Many people are sceptical of the idea that a Rolex could be an investment, often arguing that a typical Rolex bought (say) 25 years ago has only appreciated in value by a few percent a year, and has therefore underperformed stock markets. But this is a rather narrow perspective to take on "investment".
First, remember that these stock market returns were made in a time of (by historical standards) relative peace and stability, at least in the US and Europe. In less stable times a fine watch can represent an excellent store of value. Watches can be used in barter: they are portable and fairly easily hidden: if they are properly made (like a Rolex) they can take quite a bit of punishment and in extremis even be buried or inserted in more intimate places for safekeeping (anyone remember Pulp Fiction?). So, when the Soviet stormtroopers are raising the hammer and sickle over your town hall, which are you going to grab: your share certificates or your Rolex?
What's more, when you by a share or bond, you are trusting someone - a company or a government - to stay solvent and honour their promise to pay. A Rolex, by contrast, does not represent anyone's liability. So you are not exposed to the risk of your favourite company going bust and making your investment worthless, or to your country being brought to its knees by political corruption & incompetence. Watches do well in times of crisis simply because people trust them when they do not trust managers and politicians (explaining why those Soviet troops took millions of watches from the wrists of dead Nazis). Were you better off with shares in Enron, or a Yacht Master? 'AAA'-rated subprime mortgage bonds, or a Milgauss? 1920s German government bonds, or a tasty Oyster Unicorn Viceroy? For that matter, in 1971 when Nixon took the US off gold, would you have preferred to hold US dollars in the bank, or a well-looked after 1968 Submariner?
Hardly a single stock market anywhere in the world avoided being closed down completely for at least some of the 20th Century. When you want to buy or sell a Rolex, you do not need to wait for the exchange to open. Nor do you need to worry about the exchange never opening again. There are some delightful share certificates still in existence which were issued by Russian companies before 1917. They make excellent wall decorations.
Some charming items hold their value for a while, but can be overtaken by events. I have a lovely Leica camera which I adore, and which takes very nice pictures: but one day the last piece of film will be exposed, and everyone will finally have a digital camera (which they will throw away six months later when a better one is released). Some put their money into vintage cars, but one day the oil will run out. In a hundred years, my camera will be a curiosity, and a Ferrari a laughable anachronism, but people will still want to know the time (and will still have wrists). And having survived the onslaught of quartz, a Rolex is already obsolete technology, yet has kept its value. If that didn’t do the trick, it is hard to see what else could happen to make your Rolex redundant.
Being a bit more technical, you can think of your Rolex as an "alternative asset", in the sense that its value performance over time is unlikely to be correlated with the performance of any financial asset. This simply means that when the value of financial assets is falling, the value of "alternatives" need not. In recent years sophisticated investors, including hedge funds, have increasingly sought investments of this kind to try and diversify their risk - which is why they have ended up buying things like wine, stamps, farmland, works of art and musical instruments. The trouble is that as more and more investment money goes into these things, the more correlated their performance inevitably becomes with that of the stock market, since they are owned by the same people as own shares, and who therefore behave the same way under changing circumstances. Also, there is a limited supply of top quality art, violins and wine, and as the saying goes, they ain't making any more land. So even a small amount of new investment can distort the market, i.e., starts to push the price up very rapidly - and creates the risk that the price will fall rapidly when things start to go wrong. Moreover, many of these investments are not liquid, i.e., cannot easily be sold when you need cash quick. Some of them, like wine, stamps and musical instruments, but unlike the relatively robust Rolex, need specialist storage which is expensive and inconvenient (and try doing a "Pulp Fiction" with your Stradivarius). Moreover, willing buyers can typically only be found by using brokers (who are expensive and usually a bit creepy). Finally, buying a quality violin, never mind a a cattle ranch or a Picasso, is a major commitment, requiring you to tie up millions at a time, and meaning that when capital is tight buyers may be few and far between. Plus a sale of such a high-value item attracts a lot of attention – from, for example, people who think they have a claim of ownership (or at least are willing to take you to court to assert it), the press, and the tax man. And if you own a farm, one stroke of the bureaucrat's pen can replace your name on the land register with another. By contrast, there is a large existing supply of Rolexes. So, firstly, new money is unlikely to cause major distortions, secondly, the market is deep and strong, thirdly, no brokers are required, fourthly, possession is ten tenths of ownership, and fifthly, your investment can be broken up into bite-size chunks of a few thousand dollars at a time so you don't flood the market or alert the press when you need to liquidate.
In sum: a Rolex is extremely liquid, universally accepted as a form of payment, physically robust, portable, inflation-proof, needs no special storage, can be sold in small chunks without the involvement (or knowledge) of regulators, governments, stock exchanges, financial regulators, spouses or brokers, and is immune from risk of bankruptcy, obsolescence and market disruptions. And when Ivan comes you can stick it up your butt and still run in relative comfort for the border. Then, when you arrive in Geneva and you need a loan to start your business up again, you can wear it to the bank, and even offer it as collateral (though a rinse in soapy water first is advisable).
When you take this wider perspective, it is hard to think of another investment which can compete.
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