Work detail

Fine Watches as an Investment: Index Creation and Portfolio Selection

Author: Bc. Evžen Harant
Year: 2018 - summer
Leaders: doc. PhDr. Julie Chytilová Ph.D.
Consultants:
Work type: Bachelors
Language: English
Pages: 68
Awards and prizes:
Link: https://is.cuni.cz/webapps/zzp/detail/200370/
Abstract: This thesis performs a risk-return analysis and examines portfolio diversification
opportunities of fine watches. To provide the reader with a basic
understanding of the watch market and its functioning, main incentives,
price determinants, and risks are studied. To effectively analyse price dynamics
on fine-watch market, the dataset including data from major auction
houses and encompassing the period between 2006 and 2017 is created. Due
to the unique nature of fine-watch market scene, the price index is then
estimated with repeat sales method using original, three-stage, and threestage
flexible methods. Beyond the creation of price index, the portfolio
analysis is performed and the thesis further focuses on potential benefits
of watch index’s inclusion in optimal portfolio. We find evidence that fine
watches are potentially a good diversification tool due to its close-to-zero
correlation with other chosen asset classes. However, computed risk-return
characteristics shows a suboptimality of watch index relative to all selected
assets except for two equity indices, NIKKEI 225 and EURO STOXX 50.
As a result, we find no evidence of beneficial effect of fine watches’ inclusion
in portfolio.

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