Are Art and Watches Good Investments?

“Is this watch or painting a good investment?” is the question I get asked most in my line of work. It usually comes right after someone falls for a piece, and right before they start talking themselves out of it.

Before I answer, it’s worth agreeing on what “good” means. Here it means one thing: did it beat what the same money would’ve done in a plain S&P 500 index fund? That’s the easiest investment there is. It costs almost nothing to own, you can sell it in seconds, and you don’t need to know anything to buy it. If a watch or a painting can’t beat that, it wasn’t a good investment, however nice the story sounds.

By that test, the answer is mostly no. Some pieces do beat the index, but they’re rare, and you can’t reliably spot them ahead of time.

So why buy them at all?

Because the return isn’t only financial. The economist Benjamin Mandel argued in the American Economic Review in 2009 that art’s financial returns run low precisely because owning it pays you another way: the pleasure of having it and showing it. It’s often called the “emotional dividend,” and a 2026 study put a number on it. Across 13 kinds of collectibles, from paintings to classic cars, it estimates that owners give up about 2.5 percent a year in financial return for the pleasure of owning them (Financial Analysts Journal, 2026). Elroy Dimson, one of its authors, made the same point in 2014 with Christophe Spaenjers, in research that comes up again below: even if collectibles lose to stocks and bonds, they “can still be rational purchases for individuals who derive pleasure from owning them.”

That’s the honest pitch. You’re buying something you’ll wear or look at every day, and the return you give up compared to an index fund is what that pleasure costs you.

So how much return are you giving up? Here’s the math on two very different examples, the classic Rolex Submariner and the blue-chip postwar painter Ellsworth Kelly, and then what the bigger datasets say.

Holding value isn’t the same as making money

When people say a watch “holds its value,” they usually mean compared to a car. And compared to a car, it’s not close. A new car loses something like 60 percent of its value in five years, according to both Carfax and Edmunds, and the biggest drop comes in the first year. A steel Rolex bought at a fair price can be worth about what you paid years later. That’s real, and it’s a big part of why people feel good about buying one.

But holding value is the lowest bar there is. Take the no-date Rolex Submariner (ref. 114060), about as safe a bet as watches get: steel, made for decades, wanted everywhere. One bought on the open market in May 2019 cost about $10,500.

Today that Rolex Submariner is worth about $10,700 to $12,500. Here’s how that does against each bar.

So the Sub held its value. It also lost about a fifth of its buying power, and it trailed the index by roughly $20,000. Holding value means you didn’t lose money. A good investment has to make more than the alternative.

Blue-chip art: Ellsworth Kelly

Art’s harder to measure than watches, because most pieces are one of a kind. The cleanest evidence is the same work selling twice, so take Ellsworth Kelly’s Blue Black Red, a 1964 oil on canvas. It sold at Sotheby’s in 1977 for $42,500 and at Christie’s in May 2025 for $4.41 million.

That’s about as good as art investing gets: a major canvas by a major artist, bought early and held for 48 years. HENI’s analysis of the sale puts the return at about 10 percent a year, which is a great result. It’s also about half of what the index would’ve made.

What the bigger datasets say

One watch and one painting are a small sample. Here’s what people with a lot more data have found.

Over the long run, collectibles trail stocks. Dimson and Spaenjers looked at art, stamps and violins from 1900 to 2012 (Financial Analysts Journal, 2014). They returned about 2.4 to 2.8 percent a year after inflation. Stocks returned 5.2 percent.

The last ten years weren’t close. Knight Frank’s Luxury Investment Index, which tracks art, watches, wine, classic cars and more, rose 38.6 percent in the decade through 2025. That’s about 3.3 percent a year. The S&P 500 with dividends rose about 294 percent over the same ten years, by Aswath Damodaran’s figures at NYU. In 2025 alone, WatchCharts’ Rolex index gained 4.6 percent. The S&P gained almost 18.

Art indexes probably flatter art. Most art return figures come from tracking pieces that sell more than once. The catch is that the ones that went up are the ones that come back to auction, and the ones that didn’t stay on somebody’s wall. Arthur Korteweg, Roman Kräussl and Patrick Verwijmeren corrected for that across 32,928 paintings that sold repeatedly between 1960 and 2013 (Review of Financial Studies, 2016). The average annual return dropped from 8.7 percent to 6.3 percent. Their conclusion: a broad portfolio of paintings isn’t an attractive investment, though specific artists or styles might be. Picking them ahead of time is the hard part.

And yes, some pieces crush the index. In 1984, someone paid $19,000 at auction for a 1982 Jean-Michel Basquiat. In 2017 it sold at Sotheby’s for $110.5 million, about 30 percent a year. The same $19,000 in the S&P 500 would’ve grown to roughly $600,000. That’s the story everyone remembers. It’s also why the averages look the way they do: for every Basquiat, there are thousands of works bought that same year that never made anyone a dime.

What I tell the people I work with

When someone asks me whether a piece is a good investment, here’s what I tell them:

1. Buy it because you love it. Ask yourself: if it went to zero tomorrow, would I still be glad I own it? If the answer’s no, keep looking.
2. Only spend money you can afford to lose. If losing it would hurt, don’t buy the piece yet. Save and invest until you’ve got a cushion to play with, then come back to it.
3. Pay a fair price, because that’s the part you control. When the piece itself barely grows, what you pay going in decides most of how it turns out. Our post on the dealership tax shows how big that gap can be on a Rolex.
4. Keep the paperwork. Invoices, box and papers, condition reports. If you ever sell, they’re a big part of what someone will pay, and our post on provenance explains why.

If a piece goes up anyway, great. It’s just a bad reason to buy.

That’s probably not the answer people expect from someone in this business. But I only work for buyers and I don’t take a cent from sellers, so I don’t need you to believe your next purchase will make you money. I’d rather you buy something you’ll still love in twenty years.

Nothing here is investment advice. S&P 500 figures use VOO’s dividend-adjusted prices through October 16, 2026, and Aswath Damodaran’s annual S&P 500 total returns for earlier periods. Watch values are dealer asking prices and market estimates, not sale prices.