[JDsnewwatch]

I believe that Rolex is still a good buy considering inflation and insecurity in the financial markets. A house in my community 50 years ago was right around 100,000 USD. Today, that dollar value means you can’t live in my community (house, condo, appt., all out of reach for a buyer wanting to spend 100k). In many instances the inflationary value of an item is lessened with technology. A nice suit in the 1920s was VERY expensive. A nice suit today, is also expensive, but inflation didn’t rise the price as expected (this is important) because we found ways to make the suits cheeper. Even if you want to buy a custom suit, the fabric prices are lower, the labor prices are lower and the computers that aid in the production mean that it will likely be correct the first time! Manufacturing costs came down.

With Rolex (and frankly other mid to high level watches), the technology has been tweaked a little here and there, but for the most part, the labor and quality is still there. So, a recent purchase of a sub or gmt should follow in line with inflationary predictions.

The inflationary value of $800.00 in 1920 converted to today’s money is $10,500!

What has changed with Rolex specifically is the company limiting production to make the watches scarce. (You could argue that they aren’t limiting, and that the demand shot up.. it’s safe to say we are somewhere between those two extremes). This (obviously) has created a cottage industry for the second hand market and in an unexpected turn of events, used watches are selling for more than their new counterparts because the new ones are largely unattainable.

The danger that needs to be recognized is that this is a finite situation. At some point, the market will correct. This can happen in a few ways.

1) Rolex quadruples production (look at what happened to Movado)
2) Rolex starts direct selling as opposed to using ADs (Gibson and Fender Guitar companies are trying this)
3) Rolex lessens the quality (I doubt this will happen, but countless other companies have done this)
4) The end user falls out of love**

*think about when you were growing up, did most of the guys in school or at work wear watches? Look around today, the guys 18-25 don’t wear watches as a general rule anymore. That leaves the buying of watches to those older than 25. Can the trend turn back? That’s tough to do.



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