The Art of Not Valuing: Where Emotion Meets Materialism
Valuation, to me, is about Aswath Damodaran’s idea: a world of future cash flows, where every asset can be valued based on what it’s expected to generate in the future, discounted to the present. It's neat. It's logical. I like it.
But there are areas where this logic doesn’t apply—the world of art, watches, and things that make us feel something beyond the numbers. These things can’t be measured by cash flows, yet companies have to put a price on them, and we internally price them and buy them.
Take watches, for instance. As a kid, maybe you wanted a G-Shock. Sure, it had cool features like a stopwatch, backlight, and even waterproofing. It was nearly indestructible, making it a damn good watch.
But let’s be real: you didn’t buy it for any of that. You bought it because your friend had one. You bought it because there was something about the way it made you look, and feel. The G-Shock wasn’t just a timepiece. It was a statement, a symbol of belonging, of fitting in. It represented something that couldn’t be measured in time, but in connection, in the shared joy of youth.
Now, we could argue that a luxury watch, like a Patek Philippe, is a more refined version of this—that it’s about the craftsmanship, the history, and the story behind it. And sure, there’s truth in that. But deep down, we don’t buy it just for its mechanical precision. We buy it because of what it makes us feel—because it speaks to a part of us that doesn’t care about the hands on the clock, but the hands we shake and the circles we move in. It’s about identity, status, and the quiet confidence that comes with owning something that says, “I’ve made it.”
Art fascinates me even more. My mother’s a painter, so I’m admittedly biased, but to me, art isn’t just about the medium. It’s about emotions. It’s about the backstory, the context, the story of the artist, and, of course, the beauty of the artwork itself.
Consider the two sports paintings above. I had little to do with creating them, except for urging Mum to finally bring them to life. Why, you ask?
Well, to me, there’s something truly magical about watching athletes move with grace. Think of Messi weaving through defenders or Federer’s effortless one-handed backhand. It’s not just about skill; it’s the way physical mastery and pure beauty collide in a single, fluid moment. To me, it’s these moments in sport that transcend athleticism and become art.
And yet, trying to value or even price that? That’s where the trouble begins. Of course, I had a simple idea in mind:
Hourly rate based on the difficulty of the work * number of hours + cost of supplies.
But even that doesn’t work. The truth is, one person might pay Lakhs for a piece, while another wouldn’t pay thousands for the same work. I gave that whole speech about the beauty of a one-handed backhand, and yet someone could simply look at it and say, “No, I don’t care.”
Of course, I’m not an art dealer, and I don’t claim to have a deep understanding of the art market. However, strictly from a valuation perspective, there’s no true formula for things like art or watches. It’s not about DCFs; it’s about pricing based on what someone is willing to pay.
This brings us to a world shaped not by numbers, but by materialism and emotion—the joy of owning things that speak to us. We might debate whether something is a store of value or a good investment, but at the end of the day, its true worth is rooted in how it makes us feel.
For those interested in a more traditional approach to valuation, Aswath Damodaran, a professor at NYU, offers a comprehensive course on valuation available on YouTube. It is brilliant!
To those interested in watches, you may want to check out watchfund. There is also stuff on investing in wine. And lastly if you are interested in checking out some great art go visit ruchiramaniar.com. (Yes, very biased)
Disclaimer: This is not investment advice. The views expressed here are personal opinions and should not be construed as recommendations for buying or investing in any asset, including watches or art.