Why do you think the market will get back to normal?

[sinkholeninja]

Originally Posted by Sublovin

In a word....Economy
Much of the world has been enjoying a very extended period of a healthy economy. Rolex watches are luxury items, and people are employed, they are making more money than ever, their savings are growing, etc
Along with this, many of the investors and flippers that have entered the market are buying up a lot of the inventory.
If there is a global economic downturn, two things will happen.

1) many individual consumers will now become more conservative with their disposable income and will not purchase as many luxury items.

2) many investors and flippers will need to liquidate their inventory to free up capital, at steadily decreasing prices, as a result of demand decreasing. (a buyers market)

Basic economics....but just my opinion.

Correct answer right here.

[playford]

If a 2008 style downturn occurred, you'd see less retail demand, but that demand so outstrips supply that I doubt your going to see ND subs back in the window. I think it would hit the demand for the grey market and the more expensive end of the vintage rolex market may come down as there is less buyers on the market. Also liquidating pieces as times get tougher.

Waiting lists may be less ridiculous, but I doubt they would go away.

I can't see retail prices ever dropping. Rolex has the market position where they slow down production, let the AD's take the hit and weather the storm.

[WatchLurv]

I dont think Rolex will adjust their supply. They're of that cocky attitude that they will do as they please and the world can either go F themselves or follow in-line with them. I surely do hope that this is their demise in someway for brand tarnishing.

We should be able to see more watches on display upon a chaotic recession where markets flash red for months and newspaper headlines write with big caps that this is the doomsday scenario.

[SUPERDOC]

I think that the most brilliant part of the rolex strategy as it is, is that if there was a big Economic crisis.. like in the past when brands had to discount prices.. thus tarnishing the image as a luxury house (Breitling/omega/even VC ), Rolex will need only supply more SS -

Right now the TT, and PM are selling because Steel is not readily available - rather than paying grey prices for SS, you can pay retail for TT, or add afew more k, and get precious metal - to the point that AD will not discount PM.

When/if the economy tanks, Rolex just has to provide more SS - the discount right now is MSRP! When all other brands discount, Rolex can just keep charging MSRP.

of course, with internet, the 'Secondary Market' has become such a huge player in the game, ans Rolex has no control over what those guys do..


One thing I think, is that if things do turn, they will turn fast (Beanie babies all over again), all it will take is a few forum/Chrono sales at a lower price for a new expectation to be set... then panic in speculators starts to set in, then psychology supercedes any financial conventional theory

[wytrader]

Recession.
I am one of the believers that Rolex holds their supply stable and will continue to do so.
Thus the demand side of the equation is what would be needed to find equilibrium price close to msrp.

[javier]

Originally Posted by Gunnersaurus

It won’t.

Agree, it won´t

[SeaAndSky]

The world is shifting into an ever more increasing divide of haves and have nots. Most of us here are probably firmly in the have camp. Even in a downturn, even if significant, I'll be fine and in fact will come out much more of a have unless the whole house of cards comes crashing down. In which case who will care about time? It won't matter any longer. Buy low, sell higher. I suspect most of you are the same. Sadly for the majority they don't benefit and fall further behind. The point is, even in a downturn, all the haves will have plenty to buy a Rolex. Only when wrist watches fall out of fashion will prices fall. No one has any idea when that might be despite whatever they claim here. For those of us who love these rugged, well made, but still working class watches, they will unfortunately be white collar priced for some time.

I won't be buying anything more at any price above msrp. They're simply not worth it. I'm no fool.

[SlideRacker]

Sometime before you see unicorns flying on rainbows.

[phow]

I don’t want to give my source away and if that harms the creditability of my statement, so be it.

Rolex inventory is currently 10% higher than it has ever been but demand continues to grow and the supply simply can’t keep up with the demand. The average Rolex buyer’s age is 55 and their income is below 150k per year. This demographic is a prime candidate to be heavily affected by an economic downturn since most are retired and rely heavily on the their investments to survive.

Based on Rolex’s output, the size of the customer base and the core demographic, demand would only have to shift 3-5% before you will begin to see a market correction.

There is zero value here besides perceived value created by supply and demand. Demand for luxury items is one of the first thing to disappear during an economic downturn within a demographic that can barely afford these items as it is.

Anyone that thinks this market won’t eventually correct hasn’t been paying attention.

[artschool]

in the future when humanity has been usurped by robots, the machine overlords will have no use for Rolex watches and the demand will finally drop.

[Tavli3]

"The title says it all. Why do you think the Rolex market will get back to normal?"

This is no different than any other price crazy fad. Everything reverts to the mean and so will this.

Will retail prices be lower, no, will there be discounts on SS, very doubtful.
Will the Gray premiums be slashed, yes. When is the question that no one has the answer too.

Most likely any of these three reason or a combination of all.
1. Most people have gotten theirs and demand has dropped.
2. Financial crisis causes people to put other priorities in front of watches causing demand to drop off.
3. People just stop paying the high premiums for whatever reasons and demand drops off.

Nothing creates lower prices faster then lack of sales!

[AK797]

Originally Posted by Tavli3

"The title says it all. Why do you think the Rolex market will get back to normal?"

This is no different than any other price crazy fad. Everything reverts to the mean and so will this.

Will retail prices be lower, no, will there be discounts on SS, very doubtful.
Will the Gray premiums be slashed, yes. When is the question that no one has the answer too.

Most likely any of these three reason or a combination of all.
1. Most people have gotten theirs and demand has dropped.
2. Financial crisis causes people to put other priorities in front of watches causing demand to drop off.
3. People just stop paying the high premiums for whatever reasons and demand drops off.

Nothing creates lower prices faster then lack of sales!

This could be the new mean, as real wealth will never fall, just gets put on hold a bit while markets correct, but more importantly many other watch brands will die and Rolex will and already is scooping up most of their demand. SM will also keep the spotlight on Rolex and there is no viable competition waiting to enter the market and take the hype onto the next big thing in luxury watches, like with sneakers, streetwear etc, so Rolex seem pretty impregnable in this new world.

[APPRF]

Originally Posted by Sublovin

In a word....Economy
Much of the world has been enjoying a very extended period of a healthy economy. Rolex watches are luxury items, and people are employed, they are making more money than ever, their savings are growing, etc
Along with this, many of the investors and flippers that have entered the market are buying up a lot of the inventory.
If there is a global economic downturn, two things will happen.

1) many individual consumers will now become more conservative with their disposable income and will not purchase as many luxury items.

2) many investors and flippers will need to liquidate their inventory to free up capital, at steadily decreasing prices, as a result of demand decreasing. (a buyers market)

Basic economics....but just my opinion.

Yes that's exactly what's going to happen. Rolex will most probably try to influence supply by decreasing production, but will this work to keep prices high is another thing.

[Pauln]

Welcome to the new normal.

[NavalFlight]

Originally Posted by phow

I don’t want to give my source away and if that harms the creditability of my statement, so be it.

Rolex inventory is currently 10% higher than it has ever been but demand continues to grow and the supply simply can’t keep up with the demand. The average Rolex buyer’s age is 55 and their income is below 150k per year. This demographic is a prime candidate to be heavily affected by an economic downturn since most are retired and rely heavily on the their investments to survive.

Based on Rolex’s output, the size of the customer base and the core demographic, demand would only have to shift 3-5% before you will begin to see a market correction.

There is zero value here besides perceived value created by supply and demand. Demand for luxury items is one of the first thing to disappear during an economic downturn within a demographic that can barely afford these items as it is.

Anyone that thinks this market won’t eventually correct hasn’t been paying attention.

Agree with this 100%

[NavalFlight]

Originally Posted by Pauln

Welcome to the new normal.

Want to buy some bitcoin at 2018 prices?

[Xerxes77]

Unfortunately I also think this is a new normal.
First Patek Nautilus SS then Rolex with SS sport model and now I see AP with the new RO 15500 who have a retail of 19000€ and sell with 30000€ blue dial!

[RyanJ]

No one on this forum knows exactly why this started and does not know when it will end.

Just sit back and enjoy the ride.

[wesdaniel]

It will go back to normal when enough people stop caring.

When people decide that they don't want to be on a non-existent waiting list, when they decide that they will purchase another brand, when they decide to simply walk out of stores instead of playing the game of buying stuff they don't want to try to get the hot piece.

Until then, it won't end.

[Ophtheus]

China now has 3.4 million, millionaires. They all want a rolex

[Uggi]

Originally Posted by NavalFlight

Want to buy some bitcoin at 2018 prices?

No. What on earth is the relevance of this question?

[Waxtactic]

It wont. It's all doom and gloom and we're feeding the fire on this forum with our deep desire for some solid watches

[phow]

Originally Posted by NavalFlight

Want to buy some bitcoin at 2018 prices?

Supply and demand markets are some of the most unstable and it's even worse when driven by hype/FOMO. Combine that with a demographic that creates most of the demand and also holds most of the supply and can barely afford it... Well, it doesn't look good for the future since another economic downturn is inevitable.

It's tough when you are part of a community like this one to remember that we are actually a very small percentage of the actual customer base. I would venture to guess that a large percentage of the online community makes up quite a bit of the top 1-5% of Rolex buyers (high income/net worth).

We spend our money very differently from everyone else...

I doubt there are very few here who are going out and maxing out a newly acquired credit card in order to buy their watches. However, one of my previous businesses dealt with selling high end luxury goods and that's exactly how well over 90% of my clients paid for their purchases... And I'm not referring to simply the act of using a credit card to make the purchase. I'm specifically talking about financing the purchase over months/years.

That is how the average buyer makes these types of purchases and any value that requires this type of buyer to remain financial stable is quite risky.


Now the vintage market... I think that is a slightly different story.

[Tuloup58]

You have more than 300M Chinese living over the average living standards of the US... so I don't see it stoping soon it is just the beginning....

[Ucerveza]

IMHO Rolex will never fall in value
If there will be an falling market, Rolex rebuys the watches from Ads to stabilize the prices

I have heard, Rolex is able to survive apprx. 10 years without selling one Rolex (earnings from real estate and savings)

[fwhawk]

Originally Posted by Keepchasing

This same statement was being used about real estate in 2006.

You prove the exact point you are arguing against by stating it has been "proven". Its proven til it bursts.

Thank you, Keepchasing. People talk about a "new normal" and "no bubble" until the bubble bursts.

I saw it up close and personal with Ferraris in the early '90s. Selling prices on 308s more than doubled in about a year's time. Suddenly prices started to drop and the psychology of "get it now--it will be worth more tomorrow" reversed to "why would I buy it now--I'll be able to get it for less tomorrow". There were no buyers and the market went into a free fall!

I don't know if that is the future of the current Rolex SS Sports market, but people are wearing blinders if they don't take the possibility into consideration.

[Calatrava r]

Back to this thread. There really is no normal market for anything. It just reflects current supply and demand. I do not believe at full production, which I am led to believe is ongoing, Rolex can meet the current demand for their watches. The world wide market is much greater now so the inventory has a much wider allocation than years ago when most of the watches went to Europe and the USA. There was a time in the US not long ago when small cities all over the country had numerous Rolex dealers all loaded up with stock.
The market cools when it is no longer cool to wear watches and the celebrities and public figures no longer wear watches. Just finished the PGA here in the US and the golfers all put on their Rolex and AP watches just as soon as their rounds were over. There are lots of really wealthy people in the world who want that same watch experience immediately and paying double the MSRP or more for BNIB popular models is means utterly nothing to them.

[AK797]

Originally Posted by RyanJ

No one on this forum knows exactly why this started and does not know when it will end.

Just sit back and enjoy the ride.

I know the exact day, as does everyone else in the UK, no coincidence the most seismic vote for constitutional change in modern Western history has led to a sea-change in many global markets.

[NavalFlight]

Originally Posted by Uggi

No. What on earth is the relevance of this question?

Just another example of the “new normal” much like real estate “always goes up” or the price of precious metals (platinum, gold, silver, etc).

Or remember when the Prius first came out? It had waiting lists too and sold for thousands over MSRP.

In other words, saying something is the “new normal” sounds incredibly obtuse. All markets, whether for luxury goods or commodities, see highs and lows.

Currently, the economy is roaring, unemployment is at record lows, and wages are rising.

Right now, luxury watches are on a high but it won’t last forever.

[TswaneNguni]

Originally Posted by NavalFlight

Currently, the economy is roaring, unemployment is at record lows, and wages are rising.

Right now, luxury watches are on a high but it won’t last forever.

The US isn't this market and does not dictate this market.It is dictated by China.