Philosophy of Burning Money
Why luxury should feel like a sin, and what happens when watch collecting becomes "sensible"
We got into the weeds in this recent essay, where we talked about the luxury asset bubble, “experience inflation,” and why Swiss watch exports are diving faster than a submariner1 with a hull breach. It was, admittedly, a bit gloomy.
But then, down in the comments section, long-time reader Amateur Hour Watches (AHW) dropped a hot take. He argued that we shouldn’t be mourning the death of the “investment watch,” but celebrating it, because the entire point of luxury isn’t to be smart or “safe.”
The point of luxury, he said, is to be a little bit naughty.
“In general you are getting the feeling of being just a little ‘naughty’, a little bad... buying something you know you shouldn’t, spending hard earned on something you know in your heart of hearts is a little dumb - and that feels great. Why? Because to transgress is an act of autonomy.”
I am not sure I fully agree with this perspective, but this comment nevertheless sent me down a rabbit hole involving French philosophy, the psychology of “sin,” and why your accountant might be the archenemy of your happiness. It’s out of left-field for sure, but if you’re an SDC reader, this should be par for the course… I realised at this moment I am spewing out too many sports analogies, but upon further reflection, they seem to fit? I will revisit this when I edit2.
Estimated reading time: ~10 minutes
Accounting
For a number of years watch enthusiasts have been living in a delusion. We convinced ourselves (and no doubt, our spouses) that buying a 50+k watch was a “rational capital allocation strategy.” Some of us built spreadsheets, others religiously tracked market prices, and a huge number of people entered the hobby (when they otherwise wouldn’t have), because they were able to tell themselves that “because the watch can be liquidated for profit, it is basically a high-yield savings account that happens to tell time, and also allow for temporary enjoyment of the money (on one’s wrist).”
And sure, the maths worked for a while, but looking back, did it ever feel like luxury? I’d agree with AHW partially, and say that it probably didn’t - it likely felt more like portfolio management, particularly when ‘unworn’ versus ‘worn’ implied a 20% value reduction.
When you buy an asset that is perceived to be something that goes up in value, it’s fair to say you go from being a consumer to a custodian. With that sort of mindset, you effectively become a servant to the market. You are less likely to wear your dive watch (let alone on a real dive), because you’re worried about “scratching off some resale value.” In general then, you don’t enjoy the object; you enjoy the unrealised gain you’re sitting on.
At this point, the dopamine hit dies. If your financial advisor would look at your watch purchase and say “Good move, solid diversification using alternative assets,” then maybe you haven’t bought a luxury good at all. You’ve just moved cash from Row A to Row D in your personal ledger.
Where is the thrill in that?
Secretive collecting
AHW mentioned something else; he believes nine out of ten watch people he knows tell nobody they’re into watches. In other words, no watch IG, no meetups, no WhatsApp groups... nothing. They supposedly just treat themselves to something nice every now and again. He mentioned how he introduced two Rolex owners at work because they were both so secretive about their hobby that neither knew the other was into watches. I can’t speak to the 90% ratio, but in my relatively normal life away from the world of luxury, it kinda tracks. If I am not making a conscious effort to meet watch people, I simply don’t encounter any.
This of course raises an interesting question - if status signalling were the primary driver of luxury purchasing, this behaviour makes no sense at all. You obviously can’t signal status to people who have no idea you own anything worth signalling about, right? The whole point of a Veblen good is that other people see it and make inferences about your wealth, taste, or access.
So what are these secretive collectors getting out of these luxury watches? Why do they bother spending serious money on watches if they’re going to hide them under a shirt cuff and pretend they don’t exist? At this point, people like you and I are rolling our eyes and waving our fists at the screen muttering “because we enjoy them for ourselves, obviously!” Sure, and that’s exactly why I started out saying I don’t necessarily agree with AHW’s perspective - but let’s pull on this thread anyway.
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This brings us to the transgression theory, which offers another explanation. The pleasure, in this case, does not come from showing others, nor does it solely come from just enjoying your watches privately. The pleasure is in the private knowledge that you did something gloriously impractical and irresponsible. You spent money you probably shouldn’t have, on an object that does its one job worse than your phone… but you fvcking did it anyway! That act of “autonomy”, is effectively a mini rebellion against your usual ‘sensible’ decision-making, and that is the payoff.
To transgress, in this scenario, is “to assert freedom.” What I mean here, is that by simply buying an obsolete mechanical object you don’t need, you’re giving the middle finger to that ever-rational voice in your head. The watch itself, isn’t a reward, the act of transgression is the reward. You could see it as the watch being the receipt you got when you ‘purchased’ the reward.
Philosophy of burning money
It turns out, there’s actually an intellectual framework for this… of course there is 😂.