Watches and investment potential go hand-in-hand, especially when you're referring to Rolex watches. Not everyone believes that watches are "investments" but there is substantial evidence to support that sometimes they truly can be. As a watch lover, I am also a finance geek who loves crunching numbers and analyzing short-term and long-term investment patterns, especially ones that aren't usually compared. Enter the Rolex GMT Master II Coke vs Coca-Cola Stock analysis. Which one fared better? The answer might surprise you.
Image Source: Watchmaster
If you haven’t checked out my last soda to watch comparison on Pepsico vs. the GMT Master II Pepsi you should check it out here. Go read the article to see the data and find out which one is a better investment. For those that remember, one of the problems we ran into during our analysis was that the watch had appreciated quickly over a short period of time, whereas companies generally grow over longer periods of time.
So, today I have another soda and watch comparison, but one that goes back farther, much farther, to 1983. The watch in question is the Rolex GMT Master II reference 16750 “Coke”. This watch was released in 1983. It was released with a retail price of around $800, or $2,148 in today’s dollars. The watch derives its name from its two tone black and red aluminum bezel, reminiscent of the popular soft drink Coca Cola.
Image Source: CNBC
Coca Cola is a massive multinational company, and its beverages are sold in over 200 countries. You would be hard pressed to find anyone who doesn’t know what a bottle of Coke looks like. Aside from the drink, Coca Cola also owns a variety of other products ranging from popular soft drinks such as Sprite or Fanta to local favorites only sold in certain countries. The Coca Cola company is traded on the New York Stock Exchange under ticker KO. As of this writing, Coca Cola stock is trading at a price of $54.11. The more important question, however, is how much was it trading for in 1983? Back then it traded for $0.35, when adjusted for stock splits, that comes out to a total of $0.95 in today’s dollars, quite a steal.
Image Source: Bob’s Watches
Looking at the numbers, we can estimate that the Rolex 16750 sells on the grey market for $15,884, while we know that Coke’s stock is somewhere around $54. This gives the Rolex a return of 639%, not bad. That’s more than 6 times its retail price and far more than even the ceramic Pepsi.
However, when we look at the appreciation of Coke stock there is no comparison, Coke stock appreciated 5,596% over that same time period. It’s hard to imagine percentages that big, so let me help put that into perspective for you. If you had invested the $2,148 you would’ve spent on a Rolex 16750 into Coca Cola stock instead, you’d have $122,345 today, quite the pretty penny, you could buy a lot of Rolexes for that price.
The time horizon is an important point to consider when deciding between two potential investments. If you’re only looking to invest for a short period of time to take advantage of a perceived surplus in demand, then maybe a hyped watch is the right choice. However, if you plan to save for retirement or a goal farther into the future, then it may make more sense to put your money into stocks such as Coca Cola. They provide steady and consistent dividends which can be considered as cash flow and appreciate themselves, thus allowing your investment to grow. Investing is a very personal decision based on your personal needs and shouldn’t be based on one thing.