What he said above really. My dad went ballistic when I bought my first Breitling, saying it was a waste of money.
Maybe it was, but when I pointed out he's smoked 40 a day for most of his life, and goes to the pub several times a week, he can obviously justify spending his money that way but I can't.
Yeah nice watches are a lot of money, but they also retain a lot of their value. Money spent in other ways is often just lost totally with very little to show for it.
I sold my Breitling (for not much less than i bought it for) and bought an Omega Speedmaster X-33, an expensive watch which is current issue for NASA astronauts. I like it for what it is, I certainly didn't buy it to flash around and impress people. In fact I took it off its titanium bracelet and wear it on a haggard looking NATO strap, so most people wouldn't realise it was worth anything unless they looked at it closely or knew their watches.