Transcript
Intro
Stephan Shipe: Welcome back to the Scholar Wealth Podcast. This week we discuss how exchange funds can help reduce concentration risk for investors holding large amounts of appreciated stock. Then we’ll look at IRMAA surcharges and what to know if your income fluctuates from year to year.
And finally, we talk with Perri Dash about the modern watch market and what you should know before building a collection. So let’s go ahead and get started with question one.
Question 1 – Exchange Funds
Listener: I worked at the same company for almost 20 years, and I’m highly concentrated in appreciated stock. Selling even a portion of it would create a huge tax bill, so I’ve just held onto it, but I know I need to diversify. Are exchange funds a good option to reduce my concentration risk.
Stephan Shipe: So we’ve covered concentrated stock a few times on the podcast. Obviously this is a huge risk for anybody, and it doesn’t have to be a. A lot of times, especially this year, we’ve seen a lot of tech companies driving this concentrated stock issue. But it doesn’t have to be a concentration in a tech company or a riskier company. It could be a concentration in a really safe or low beta stock.
And I would still say that we have this concentration risk. And the reason for that is, as you’re rightfully trying to get out of, is the standard deviation for an individual stock portfolio or for a highly undiversified portfolio ends up being really high. So diversification helps to reduce a lot of that risk from a standard deviation perspective or volatility perspective.
So exchange funds are really neat. So they can be really useful. We’ll talk a little bit about how it makes sense because I don’t want you to jump into it because they sound really good upfront. And then of course, just like a lot of different things, there’s these asterisks that follow it in the footnotes. You start to find out a little bit more about what to watch out for.
So the idea of an exchange fund is, you’re here, we don’t know the specifics of your specific holding or the amount of the holding, but let’s say it’s five million dollars in a particular stock, and for ease, let’s say that represents 50% of your portfolio. So ten million dollar portfolio, five million dollars in this concentrated position, way too much in any position. But if you go sell it, and we’ll say for even more ease, let’s say five million of that five million is essentially all capital gains.
So if you were just to go sell out and you say, Stephan, I agree too much concentration, I need to get rid of it, but I still need that money in the future. It’s not like we can just give it away because the easy thing you’ll hear all the time is well just donate it. And if you donate it, then you don’t have to worry about it. But that means you’re giving away half of your money right away. And that’s not likely the goal of many people, especially early on.
So in this scenario, we could go and just sell everything. You’re going to pay a huge tax bill. You probably pay a couple million dollars in tax. Not ideal, but not horrible. I don’t think you should take that decision off the table, it’s not as bad as a lot of people think. No one likes to pay millions of dollars in tax, but because of the benefits that it provides and the increase in cost basis, it could be okay.
Now if you go the exchange fund route, the idea of an exchange fund is, well, wouldn’t it be great if I’m holding stock A and it’s highly concentrated and I’ve got five million dollars of stock A in my portfolio and you have five million dollars of stock B in your portfolio and somebody else has five million dollars of stock C in their portfolio and we all hate it because we have all these concentrated positions.
What if we had a partnership. And we just all put in our five million dollars. Well now we have fifteen million dollars in our partnership that is split between three different positions. So we immediately diversify in a big way across this fund by having three holdings within fifteen million. And then what we’ll do is any earnings and everything, we’ll just take the earnings from that portfolio, split it up.
And then after a certain amount of time, we’ll cash out, redeem our shares in the partnership. And instead of having, let’s say they all grew to six million dollars, instead of having five million of one stock, I now have two million of stock A, two million of stock B and two million of stock C. It doesn’t help on the tax side necessarily, because I still have all those gains, just deferring the gains to later.
But what it does do is it significantly reduces my risk. That’s how an exchange fund is going to work. It allows you to contribute appreciated securities into this exchange fund as part of your partnership buy-in, and then you’re now owning this portfolio that typically matches some sort of index over time or tries to match an index, and that’s where one of those asterisks are going to come into play.
And then after seven years, you cash out. Instead of having your five million dollars of one stock, you now have five million dollars of the S&P 500 with a low basis, which obviously adds some complexity there.
So that’s the idea of how an exchange fund works. When I first heard about exchange funds, it was a no-brainer in my mind. I thought, this is great. There’s no way you could pass up the reduction in standard deviation going from one stock at maybe like 48, 49% standard deviation to the market standard deviation around 18%. It seemed like a no-brainer.
However, there’s a catch there. There’s a few catches that come into play. First thing is the IRS doesn’t allow you. Whenever it sounds too easy and too good to be true when it comes to taxes and the IRS it probably is. And of course this is one of those cases where if I just put five million dollars into a partnership and I got five million dollars out of S&P 500 stocks, that’s going to be a stock swap and that’s going to be a taxable event so that the IRS is not going to allow that, it’s going to be taxable.
So the key is an internal revenue code scenario of subsection 721. And the idea of this is that you’re able to buy into a partnership with public securities as long as that partnership holds at least 20% of non public assets. So that’s the catch. You have 20 to 25% of this portfolio is actually going to be real estate. It’s going to be private equity. It can be timberland, it can be private credit. It’s all of these things that are more illiquid, have a different amount of risk associated with them.
A lot of times you’ll see that be real estate because real estate is a little bit easier to mark to market and have a value placed on it compared to a private equity or private credit. But that’s the catch.
The other catch is you’re going to be locked up for seven years. So you can’t go and say, I’m going to take my five million today, throw it into an exchange fund, and tomorrow I’m going to pull out four million dollars worth of the S&P 500 individual stocks and a million dollars of real estate. You have seven years that this is going to be locked up, so it’s seven years before you can redeem.
Now once you redeem, you’ll have all of your shares back and not your individual company, but a mixed basket of low basis stock, which can be an absolute nightmare as you’d imagine. If I went and took that five million dollars, cashed it in, and now redeemed my shares seven years later, I now have six, seven million dollars of all of these individual stocks that have low basis.
So you’re adding a little bit of complexity, but a huge decrease in risk. There typically are minimum contribution thresholds, so depending on how much you have. If you have a hundred thousand dollars in a stock, a lot of exchange funds probably aren’t going to take it. And the other thing to keep in mind is they might not even take your stock.
So they might look at it and say, hey, we have too much of that stock already. It’s gone up so much. Everyone’s trying to cash in on that one, so we’re not going to take it. So you’re looking for availability of stock and the amount of stock. So it can be useful there.
There’s some transparency issues. You’re not going to have control. You’re going to have the issues of contributions and loss of liquidity for those seven years. And you’re going to have a big thing, which is known as tracking error. So something to watch is that, what a fund will do is they’ll say, let’s say I open up an exchange fund and I say I’m looking for people to include their appreciated securities in the fund.
You show up with five million dollars of your stock. I say, that sounds great, we’ll take it. My goal is I’m going to try to match the S&P 500. So over time, you’re going to want to look back and see how good that fund is at actually matching the S&P 500, because I can tell you all day long, my goal is to match the S&P 500, but I could be wrong.
And the S&P 500 is up by 10%, I’m only up by 7. Or the S&P 500 is down by 15%, I’m down by 22. That number is important. So that gap between the benchmark index that’s being used and the portfolio, you can take the standard deviation of that and calculate tracking error, and usually that’s provided for you.
So to wrap up all of that, I think it can be useful. I wouldn’t take the just sell it all as an option, I wouldn’t take that off the table. But exchange funds are really interesting. They take a little bit of time to understand, you want to make sure you get into the weeds a little bit of the type of provider that’s out there, what experience they have, what type of exposure you’re getting into, and how they’re going to fill those non public assets.
But I definitely think it’s worthwhile to consider as an option. Despite these different issues that come out, that all needs to be weighed, just like any other things that look too good to be true.
Question 2 – IRMAA
Listener: Next year is the big 65, and I’m concerned my income from two years ago might push me into a higher IRMAA bracket That year included a Roth conversion and a one-time capital gain from selling a rental property. I’m thinking my Medicare premiums are gonna be a lot higher than I expected. How does IRMAA get calculated and what can people do if their income is lumpy like this?
Stephan Shipe: Everyone hates IRMAA. There’s no way around it. And I hear it all the time. It’s a regular complaint. It’s, “Well, that’s going to push my IRMAA higher into a higher bracket,” and everything else.
And that’s absolutely true. It’s an additional tax that’s out there, however it wants to be defined. You make too much in retirement. They look at it and say, you made too much, we’re going to add a premium on top of your Medicare Part B premium, and they’re going to use a two-year lookback.
Now, the two-year lookback is something that throws a lot of people off because they look at it and say, “Why is it two years?” And they assume it’s this two-year rolling average. All it is, from a practical purpose, is the IRS saying: if we’re looking at 2025 IRMAA, we don’t know how much you made in 2025. So how is the government going to determine how much extra to tax you if they don’t know how much money you made this year?
They really can’t go to 2024 either because those tax returns may have had an extension. They don’t have it. So they just go back two years and say two years ago, we most likely have all the income information we need to determine how much extra we’re going to charge on Medicare.
That’s the basis of IRMAA, and it uses modified AGI or MAGI. And that includes Roth conversions. It’s going to include IRA contributions. It’s going to include things like property sales, depending on how they were sold — I wouldn’t necessarily include that one as a guarantee — but HSA contributions as well.
The modifications to AGI come back to the idea that we’re trying to find out how much money someone actually has to pay their Medicare costs and medical costs. So if you say, “I made $100,000, but I had some depreciation on some rental properties and I contributed to an IRA,” then that’s reducing your AGI. So technically you’re in a lower bracket, but that’s not really true because those things are not cash expenses. So they add those back. That’s the concept of MAGI.
The problem with this — and this typically happens right around 65 and retirement — is that someone comes in and says, “Stephan, I’m going to be charged a ridiculous amount next year in IRMAA because two years ago I was still working, making a ton of money. Now I’m not, and my IRMAA premium is going to go through the roof.”
Fortunately, there is a way around that. You can file a Form SSA-44 that allows for an adjustment to your IRMAA for life-changing events. Whether it was a change of marital status, a change in income in a big way, a loss of income, or a significant change from retirement. There’s a short list of qualified events. You can look at those and say, “I am retired now, huge drop in income, so don’t use my income from two years ago.” That’s not a good reflection of how much money I have now to pay for healthcare. So there’s a good option there.
Now when it comes to trying to reduce IRMAA in the future, there are a lot of considerations. I’ll recommend a Roth conversion or a capital gain and I’ll get the pushback: “That’s going to increase my IRMAA.” And the reality is yes, it’s going to increase your IRMAA. You’re probably paying $200 a month right now. But if you jump — and that’s under roughly $174,000 to $200,000 or so for a married tax return — if you go up to $300,000, it’s going to go to somewhere around $350 or $400 depending on how high you are in the $300s. It’s going to cap out somewhere around $600.
Now that’s per month. So it’s a big number. Going from $200 to $600 is $400 a month, $4,800 a year. That’s an extra $5,000 that you’re giving the government. But from an income perspective, you’re looking at income well over $750,000 or so. There’s likely a reason your income is that high.
I wouldn’t let the tax tail wag the dog in this scenario — especially with IRMAA. There’s a lot of concern around IRMAA and all the different acronyms that start floating around retirement — DAFs, QCDs, RMDs, IRMAA — the alphabet soup of taxes. We don’t want to worry about them too much.
We want to be careful. We don’t want to unnecessarily increase income if we could smooth it from an IRMAA perspective. But the reality is, if you’re doing a conversion or making a big withdrawal within the context of a broader plan that’s already trying to smooth tax implications and income later on, then IRMAA is not likely to be at the top of the list of things we’re concerned about when it comes to overall tax brackets and taxes.
From the Field – Watches with Perri Dash
Stephan Shipe: And for today’s From the Field segment, we’re shifting to the world of high-end watches. This is an area where culture, craftsmanship, scarcity, and value all intersect and families often wonder what actually drives collectability and long-term value. Joining me today is Perri Dash, founder of Super Niche and co-creator of the Wrist Check Pod. Perri’s built his career in intersection of fashion, jewelry, and horology, and he brings a global perspective on what makes a valuable time piece. So Perri, thank you so much for joining us. Please start off, tell us a little bit about yourself, how you got into this world.
Perri Dash: Oh man. Thank you for having me. It’s a absolute pleasure. I got into watches initially from my grandfather. My grandfather was a military veteran. He’s in the Marines. Avid fisherman, jazz pianist who served as a session player for some jazz grades when they would visit New York, namely Nancy Wilson. And he was kind of, he was just a real culture connoisseur, kind of a classic gentleman.
And he owned multiple watches and I used to visit him. He lived on 87th and Riverside. He was actually next door neighbors with Cherry Stiller, which was funny. So I, I kind of grew up with them next door, anytime I would visit my grandfather, but. I noticed in his bedroom, he had this sort of little shelving unit on his dresser and had a bunch of watches on, and I thought it was odd that someone would own more than one watch, and he broke it down to me.
He had a watch for every occasion. And so I think for him it started as utility and he moved into becoming a collective. Though I don’t believe he ever considered himself a collector, but that’s what started the initial spark. And so from childhood, I’ve been fascinated with watches and horology. It wasn’t until COVID where I really dove deep, and it was because watch media began to become a thing, and at that point, I think like everyone else we’re at home and scrolling YouTube and Instagram and everything and just figuring out what was going on, trying to pass the time.
And I noticed that there was this whole world that was happening in watches that I wasn’t participating in, and I started consuming a lot of content. I mean everyone from Teddy Baldassarre, Hodinkee, Revolution, of course. And I had an idea to sort of jump in. I thought, you know, it might be cool to do something that was a little more casual, a little more off the cuff, and provide a cultural lens and perspective on what was happening in the watch world.
So I reached out to a friend of mine who’s my co-host, Rashan Smith, and I brought up the idea of starting a podcast that was video based on watches and. He was into it. And so we found, a studio to begin recording in the financial district, and that was where we started. It’ll be four years this year.
And vicariously through starting that podcast, we made relationships. We started attending trade shows and auctions, and we kinda just ingratiated ourselves in this amazing kind of burgeoning community of collectiveness and enthusiasm. That’s really where all of this was born.
Stephan Shipe: The way you described how he collected watches or maybe not formally collecting watches, but how he had kind of set up his collection was on different occasions. Is that common? When someone builds a collection, how do they tend to build it? Is it by brand or by occasion, do they have a variety?
Perri Dash: I think most collectors today have a variety and the difference between then and now. You still have some that I think collect based on utility, but. More seasoned collectors are trying to maybe express a point of view with their collection in addition to being sort of value conscious, right? I mean, especially once you get into luxury time pieces, as it so happens, you know, during COVID there was an explosion with everything. The stock market, crypto, and watches began to appreciate, again, this happened before in the nineties, but not quite like how it happened, like over the course of COVID. So today you have collectors that are sort of monitoring their collection in terms of value, right?
They might start with something that’s more accessible, maybe let’s say like Tudor, move into Rolex, and then eventually find themselves with more high horology brands. And then today it’s exploding into this whole other thing that’s happening with independent watch explosion.
Stephan Shipe: I think one of the big misconceptions that people have is if, say they listen to this and say, Perri gave me some good ideas. I’m ready to start collecting watches, and I go and I found this special edition watch and I’m just gonna go up to the store and go buy one. That’s not the case all the time.
Perri Dash: Exactly. Excellent point and question. All watches are not created equal. Just because something has limited edition tied to it doesn’t mean it’s a valuable piece. It may have some, you know, emotional value for you or some value in terms of how you’re building your collection. But there are specific brands that have built a name and a platform for themselves and become highly, they have highly collectible cases. Rolex is one, Audemars Piguet, and Patek Philippe. And even Vacheron Constantin are examples of that as well.
And so I think probably the most immediate thing that people can kind of gravitate to is just the idea of Rolex, right? Rolex was built up in a mind as like the brand that you had to own and Rolexes appreciate and you know it’s a good investment. And that’s partly true, but not entirely the whole story, but it is. It is interesting, right?
Rolex, for example, is a brand, the most powerful watch company in the world. They also happen to make the most watches. I don’t think many people realize that Rolex makes approximately 1.2 to 1.4 million watches a year. So you would think probably not so difficult to get one. The thing is the way the watch business is structured, Rolex, up until recently, was a wholesale business, so they sold product to retailers and those retailers marked those up and sell it at suggested retail price.
With the explosion of the popularity of watch collecting, retailers then identified that they could scale their business on the back of Rolex because the demand was so high. And even though they’re producing 1.2, 1.3 million watches, the demand far exceeded that. So what was created was a scenario where retailers were leveraging watches, understanding that the demand was high, people were willing to pay more, they were appreciating.
So you might say, I want a Daytona. I want a steel Daytona. It retails for $15,000. Why can’t I just go get one? You should be able to. They probably make somewhere around 60,000, 70,000 units of that model alone. But the retailers, and there are hundreds globally, might only see maybe 20 of them a year, and that’s pretty generous.
And so understanding that the demand is high, they have longstanding customers who also want those watches who have been doing business with them for a number of years. So this is where the term spend history comes into play. And so what these retailers are doing are taking care of their long existing customers or encouraging new customers to catch up to those longstanding customers to scale their business in order for you to get that Rolex.
So I think at the height, for example, a steel Daytona might have been reselling for somewhere around $70,000. So from a retailer’s perspective, if the going rate on the secondary market is about 70,000, but it retails for 15, I could probably get someone to spend $50,000 in product before I allocate them, and this is what was happening.
Perri Dash: And the reason why you couldn’t just go in and buy one — the demand or the appreciation has come down a bit, but it’s still pretty high on particular models. But then you have other models that are easier to get because the demand isn’t so high. This tends to be the case with either precious metal Rolexes, Rolexes with stones. The prized sort of models are the professional models, which are all the steel models.
And so it creates a situation where someone who, you know, maybe you got that big promotion or you’re celebrating a birth and you wanna mark the occasion with that special watch — you can’t just go in, get one. You have to build what they call spend history and a relationship. And that relationship comes in the form of a monetary exchange.
Stephan Shipe: This was common as well in the luxury car markets. We saw a lot of the sports car manufacturers—
Perri Dash: Ferrari.
Stephan Shipe: —the same thing, right? Or what some of the manufacturers started to do is they started to put restrictions on your ability to sell a car once you received an allocation. Do those same watch dealers that you’re talking about have those same restrictions? So I have a big spend history. I go in, buy me a Daytona. Then I immediately go sell it for 70 grand and come in the next time you get an allocation, I say, well, I want another Daytona. Does that get taken into account or do they care less?
Perri Dash: No, they absolutely care. 99.9% of the cases, if you’re working with a retailer, once you’ve been allocated that watch, you won’t get allocated again unless there’s some special circumstance. Maybe it was stolen or you’re a longstanding customer and perhaps you want to make a special request for your son, relative, or something like that. There are exceptions made, but most of the time, once you’ve been allocated that piece, that’s kind of it.
With certain brands, they do monitor sales. Rolex is a little difficult. They get reports on what models are selling and when they sell, so they understand the turnover rate in all the stores where their watches are being sold. But it’s really up to the retailer to monitor those, and so simply for the purpose of scaling their business. It doesn’t behoove them to allocate you multiple of the same watch, right? Because if I’ve got a number of customers that are already in good standing that are waiting for it, I’ve gotta appease them to continue their business.
But also there are prospects that I might want to fold into my business, right? Because that’s also beneficial to me. And so it doesn’t incentivize the retailers to allocate those same watches to the individual. So it’s very rare that you’d see someone. So there are those rules set in place.
Patek Philippe is an interesting study because Patek’s model — they actually, outside of the retailer, with the manufacturer — they keep record of every Patek Philippe watch that’s sold, so they know their customers by name. So every time you purchase a Patek Philippe, your name gets written on a certificate, and that certificate data is logged into a system that goes into their records forever. So they actually follow and track the ownership of a watch, so it’s a little easier for them to know when it’s sold, if you’re reselling it — and reselling is frowned upon.
So that’s a quick way to get excommunicated from a retailer because the demand, again, is so high. They’re always thinking about, perhaps I may have overlooked someone else that would’ve loved that watch, or that watch could have brought me more business than having you just go out and flip it.
Stephan Shipe: When it comes to jewelry, one of their concerns is you buy something and then it drops in value. But in a lot of these cases, like you’ve been giving examples, the value is appreciating or staying the same, or at least holding a significant amount of its initial value. Right. What drives that when you’re looking at watches or when you’re talking to somebody about one?
Perri Dash: It’s a great question. It’s a combination of a few things. I think first, primarily it’s brand, right? Brand recognition is huge because that’s the easiest thing that people can gravitate to. So Rolex means something. Audemars Piguet means something. Patek Philippe means something.
By extension of the brand, there’s story and provenance tethered to that, right? So Rolex is a brand that’s known for doing the first waterproof cases. They’re also a brand that is known for delivering the first commercially available automatic watches. So those stories have created sort of allure that make them more attractive. In addition to the celebrities that you’ve seen over decades wearing them or sporting these models.
And so then you have, for example, the model — like the Daytona is a great example of that — the GMT, right? Which has a connection with Pan Am Airlines. And so those stories build up the mythology about the brand. And so there’s intrinsic value that’s established there.
Next is rarity, and that goes into the fold too. You look at the Patek Philippe Nautilus — it was designed by the same gentleman who designed the Audemars Piguet Royal Oak, Gerald Genta — and so now anything that is Gerald Genta-designed has some more value tethered to it. And rarity is a big issue. Brands like Audemars Piguet and Patek Philippe don’t produce as many watches as Rolex does. Audemars Piguet is roughly around 40 to 50,000 units globally a year.
Perri Dash: I think Patek Philippe right now is up to about 60,000, and so there’s that idea, I think, amongst collectors that I’m less likely to run into folks who have these watches. That combined with the brand cachet and provenance is where the value increases because many of these watches, though you need the spend history to get, they didn’t retail for as much as the resale value is.
I think Audemars Piguet Royal Oak, right now, the standard model is probably around $27,000 for a 37 millimeter, or 30 grand for a 41 millimeter. But the resale value is double that, right? You’re seeing a 100% increase. Patek Philippe, when they did the steel Nautilus — I think before they discontinued it — it was probably sitting around $27,000, $28,000. At the height of its secondary value, we shot up to $150,000 just for a steel watch.
So it’s a combination of a lot of these things. And for collectors that have the ability to sort of dive into that and play the spend history game with retailers, they have to kind of take a step back and educate themselves on what it is that they’re buying to really capitalize on that value.
If you’re gonna spend secondary value, you gotta kind of wrestle with the fact that you probably are gonna lose a little bit of money, but it’ll retain a good portion of the value. And if you can get into the retail game, I know many collectors that look at it — they might look at it as stocks, right?
So if the requirement for me to get a steel Daytona — and these are older numbers, I think a lot of numbers have come down — but let’s say in the height it was $70,000 and I’m required to spend $50,000. They might look at it: 65, I’m all in, so I’m netting 5K. And so they would look at it like this. And maybe you bought stuff to kind of build your spend history and maybe you enjoyed some of those watches, but maybe you got out of some of those watches, and you might take a loss on some of the watches you purchase in order to get there.
But you can recover your standing and increase your position in the black by selling watches. And so that kind of brings up the conversation — are watches an investment? They can be. I tend to think that they’re only an investment if you plan on learning how to sell watches. So whether you’re utilizing platforms like bezel.com where you can relist watches and sell them, or you befriend a dealer who’s educated, or you take the position to educate yourself and kind of understand how to sell watches on your own — which many collectors do. If you’re collecting long enough, you kind of figure that out just by way of bringing yourself further into the community.
Stephan Shipe: I’m gonna put you on the spot here with a couple—
Perri Dash: Sure.
Stephan Shipe: —wishlist here. If someone’s listening to this and they say, “Alright, I’m sold. It’s time for a collection of time pieces,” and they could start off with a budget of, let’s say, two grand, 10 grand, or 30 grand — what is the watch you would get at each of those price points?
Perri Dash: It’s a great question. So at two grand, I would say you’re in the more accessible range. At that price point, you’re not necessarily thinking about value — you’re probably thinking about experience. I think at that level it’s just great to kind of get your feet wet, understanding what it is that you like in terms of material, in terms of case size. Do you prefer a watch on bracelet? Do you prefer a watch on strap? It’s a nice sandbox just to get your feet wet and understanding how watches fit into your life.
At 10 grand, you can probably get into brands like Omega and you can even touch Rolex. I think that’s feasible. Base model starts at around six grand with an Oyster Perpetual. Some of them are harder to get than others, but if you can manage to get one — and it’s not as difficult as it was — those are watches that are still in demand, and so they would appreciate some.
At that level, if we’re talking about a brand like Omega, I would always recommend a Speedmaster. It’s got a lot of history — first watch worn on the moon. It’s a complicated timepiece. It’s a chronograph, so it measures speed over distance, and you’ll get the cachet or some of the value from that watch by the rooms that you’re in, right? And so if you’re a business professional and maybe you’re trying to build relationships with other guys who are into watches, an Omega Speedmaster is a great conversation starter. It’s a great icebreaker.
At 30 grand, you’re entering big-boy territory. And so you’re gonna start looking at brands like higher-end Rolexes. You’re gonna start looking at AP. You’re gonna start looking at even Patek Philippe, because now you’re starting to enter that zone. Vacheron Constantin is a great brand to take a look at. Their coveted sports model is the Overseas, which is not as difficult to get and retains most of its value today. It’s also one of the premier brands — it’s part of what they call the Holy Trinity, which consists of Vacheron Constantin, Audemars Piguet, and Patek Philippe.
That’ll get your feet wet in terms of that sandbox, where now it’s like you can start to rub shoulders with really big collectors, and if by chance you ever needed to sell the watch — maybe break in case of emergency — you’ll get the most value back from a model like that.
Stephan Shipe: As we wrap up here today, what are your thoughts for someone — what you’d want them to know about this niche of a world or where you think the market’s going?
Perri Dash: So I always encourage people to get educated. At Super Niche, we are collectors — and so we collect art. My business partner is a poly-collector, collects wine — and it really comes down to education.
If value retention and appreciation is important to you, you’re gonna have to study. And so you’re gonna have to be acquainted with not only who the players are, but who the outlets are that are putting information forward. Outlets like us. Outlets like Hodinkee. And it really comes down to what you know.
There are a lot of other opportunities that exist now outside of just general retail. The vintage watch market is really bubbling, and if you are someone who is looking to increase value, there’s a lot of value to be had there — but you have to also be able to identify the trends. What are people gonna be looking for in six months? What are they gonna be looking for in 12 months?
I had purchased earlier this year a vintage Daniel Roth that I got for around 12 grand from a dealer in Miami. And I purchased that not only because I loved the watch, but because I saw that Daniel Roth was coming back into the fold. Louis Vuitton — well, LVMH — purchased the name and they were planning on reintroducing some of those core styles that were discontinued. And collectors were talking about this in all circles, articles being written about this.
So I decided to say, Hey, I found a rare piece that no one’s looking at. I can get into it early. And I got into it. I enjoyed it for several months, and then I sold it and I made about 10 grand on it. And I then used that money to buy another watch — which most of us collectors do. I used that to get this watch here, which is the AP Royal Oak, and I put that with some of the money I had, and I was able to buy it at retail — and this watch has gone up 100% in value.
And I can choose to enjoy that, or I can choose to maybe at some point get into something maybe a little higher.
But the thing is that — it’s a lot of fun. There are opportunities to make money if you want. And you know, a recent advent that’s happened with this sort of exploding world is that now you can protect these items, right? And so you have companies that offer insurance on these assets, if you will. Not only do they offer insurance, but they insure the future value. Right?
So I can insure this for retail, but many of the insurance companies will honor — should something happen, where it breaks or it’s stolen — they’ll honor the secondary market price. And that’s an interesting thing now in the watch market, because hypothetically, if I lost this watch or if it was stolen from me — I made the profit.
That’s a new and recent advent that’s taken place. So I think people ought to educate themselves on what’s happening. Do some homework. You don’t have to necessarily be an expert, but get a sense of what’s going on in the market by ingratiating yourselves — whether it’s on the media landscape or even with local watch clubs — and having access via events with retailers or local collectors, because you’ll realize that the more you know, the more opportunities exist.
Stephan Shipe: Thank you so much, Perri, for all the information, for being on today. I learned a lot. I know others will as well. Thank you.
Perri Dash: Thank you.
Outro
Stephan Shipe: That’s our show. Thanks for listening, and we’ll see you next week.
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Disclaimer: The information provided in this podcast is for general informational and educational purposes only, and is not intended to constitute financial, investment, or other professional advice. The opinions expressed are those of the hosts and guests and do not necessarily reflect the views of any affiliated organizations. Investing in financial markets involves risk, including the potential loss of principal. Past performance is not indicative of future results. Before making any investment decisions, you should consult with a qualified financial advisor who can assess your individual financial situation, objectives, and risk tolerance.