it?

Watches are a part of my life for many reasons, so formally framing my thoughts about my watches seems a logical thing to do. I also think that collecting watches is a journey, so chronicling that journey in the form of a weekly diary also makes sense to me. I also think that writing down my thoughts makes me take the time to think through carefully exactly what I do think. Rather than shooting from the hip and spouting out what would likely be spurious rubbish, writing a blog makes me think through carefully about my collecting process.

When buying a 5167A, what factors go into that decision?

This got me thinking. I started trading equities about 25 years ago. Initially, I would shoot from the hip. If I liked the look of a chart and thought the story made sense, I would buy the equity. Once it had made 20% or so, my tendency was to take the profit. If the stock happened to fall, then once it had fallen more than 10%, I would take the loss. It was a fairly mechanical process. However, over the years, I refined that process.

My process today involves me selecting 50 stocks from a universe of about 2000. To filter down from 2000 stocks down to 50 requires me to create a set of rules. For example, I like highly liquid companies, so market capitalisation is a big factor. I also like to see gearing levels below a certain threshold. Filter after filter is applied and eventually I am left with 50 stocks. This is my broad “buy list”. However, within these 50 stocks, some will be over-valued. Some will be fairly-valued. And some will be cheap. I aim to hold the cheapest 23 stocks from this list of 50, so long as the weightings do not result in an undue concentration in specific economic sectors.

For a perpetual calendar, how important is the moonphase?

To make the final table of 23 requires me to do extensive research into each of these companies. I developed proprietary balance sheet indicators that allow me to place a valuation metric on each company that then allows me to rank a company according to how cheap or expensive I think it is. The bottom line is that to make the list of 23 companies that I buy involves a lot of research and judgment.

The result is that the companies I end up owning tend to stay as part of my portfolio for prolonged periods of time. The monetary weight I attach to the portfolio will naturally vary, but the actual companies in the portfolio will tend to remain relatively static. To become part of the final table of 23 requires a stock to replace one that is already in the portfolio… there can only be 23. By definition, the 24th best stock is not as attractive as the 23rd. Its competitive. Each company I own has its own boxfile in my office with all the proprietary research that I have conducted. It is a process that has evolved over decades and is always evolving further.

Unlike stocks, watches become personal…with attached memories.

My wife asked me whether there were parts of my job that I didn’t enjoy. I looked at her and could not readily think of an answer. Over the years, I have shaped the job to become something that I enjoy. The research. Developing proprietary quantitative tools. Risk management. It has become something that I love because I have spent the time shaping it that way.

Horses for courses, but a beater also needs to bring a lot to the table.

Is it possible that I look at watches in a similar way? There are, obviously, some crucial differences. For example, once I buy a watch, I consider the money spent. I am not looking at what monetary return I can anticipate. However, I am looking at a type of return on capital. Clearly, I have spent capital acquiring a watch so I do expect some type of “return”. It is in this guise that I think a blog becomes quite useful. It is the equivalent of my proprietary research, but the return I want from a watch is through the joy of ownership.

If I found a perpetual calendar that I loved more……

A blog allows me to elucidate my thinking on what I like about specific watches and what I do not like. It allows me to reflect on different aspects of a watch. It allows me to consider how a particular watch would fit into my overall collection. Do I want a vertical concentration of specific types of watches or do I want a more horizontal approach that allows me to own a broader range of watch types? How should I evaluate everyday watches? How should I evaluate rarity? What about fragility? Condition of a watch means different things to different people. How should I look at this aspect when building a collection? What about aesthetics? As was highlighted this week by @DrJuanola, how should I weight condition versus originality? Metal preferences. Dial layouts. The issues for evaluation go on and on.

I suspect that there are dozens of “filters” that I apply to any watch that I buy

Yes, watch-collecting for me requires me to think a lot about how I want my collection to be shaped. It would be easy to build a very large collection across numerous manufacturers. However, I don’t want 100s of watches, just like I don’t want 100s of stocks. I want a focused collection that has taken me through all the necessary filters that results in a “final table” where each watch contributes something exceptional. If a stock wants to get onto the final table, it needs to outscore a stock that is already in that final 23. If a watch wants to enter my collection, it needs to bring something different to the table.

Whether its a stock or a watch, it just has to bring something to the table.

Nobody gets to see what stocks I own. Nobody gets to see the research that I do that results in that final portfolio. My returns are known by just myself. The only “client” that I have is myself. In this sense, stocks are different to watches insofar as people can see what watch I am wearing on my wrist. Watches are also different to stocks insofar as the latter are required to provide a monetary return on capital employed. Watches, on the other hand, need to provide a different type of return on capital. Joy. The watches I own must bring me joy. When I put a watch on my wrist, I want that experience to be special. I want a watch to evoke specific memories and feelings.

The 5970P….this was the first Patek Philippe I bought from my AD

So, when I get an email from someone who doesn’t know me and who doesn’t really read my musings, but tells me that my blog is a waste of time and that it is useless, my thoughts are simple. I am not doing it for anyone but myself. This is a blog that I do that helps me to frame my thinking about watches. Making it public just keeps me honest.

There are now nearly 2000 signed-up members of this blog since it started one year ago. What that tells me is that others glean something from my personal musings. I certainly consider that to be the cherry on the icing on the cake. But the cake really is for me. If that makes sense. It is my journey. If you like to read the blog, then great. If it gives you ideas or makes you think about your collecting process, then great. And, if you don’t like my blog and think it is a waste of time (for you), then thats fine too. I promise I won’t lose sleep.