Warren Buffet is famous for his belief that you discover who has been swimming naked when the tide goes.
In business terms, he means a sharp downturn will expose the businesses that only have the experience, skills and energy to make money in the good times.
The secondary market for luxury watches has been through a decade of exceptionally good times, but this year experienced a downturn as prices began sliding at the end of the first quarter
Fly-by-night flippers have been exposed to significant loss of value for their holdings.
Mr Buffet’s philosophy is rarely turned on its head, but the strength of businesses that thrive in good times and bad, is just as important.
That is the case for Erik Boneta and his eponymous watch trading empire, Boneta Inc., which he founded 20 years’ ago and is now America’s largest business-to-business operator in the pre-owned luxury timepiece space with sales of over $200 million in 2021 from 20,000 watches sold.
2022 was off to a record start as well, but prices turning at the start of the second quarter slowed activity for a while.
Mr Boneta is relaxed about the correction. “As with any market, it goes up and it goes down, but we are looking at long term growth,” he tells WATCHPRO.
He is also investing in that growth with a move into a new 7,000 square foot headquarters on West 46th Street in Manhattan.
“Watches and watch business are here to stay. It may go up and down and have times when demand rises or falls, just like anything else of value such as art or real estate,” Mr Boneta suggests.
Unlike much discussed alternative assets like cryptocurrency or NFTs, luxury watches have lasting underlying value and an ever-growing global market of enthusiasts and collectors.
“Over the long-term, buying quality is proven to work its way out. You can buy watches safe in the knowledge that it is a long term investment and something to hand down to family,” Mr Boneta says.
Prices for the most traded watches from the likes of Rolex, Audemars Piguet and Patek Philippe appear to have found a floor this Fall, which may prove to be a buying opportunity for traders.
But Mr Boneta believes in building more sustainable confidence in watches by encouraging people to shop for what they love rather than as a short term investment.
“Don’t buy initially as investment, I tell that to everyone,” he advises. “Buy quality brands that you like; that’s what I recommend,” he adds.
Mr. Boneta has two decades of buying and selling watches have given him a deep knowledge of both the market for pre-owned timepieces, and a life-long appreciation of horology.
On a recent visit to his premises, we are reminded that he is one of the biggest and most respected watch dealers amongst his peers in the world and he states: “one of the most prolific collectors that you’ve never heard of”.
The industry most certainly has heard of Mr Boneta, and he is frequently approached for advice on market trends backed by years of rich data collection. “I’m an advisor to many watch brands and retail stores,” he reveals.
Looking ahead, Boneta Inc. is planning for its next growth phase from its new midtown Manhattan HQ. Hopefully, Mr Boneta says, building a business that his children may eventually take over.