High-end retailers are literally "watching" what you read!

Last night I salvaged my latest Forbes and Economist magazines from a daunting stack of holiday catalogs. You know the drill: You look for keepers while standing over the trash can.

I settled into my favorite chair and flipped open the Forbes to find a featured article on Warren Buffett. And there, staring me in the eye with a big smile on his face I saw ... NOT the legendary "sage of Omaha." It was Nicholas Cage, hand-to-chin, casually displaying the biggest watch I'd ever seen. It's no mere watch, I discovered. It's a Montblanc TimeWalker Chronograph.

I flipped back to the table of contents to locate the Buffett article. Instead I found a full-page Concord C1 -- a timepiece that dwarfs the Montblanc Chronograph: "What other watch has a 3.3 mm thick sapphire crystal? What other watch has a case," the ad asks, "that stands 16.7 mm tall?" Wow! I don't think my travel alarm is that big!

I flipped the page and found yet another Hummer-sized watch, an IWC Schaffhausen, which claims to have the world's largest automatic movement: "If this watch stops, please call a doctor. It means you haven't moved for seven days." A few pages later looms an even larger image, an Ebel 1911 Discovery, "Water-resistant to 10 ATM." Other timepieces began jumping from the pages -- exotic names from centuries past, like Vacheron Constantin ("Genéve, depuis 1755") and the relative newcomer Gevril ("fine Swiss timepieces since 1758").

I flipped to the inside back cover, which pictures a father and son above another legendary Swiss watch. The caption reads "You never actually own a Patek Philippe. You merely take care of it for the next generation."

No respite
Needing a break from vanity watches, I picked up The Economist, only to discover more luxury timepieces: A Cartier ballon bleu in 18K yellow gold, a BVLGARI (ancient Roman capitals with a V instead of U) in 18K pink gold with a clou de Paris dial, and a Panerai Luminor Marina, which boasts water resistance to 300 meters!

"Enough!" I thought, tossing The Economist aside. But there on the back cover was the now familiar father, son, and Patek Philippe -- the watch you never actually own.

The millionaire's choice
All this focus on designer chronographs sent me scrambling for my copy of The Millionaire Next Door. I remembered some statistics on the buying habits of high-net-worth individuals. According to the authors, ten percent of millionaires never spent more than $47 for a wrist watch. Fifty percent never spent more than $235. The book was copyrighted in 1996. But even when adjusted for a decade of inflation (about 35%) these are admirable examples of frugality. In today's dollars, that $47 watch would cost about $63. The $235 timepiece would ring up at $317.

In contrast, as you can see below, you can spend hundreds of times more on a fancy watch. But would self-respecting millionaires-next-door put down that kind of cash? Nope. They'd buy a cheap watch and invest the rest. Taking Patek Philippe's advice to heart, see how they'd do if they earned 10% on their money long enough to pass it down to the next generation:

Designer Watch	List Price	20 yrs	30 yrs	40 yrs
Montblanc TimeWalker	$3,930	$26,439	$68,576	$177,869
Ebel 1911 Discovery	$4,850	$32,628	$84,630	$219,507
Patek Philippe 5146G	$29,700	$199,807	$518,247	$1,344,200

Maybe I lack the sentimental gene, but I think my future grandchild would rather have $1,344,200 than a hand-me-down watch.

Targeting your urge to splurge
The makers of these luxury items understand consumer psychology. They know that the holiday spirit fosters extravagance, and they "time" their ads accordingly.

I glanced through some old copies of Forbes. The September 3rd issue contained no watch ads; the next issue contained only one. But as the holiday season approached, the ads multiplied. They often featured endorsements from the likes of Nicolas Cage and Derek Jeter (Movado), Tiger Wood (Tag Heuer), and two-time NBA MVP Steve Nash (Raymond Weil). My favorite celebrity sizzle is Swiss watchmaker Breguet's posthumous endorsement from Napoleon Bonaparte!

A better approach
Instead of buying a Movado watch, you might consider buying shares in the company (NYSE: MOV). Since its initial offering in 1993, the stock has risen 722%. Or you could go straight to the pinnacle of luxury with shares of Tiffany (NYSE: TIF). In 2007 this high-end brand has significantly outperformed the S&P 500 with a year-to-date gain of around 22%. Coach (NYSE: COH) is another possibility. It offers some mighty fine watches, and the stock is up fourteen-fold over the past six years.

Our consumer-based economy depends on a certain amount of holiday exuberance. But if you need a little budgetary restraint (and who doesn't?), then you should try out the Motley Fool Green Light service. Co-advisors Dayana Yochim and Robert Brokamp lead the ideal support group for financial self control. For access to money-saving tips, members-only discussion boards, and sage advisor blogs.

PS: Doug wears his beloved $15.99 Cassio digital chronometer everywhere. It has dual time zones and serves as a stop-watch, countdown-timer, and a startlingly loud alarm-clock. He owns neither of the stocks mentioned above, but in the mid '90s, before reading The Millionaire Next Door, he did splurge on a low-end Movado.