Will Pateks keep dropping?

[DavidSons]

Hey just wanted to gauge the experts on the matter.

We own a bunch of rare Pateks (I would say we have seen a 20-35% for most pieces).

Do you guys think the market will keep dropping?

[amanbra]

Originally Posted by DavidSons

Hey just wanted to gauge the experts on the matter.

We own a bunch of rare Pateks (I would say we have seen a 20-35% for most pieces).

Do you guys think the market will keep dropping?

Probably because people have other concerns now and they were at stupid prices before.


Sent from my iPhone using Tapatalk

[agsstructures]

Originally Posted by DavidSons

Hey just wanted to gauge the experts on the matter.

We own a bunch of rare Pateks (I would say we have seen a 20-35% for most pieces).

Do you guys think the market will keep dropping?

I think they will, especially the Nautilus & Aquanaut. Nothing is moving right now, Royal Oak's have tanked also.

[AbeFroman]

Originally Posted by AbeFroman

Regarding the market, I personally think it’s too soon to say. The Federal Reserve is due to meet later this month and July. Half percentage (50 basis points) increases are supported by various FOMC members and very likely to occur. (No August meeting).

The Sept meeting is when they’ll regroup and look at how inflation and other metrics are trending. If inflation persists then, they have said they’ll resort to rate increases on an even faster pace.

In short, things can change drastically within the next 2-4 months. My personal opinion is prices will continue their decline.

I posted this in another thread in the Rolex sub-forum this morning for another member who has asked about the current market state.

Since this morning, both the treasury secretary and World Bank have said they believe inflation will continue to persist over a prolonged period. I think watch prices will continue their decline and at an increased manner especially for those references that experienced explosive gains (hype models).

The cost of fuel, food, housing, and basic life essentials are making many recalibrate their spending habits.

[huncho]

Originally Posted by AbeFroman

I posted this in another thread in the Rolex sub-forum this morning for another member who has asked about the current market state.

Since this morning, both the treasury secretary and World Bank have said they believe inflation will continue to persist over a prolonged period. I think watch prices will continue their decline and at an increased manner especially for those references that experienced explosive gains (hype models).

The cost of fuel, food, housing, and basic life essentials are making many recalibrate their spending habits.

true, but at the same time most of the people buying APs/pateks shouldn't be impacted by inflation too much. i imagine the people that will be offloading these are the ones who are getting (or got) wiped out by being over leveraged in markets and bought them at ridiculous prices, since that's the other side of who can afford them

rolexes should be most impacted because people were actually buying them on credit lol

[AbeFroman]

Originally Posted by huncho

true, but at the same time most of the people buying APs/pateks shouldn't be impacted by inflation. i imagine the people that will be offloading these are the ones who are getting (or got) wiped out by being over leveraged in markets since that's the other side of who can afford them

rolexes should be most impacted because people were actually buying them on credit lol

Yes, I agree, but to an extent.

There’s a good majority of over leveraged dealers and individuals who are holding hype Patek references. It’s not a small percentage. Patek won’t be immune to continued price declines once all those try to offload at the same time. It’s not exempt from market fundamentals.

The fact a dealer came on here inquiring is telling. No offense to OP.

[huydoan]

interesting to see if the revenge shopping in Chinese market helps as some big cities like Shanghai and Beijing have the lockdown removed partly

[ajw45]

The Chinese economy is in a different, much worse place than the first lockdowns. Capital outflows are accelerating and the Chinese govt is lowering interest rates and moving forward spending, basically going the opposite direction of all the other countries that are tightening. There will be no revenge shopping this time.

All speculative or appreciation based 'investments" are falling, even property is cooling. The watch market is going to keep falling until inflation and interest rates stabilize which won't happen probably till next year totally separate from any potential recession. For decades pre-owned watches traded at a fraction of MSRP, there's no reason not to expect the market will revert to the mean, especially with every watch brand having boosted production capabilities over the last few years of the bubble. There is more production capability than there ever has been and it is cranking along as the market falls through the floor. Unless those pateks are rare AF AND significant I would sell now. Market may come back but it could be years and in the interim you'd be better off in cash to put towards real I vestments when the market does start to turn around.

[Moondoggy]

Yes

[Incroyable12]

Here's hoping I can buy 3800s for $20k again.

[dchang81]

i figure the grey market insanity was more related to the bitcoin market and once that took a big hit overleveraged dealers had to dump inventory. everyone colluding to limit stock couldnt hold out anymore. timing seemed to coincide with that but ive been wrong many times.

[Incroyable12]

Originally Posted by dchang81

i figure the grey market insanity was more related to the bitcoin market and once that took a big hit overleveraged dealers had to dump inventory. everyone colluding to limit stock couldnt hold out anymore. timing seemed to coincide with that but ive been wrong many times.

Crypto and Reddit day traders I think. Both of those have tanked.

It's no coincidence there was a sudden influx of young guys who were also into trading cards and NFTs always talking about maximizing value and leveraging up. These guys were not true watch lovers but in it as a game to make money.

[scurfa]

Depends what you mean by rare, rare vintage models continue to make record prices at auction but the highly inflated modern Nautilus and Aquanaut (in my opinion) will keep dropping.


Sent from my iPhone using Tapatalk

[G3Z]

Anything discontinued is a ‘safe’ place IMO. It’s all these new releases that have been super hyped to 3-5x MSRP that are tanking.

[kanwind]

the watch, the sport watch raise too crazy in the past year......people who have enough knowledge or clear mind should know this is just a bubble
what's go up, must go down
Rolex produce 1 million every year, it is reasonable to buy a daytona for HKD4xx,xxx? should go to see a doctor

[upgraaade]

Originally Posted by G3Z

Anything discontinued is a ‘safe’ place IMO. It’s all these new releases that have been super hyped to 3-5x MSRP that are tanking.

Not necessarily. Just look at the spectacular drop of the 5990.

[joa]

Originally Posted by AbeFroman

I posted this in another thread in the Rolex sub-forum this morning for another member who has asked about the current market state.

Since this morning, both the treasury secretary and World Bank have said they believe inflation will continue to persist over a prolonged period. I think watch prices will continue their decline and at an increased manner especially for those references that experienced explosive gains (hype models).

The cost of fuel, food, housing, and basic life essentials are making many recalibrate their spending habits.

the real fun awaits once the interest rates creep up high enough to threaten sovereign debt.

This is so mind blowing that i think there is no safe place to hide, just ensure portfolio is not overleveraged, ideally lower your counterparty risks (bank failures) and then just ride through the storm.. where watch prices will be once the clowds lighten up in a few years, who knows

[Arthur Daley]

I suspect luxury goods in general are going to drop further this year, and keep going down into next year.

A local AD had the best year in history, last year, during the pandemic. They attributed the great year(s) to COVID, specifically that people had money to burn and not much to spend it on - given travel limitations. So disposable income normally spent on luxury travel was redirected to jewelry. While travel isn't back where it's used to be, its certainly bounced back.

On top of that, the pressures on global supply chains seem to be easing somewhat, which is going to mean supply becomes less constrained than it has over the past couple of years.

And then of course we have inflation, which is also going to put a little but of downward pressure on demand for luxury goods. Maybe not as much as the other factors re: Patek, but certainly some impact will be seen.

And then there's the impending recession....

So - in short, I suspect we'll continue to see a softening of demand which should put downward pressure on Patek and other luxury goods pricing.

[smg8]

Originally Posted by Arthur Daley

I suspect luxury goods in general are going to drop further this year, and keep going down into next year.

A local AD had the best year in history, last year, during the pandemic. They attributed the great year(s) to COVID, specifically that people had money to burn and not much to spend it on - given travel limitations. So disposable income normally spent on luxury travel was redirected to jewelry. While travel isn't back where it's used to be, its certainly bounced back.

On top of that, the pressures on global supply chains seem to be easing somewhat, which is going to mean supply becomes less constrained than it has over the past couple of years.

And then of course we have inflation, which is also going to put a little but of downward pressure on demand for luxury goods. Maybe not as much as the other factors re: Patek, but certainly some impact will be seen.

And then there's the impending recession....

So - in short, I suspect we'll continue to see a softening of demand which should put downward pressure on Patek and other luxury goods pricing.

Agree with this post.

We have decades of history to look at what watch prices did.

Then we have a unique period between say April 2020 to March 2022.

During that unique period we have multiple abnormal factors at play (money being pumped into the market, free money being handed out to people, very limited discretionary spend options, extreme wealth creation from stocks and bitcoin etc etc).

I have no idea why someone would see that 2 year period with abnormal factors as more indicative of future trends, compared to the decades of history that preceded it.

The multiple factors that led to the watch bubble are being unwound, and new factors that are a headwind to luxury item prices (inflation, cost of living, interest rates) have entered the room.

As such I'd expect mean reversion, and then some.

[rolexpatek363]

Originally Posted by AbeFroman

There’s a good majority of over leveraged dealers and individuals who are holding hype Patek references. It’s not a small percentage.

What percentage is it, and how have you arrived at that figure?

[PattayaHammerTime]

a big chunk of the grey market has been down to people washing money/cash, Russians for example would prefer assets they can cash in and knew things were heating up with their neighbours, you can't sanction whats on someones wrist or in their safe!

I sold my 5164a recently, a decision I took not so lightly but the £'s were there from someone I knew saving me from going to the open market and potentially getting robbed at gun point or something or having it sit in a second hand jewelers window, the few companies I approached to sell to when I enquired were not chomping at the bit to do a deal and very vague with their bids.

[Wahlberg]

Originally Posted by ajw45

Capital outflows are accelerating a

Going where or how are they doing this? I thought getting money out of China was rather difficult.

I remember reading all the stories about Chinese buying up properties in the US/Canada/Australia/..., is this still going on then? Somehow I can't imagine these ridiculous wealthy Chinese would stop buying, since the important thing is to get money out of the country.

Buy a 5 million property, even if it loses 500k in the current market it doesn't matter since that's the cost to get this done. So they are unaffected?

[ajw45]

Originally Posted by Wahlberg

Going where or how are they doing this? I thought getting money out of China was rather difficult.

I remember reading all the stories about Chinese buying up properties in the US/Canada/Australia/..., is this still going on then? Somehow I can't imagine these ridiculous wealthy Chinese would stop buying, since the important thing is to get money out of the country.

Buy a 5 million property, even if it loses 500k in the current market it doesn't matter since that's the cost to get this done. So they are unaffected?

Yes, individuals are finding it harder than ever to get out and get money out of the country but I'm not talking about $5M homes, I'm talking about $5B investments.

The big money moving is at the corp / institutional level, most western countries are tightening policy and raising interest rates while China is doing the opposite, loosening credit and lowering interest rates, so there's been a natural move to pull investment from China to EUR/USD zones as the relative return becomes more favorable. That's not politics or speculation, that's just normal boring asset allocation.

Additionally, the 0 covid policies and arbitrary market controls make China practically uninvestible killing capital inflows of foreign investment. No one wants to buy China bonds with the recent defaults. This is forcing China to be more dependent on internal growth vs foreign investment at a time when their housing market is going bust and covid lockdowns froze their economy. It doesn't help that China has been uncertain about their position on the war and if there's an escalation no one wants to pour money into a country that could get hit with sanctions.

It isn't the end of the world, I'm just saying this lockdown is different. In 2020 China went into lockdowns as a strong economy, in 2022 they went into harsher lockdowns on richer regions with a weaker economy so I wouldn't expect the revenge spending to hit the same way as it did last time.

[beshannon]

Originally Posted by DavidSons

Hey just wanted to gauge the experts on the matter.

We own a bunch of rare Pateks (I would say we have seen a 20-35% for most pieces).

Do you guys think the market will keep dropping?

Very interesting post

[JR16]

Originally Posted by beshannon

Very interesting post

Agree. Didn’t realize the forum was a place for us to give advice to pre-owned dealers on pricing.


Sent from my iPhone using Tapatalk Pro

[Wahlberg]

Originally Posted by ajw45

Yes, individuals are finding it harder than ever to get out and get money out of the country but I'm not talking about $5M homes, I'm talking about $5B investments.

The big money moving is at the corp / institutional level, most western countries are tightening policy and raising interest rates while China is doing the opposite, loosening credit and lowering interest rates, so there's been a natural move to pull investment from China to EUR/USD zones as the relative return becomes more favorable. That's not politics or speculation, that's just normal boring asset allocation.

Additionally, the 0 covid policies and arbitrary market controls make China practically uninvestible killing capital inflows of foreign investment. No one wants to buy China bonds with the recent defaults. This is forcing China to be more dependent on internal growth vs foreign investment at a time when their housing market is going bust and covid lockdowns froze their economy. It doesn't help that China has been uncertain about their position on the war and if there's an escalation no one wants to pour money into a country that could get hit with sanctions.

It isn't the end of the world, I'm just saying this lockdown is different. In 2020 China went into lockdowns as a strong economy, in 2022 they went into harsher lockdowns on richer regions with a weaker economy so I wouldn't expect the revenge spending to hit the same way as it did last time.

Thanks! I agree with you on everything, just curious about those points.

[Ichiran]

Originally Posted by jr16

agree. Didn’t realize the forum was a place for us to give advice to pre-owned dealers on pricing.

+1.

Bizarre a grey dealer opened a thread to discuss price drop.

[joa]

Originally Posted by Ichiran

+1.

Bizarre a grey dealer opened a thread to discuss price drop.

haha so much for those "i talked to a dealer and he told me the market will ..." news flashes))

[john_peter33]

Curious what a blue dial 5711 is actually selling at? Dealers are still holding strong at around 180 asking which seems way too high to me.

[macrowatch]

Originally Posted by Ichiran

+1.

Bizarre a grey dealer opened a thread to discuss price drop.

Free market research!