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LONDON (Dow Jones)--A vintage wristwatch is an alternative investment unlike any other. As a tangible asset it is unique in that it can be enjoyed every second, of every minute, of every hour, of every day.

But watches are long-term investments; consequently their owners will often have to wait more than a few rotations of the small hand before seeing any significant return on their initial outlay.

The first wristwatches began to appear around 1910 and proceeded to displace their pocketed cousins in the market over the following two decades. With the 1960s came not only the sexual, but also the quartz revolution. Time seemed to come almost to a
standstill as the industry stood back to asses the impact of this new electronic medium.

However, watches with mechanical movements - which contribute 14% of volume, yet 65% of the total market value of watches sold - rather than quartz ones, are preferred for investment. This is due to the artistry involved in their construction, and the quality of the materials they are made from.

Today, brand-new watches, like luxury cars, depreciate around 40% in value the moment they leave the shop - making them a far less attractive investment than say, a more vintage model.

And wristwatches, like automobiles, are also marketed towards, and sought after by, a predominantly male audience, guided by the latest fads and trends within the market.

"It's the main piece of jewelry a man will wear," said Paul Maudsley, head of watches at Bonhams, an auction house. "Well, with the possible exception of his wedding ring," he ever-so-quickly added.

In contrast, the market for ladies' watches at auction is virtually nonexistent. "Women can buy jewelry; quite simply, they have other things to spend their money on," Maudsley said.

Unsurprisingly it is the top end of the market, with established brands such as Rolex - the world's most collected brand -
Cartier and Patek Philippe that command the highest prices at auction. Watches released by major fashion houses, rather than
traditional watchmakers, are looked down upon as "costume" watches.

"The market was very buoyant a year ago," said Maudsley. The slide of the U.K. into recession has sent a tide of sellers into the market place, and a wave of potential buyers out of it - according to John Matheou, founder of The Swiss Watch Company, based in Chiswick, London.

The watch market peaked around 12 months ago, after a period of inflated prices. When investors got wise to these prices, "the
bubble burst and watches started to come back into the dealers' hands," Matheou said. The market quickly leveled out, counteracting the "one-upmanship" of the former vintage-watch-buyer demographic of bonus-culture-dependent city workers.

In the last year, prices in the top tier (valued above GBP20,000) have dropped by between 30-50%, with Rolex watches holding up only slightly better than their rivals, Matheou continued.

It appears that the only recession-proof luxury watches are those which have been discontinued. The Rolex GMT II and the Rolex
Sea-Dweller, which both ceased production over the last six to 12 months, have seen their values continue to rise. "Once they become discontinued, people want them more, as there is an element of history attached to them," Matheou said.

At the artistic end of the supply chain, the Swiss watch industry registered its first decline in exports in the fourth quarter of 2008, after enjoying 19 consecutive quarters of growth.

According to the Federation of the Swiss Watch Industry, however, Swiss exports still totaled an incredible 26.1 million watches - worth 15.9 billion Swiss francs ($14.7 billion) - in 2008, with an annual growth rate of 0.8%.

The record price paid for a wristwatch at auction in the U.K. saw a gold, 1932 "Trossi Leggenda" Patek Philippe watch, originally owned by Italian racing driver Count Carlo Felcie Trossi, go under the hammer at Sotheby's in 2008 for CHF2.345 million - equivalent to GBP1.14 million.

Because there is no market index, the burden of establishing a database of sales figures, by which valuations can be made, lies with individual auction houses. Thanks to the growth of the Internet, however, most of these databases are easily accessible for cross-referencing.

Although prices may have dipped, interest in watch auctions continues to grow - a trend which isn't set to change anytime soon, Matheou said.

Watches tend not to change hands, or wrists, too often. A lot of vintage wristwatches brought to auction are sold by their
original owners. As long as they're looked after, tales of incredible profits are not unfamiliar. For example a Rolex submariner bought for GBP100 in 1972, would now sell for between GBP10,000-GBP15,000.

However, a watch worth GBP7,000 on its own, could be worth as much as 70% more, at GBP12,000, if complete with case and
documents, Matheou informs us.

The timepieces themselves are always going to be more accurate than the art of investing in them. So, if a chosen watch is something that you're passionate about, then it is likely that, if or when the watch is brought to market, someone else will be so too. "It's likely that, at the very least, you'll get your money back, if not even more," Maudsley said.