Quote:
Originally Posted by BraveBold
No, not drawing a 1:1 ratio - but know all too well that watches weren’t unique. They were one of many segments that were impacted.
Ultra speculative equities (SPACs, anything Cathie Wood endorsed), crypto, some watches, some cars, some cards, some comics, some coins, some stamps, some <insert additional segment here>) - all more than “linearly” impacted.
All those categories unwound. Sometimes carrying other assets down too far - savvy investors buy when others panic.
The watch market - Patek and AP in particular but also Rolex to a lesser degree, dropped sharply as well. But that unwind - it already knocked off the speculative flippers from AD waitlists. They are mostly not participating other than holding inventory. I mentioned the inventory overhang (or think I did) but that is unlikely to crater the market further. Why? Because the true excess demand has been there for a while… and global wealth has gone up more than production over the past few years. So fundamentals are strong.
I perversely wish the market would crater - but there are many others ready to pounce too. Remember, this is all dynamic and iterative, not static. If demand falls sharply overall, rates will follow. One won’t happen without the other and those trillions in short duration investments will flow right back in…
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“But that unwind - it already knocked off the speculative flippers from AD waitlists”. Not true. I literally just sold my submariner for $2000 profit. Stainless steel models trend downward, but there’s still a meaningful spread that has kept flippers incentivized. However, that trajectory is clear that it is heading towards aversion to the mean
“If demand falls sharply overall, rates will follow. One won’t happen without the other” again, not true. The fed does not adjust rate based on secondary watch market demand. If they did, that would be the exact one-to-one correlation that I was talking about which you are refuting. I can paint numerous scenarios, whereby demand decreases with fed funds rate remaining static, or at the very least elevated. The most salient example would be, and is, watches, falling out of “fashion” or “hype” or “investment” for certain cohorts.
No one has a crystal ball, but I think many are too quick to assume that the correlation between economic health, and watch prices (adjusted for inflation) are strongly correlated.