(So... he was actually being was serious, then? Not ironic?)
(or if you don't have any, then read up on the psychology)
Got any links Nev?
There must be a million threads out there, but here is one for starters: low self esteem
But that's not what the article says. It's speculatively non specific as in "You might also be willing purchase pricey goods for entirely internal reasons". To be specifically correct you would have to psychoanalyse a chosen individual with an expensive watch, draw a conclusion, and that conclusion would only apply to that person.
There are people of low esteem who wear expensive watches.
There are people who do not suffer from low esteem who wear expensive watches.
There are people of high esteem who wear expensive watches.
There are people of low esteem who do not wear expensive watches.
There are people who do not suffer from low esteem who do not wear expensive watches.
There are people of high esteem who do not wear expensive watches.
There is no intrinsic connection between esteem and the watch a person wears.
Any connection will be individual specific and understood as an individual judgment.
To exclusively associate an expensive watch with low esteem is extrapolate a conclusion based on an assumption.
Stereotyping all people who wear expensive watches and then drawing erroneous conclusions about each as an individual is both simplistic and judgemental to the point of prejudice against anyone wearing such a watch. One could pick on any any expensive possession and take a similar judgmental attitude.
This is not the intelligent thinking with which I associate you. 
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I learned my lesson about stereotyping a long time ago when a Crusty came in saying he'd found a wallet. I took one look at him and the state he was in and formed an opinion, only to have that opinion and my prejudice revealed for what it was when I opened the wallet to find about £500 in it. It was this error of understanding on my part that first made me interested in stereotyping which I studied from an epistemological standpoint in order to understand the thought process behind my error. I then came to understand the usefulness of stereotyping in certain situations, but also its severe limitation as an analytical tool. It needs to be applied with intelligence and circumspection rather than indiscriminately with a failure to understand the ramifications of misuse. 