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

[Fleetlord]

Originally Posted by Litflynt912

This has been my experience

Second hand market in 2008:
14060M complete set - $2,500-$3,600 although my Y serial was $3,200 in 2016
16570 - $1,900-2,500

Compare to prices today, my mileage over the years
2008-2016/17 you could walk into an AD and have your choice short of a Daytona.
Our vacation to Hawaii in 2012 - Waikiki AD had every sub and sea dweller out. With a 5% discount and no tax shipped home.

2019: local ADs hold SS back for HNW clients who bundle

As I’ve posted before. This is the Hermès business model. Recession or not, the availability game isn’t coming back.

This is accurate. I recall a small dealer in 2013 telling me he keeps the Daytona in the safe to keep the flippers away from them..I scoffed as the Daytona was selling on the grey market for substantially UNDER retail...

Rolex...as a luxury good...was far too available back then. What’s happening now is what the luxury market wants.

[Weasel20]

I suspect that the market will revert closer to normal eventually because I believe that Rolex will increase production of those SS sports watches that are being flipped for double their retail value. Face it they could triple production of the Daytona and it would not have a negative impact on the ADs at all. The only parties that would be negatively impacted are the flippers and grey market. I have to think that Rolex doesn't like to see someone flip their $12,400 Daytona for 24k. While maintaining a shortage is often good for maintaining prices clearly the goal of Rolex can't be for their customers or grey market dealers to make more profit per watch then the AD.

Total guess and I have found that assuming Rolex to do things that others would do can make you look foolish so we will see in a couple of years. Till then I buy what I love and enjoy them first and worry about values second, or third. At 53 I am buying to enjoy not to flip. As much as I hate it I will likely have to suck it up and go to the secondary market to get a Daytona unless something pretty drastic happens to supply.

[Monte Cristo]

Originally Posted by Uggi

I feel no more strongly about it than if someone was telling me the world was flat. And I wasn't the one who introduced words like "fool" so don't accuse me calling people - I was simply fitting in with the jargon of the thread.

To say "all situations where value appears to have structurally increased = a bubble" is wrong. Is the pricing for Daytonas a bubble and will we all one day be wandering into ADs to buy Daytonas at MSRP or at discounts when this bubble bursts? Whether it is watches, sports cars, artwork, jewelry or certain company shares - a permanent systematic increase in value is sometimes possible. Not everything is a bubble. Citing Bitcoin and tulips is simply silly. Yes they were bubbles but it doesn't mean that pattern applies in all situations. I'm not denying that bubbles exist, I'm arguing against the naivety which assumes that the prices of every single asset or class of assets will eventually burst and fall to some ancient version of "MSRP".
Yes it would be nice to think I shall once again be able to buy that Ferrari or that Amazon share or that Daytona or that house for "MSRP" but values have shifted permanently away from what was always an arbitrary and historic price point anyway.
Sometimes things gain value permanently. The MSRP of my house was around £20k ninety years ago but good luck to anyone waiting for the bubble to burst to the point where it could be bought for that again. Maybe, on the brink of Armageddon, thousands of years from now when the sun is about to explode, people will look at my valueless house and say "ha! told you so - it was a bubble" but I will be forgotten dust so what is the relevance?

You’re comparing the dynamics/increase in value of housing in the UK over a 90 year period to what has transpired globally to 3 specific luxury watch brands only since 2017? Housing is a necessity, Rolex’s or even watches in general are not.

The MSRP is increased every year by Rolex - this is the permanent systematic increase in value you write of. The scarcity and 50-100% increased price via greys IMO comes from the lust of the younger generation and non traditional Rolex customers, not Rolex per se (Or maybe the masterminds at Rolex have artificially created this situation, although that’s a different debate).

Stating categorically that something has changed forever after only a few years in the current cycle I feel is a little premature.

Quartz almost killed the mechanical watch back in the 70s, wonder what the people who stated categorically that that was the new norm would say about the current situation?

We went from bespoke to off the rack to bespoke again.

Carbs were in (yay) then they were out (booooo) now they are back in again (yippee).

There will be trends (both fashion and market) and there will be bubbles - who is to know which of these this one is?

[1William]

Pick your term to describe what is going on now but I like the term "bubble" based all of the pricing indicators and the term of time it has been occurring. If ignorant I am, then ignorant I be. I have been collecting and flipping for more than 25 years and love the hobby but we are outside of the norm for the market for Rolex and PP. Could this be the start of a new norm for both groups, sure, but doubtful. Rolex and PP will at some point have to satisfy demand and stop the speculation or risk devaluing the brand in the long term. Customers will only hang around for so long before frustration sets in and sales and demand will be impacted. And you can believe that Rolex and PP are aware of that and will start moving in that direction once they see the market respond. As a long term member here on TRF I have noticed so many posts regarding value and investment. While it is nice to have your money somewhat protected if you bought right that could change and will change. The big dump in the watch market will be when a lot of buyers see the market and the investment they made start to tank. I think a lot of people who have bought the watches did so for reasons that did not have a lot to do with loving the watches and enjoying them. We will see. Thanks for reading and I hope my ignorance was to much for you to stand.

[Lemonvr6]

Entire theory goes out the window if they sell everything they can make

[Wingslogo]

Originally Posted by Lemonvr6

Entire theory goes out the window if they sell everything they can make

The bubble is real as buyers constantly buy hot pieces at these inflated prices. The buyer determines the market.

Unless Rolex floods the market with what they can really produce (no holdbacks) this market is here to stay.

It creates exclusivity


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[teck21]

Originally Posted by 1William

Rolex and PP will at some point have to satisfy demand and stop the speculation or risk devaluing the brand in the long term. Customers will only hang around for so long before frustration sets in and sales and demand will be impacted.

It is satisfying demand that will devalue the brand, not the opposite.

The gripers on this forum should not be taken to be representative of the average Rolex consumer, if there is such a thing.

Quote possibly 99 out of 100 Rolex owners/enthusiasts even know about this forum, much less bother to come here.

The people crying out about how unfairly the popular models are being distributed are also quite likely what is called the ‘vocal minority’.


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[teck21]

Too late to edit:

*Don’t even know


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[mongrelnomoad]

Low interest rates and the search for yield: a self reinforcing inflation. Every asset class is seeing equivalent patterns. This is a bubble people, and it’ll keep going till either rates go up or everyone stops believing the prices of Rolexes will increase further, whichever comes first.

Anyone who thinks otherwise needs to open a history book and/or read Kipling’s Gods of the Copybook Headings.

[Lemonvr6]

We can just use the Birkin as a measure

50 year “bubble”

[jaisonline]

Agreed. It would need to happen to either Europe, Asia or North America. Fingers crossed when the time comes (and it always does usually every 15-25 years or so), it won’t be multiple continents. If like other higher end items, vintage prices should stay somewhat stable but modern will get hit hard compared to secondary mkt prices.

Originally Posted by Burbank90

If we were to have another 2008 style recession that would do the job.

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[VacherObsessive]

Originally Posted by Burbank90

If we were to have another 2008 style recession that would do the job.

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It wouldn’t. Asia will still be buying Rolex

[Keepchasing]

I don't see any way Rolex steps up production to meet the demand.

I believe they see things two-fold.

1. They are smart enough to know that this is a bubble and when the music stops, they don't want to have that much dilution out there. It will already be bad enough.

2. By not amping up production, it is sort of a game of chicken in that I think the bubble pops before not meeting demand damages the brand.

If they just wait it out, we will revert to the mean. That isn't to say a new higher price floor isn't being created. I think it is.

But this continual thinking that prices on the secondary market will keep rising every month/year is going against all of history.

Again, Rolex isn't doing anything wrong IMO. I believe it is genius to not meet demand. I think we will see revision to some sort of mean before brand is damaged permanently. That will ensure the new higher floor remains strong.

Also, I don't know how others feel when they speak of this being a bubble, but my take is that it has nothing to do with Rolex or what anyone thinks is the "new normal". I'm talking about major economic realignment that is much needed. This can't go on forever.
End of rant.

[bonsai-man]

I’m not a financial expert, but wasn’t the global recession of 2008 considered the worst global downturn since the Great Depression of the 1930’s.

I don’t recall steel Daytona / 5711 demand waining or prices tumbling, they grew steadily. Far too many collectors have so much money that a mass extinction event would be needed, but then just surviving would take priority.

I’m still waiting for UK house price correction predicted in 2008 by all the experts. They dropped a bit, but no where near to pre bubble prices. I still couldn’t afford, couldn’t get a loan and they went straight back up out of reach.

IMO if they triple production and the bottom drops out of the market, jobs would be lost, wages will drop and the average Joe will be priced out of the market still but at a lower level. The waiting list for steel Daytona, Nautilus and probably Aquanaut is here to stay, they are as safe as gold bullion, but harder to get.

Hoping for the bubble to burst is futile, you need your prospects to significantly improve while everyone else’s stay the same. Imagine if everyone in the world won $1,000,000 in a lottery, you AND the rest of the world would be millionaires but neither YOU or THEM would be any better off for it, you are the same at a higher level.

[scv]

Originally Posted by drtii

My take on this is Rolex has figured out a substantial way to increase sales and profits (PM's + Tudor) through manufactured exclusivity and barring an economic downturn, this practice will remain indefinitely.

Tell me one sane CEO that would reverse course on this model.

This is an excellent point and a strategy I think Rolex will attempt to pursue even during an economic downturn. I will watch with great interest as to whether they are successful in leveraging interplay between Tudor and Rolex to keep Rolex exclusive during a recession. From my standpoint the brand is the most valuable thing Rolex has and is a much bigger deal than profits earned during a recession.

[jb335]

If I had a watch, I would tell you.

[georgekart]

Originally Posted by jaisonline

It would need to happen to either Europe, Asia or North America.

I disagree, for prices to really fall and all SS sports model to become available, it would have to hit the whole world. 2008 was so effective in decreasing prices, because it was a global crisis.

If the crisis was to hit just one of those areas, maybe we would see black Subs in windows at AD, selling for MSRP. No discount. Hulk and BLRO and watches like that would go down, but you still wouldn't be able to walk into AD and get one.

[rudestew]

Originally Posted by np208

I really like how confident everyone is in their view on the market. you can tell who bought watches because they like them and those that bought them as investments.

[dhknola]

One 2008ish economic crisis and prices will hit the skids.

I agree that the 'shortage' is contrived by Rolex and is following the 'Hermes' model of (un)availability to drive demand (Source: Someone a few posts back). If the global economy goes backward, watch these watches become MUCH easier to obtain.

I personally think any Rolex past 5 digit serial is a fashion piece; yall can have them as they lack charm and appeal to me compared to their past pieces.

[NavalFlight]

It won’t be a worldwide crisis that pops the bubble, it will be a “hype crisis” that does that job. Fashion is fickle. Large watches are hot one year, small the next. This brand is hot, then the next. Yellow gold was popular, now its white metals. Skeletonized watches are hot, then they won’t be.

And the pendulum continues to swing in one direction and then the next.

That’s how the bubble will burst. The question is when.

[Maverick_1908]

Originally Posted by NorcalBlue

Next downturn in the economy. Send the stock market down 20%-30% and Rolex will be discounting their top sellers.....Book it. People said the same thing about houses in 2006 "They're not making more land" "This is the new normal" "Better buy a house now" - blah blah blah. It's the economic cycle - been around a long time.

This. Twenty year olds are not old enough to remember.

[jfmiii]

Originally Posted by bonsai-man

I don’t recall steel Daytona / 5711 demand waining or prices tumbling, they grew steadily. Far too many collectors have so much money that a mass extinction event would be needed, but then just surviving would take priority.

they did fall. vintage daytona prices dropped 50% in very, very short order. BNIB modern daytonas were offered below MSRP.

Bubble Backs collapsed along with the Japanese stock market even before that and never recovered. Preferences changed and so did price.

When I hear things like "new normal," "buy now or be priced out forever," etc etc, it has all the markings of a bubble. At the end of the day a SS Daytona/Sub/GMT isnt a Monet, even vintage. There are hundreds of thousands of these watches out there and increasing every day. They arent rare. I can have any reference I want at my door tomorrow if I am willing to pay grey dealer asking price. History is littered with veblen goods that no longer are veblen goods for one reason or another. Everything is cyclical. This too shall pass. Those who think otherwise have a vested interest in believing otherwise.

[Craigdwh]

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.

Oh man glad someone pointed out the idiocy of some of these comments.
Either many of you weren’t economically involved during the credit meltdown ie not old enough to be working, or your stupid. When a recession/bear market sets in again, and it will, these prices will come crashing down.

You know nothing Jon Snow.


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[teck21]

Originally Posted by jfmiii

they did fall. vintage daytona prices dropped 50% in very, very short order. BNIB modern daytonas were offered below MSRP.

And so for everyone who quoted the GFC, I ask again:

Did these prices fall in any sustained sort of way? What are these prices now?

People always forget what makes Rolex (and a very few select other makes) unique is that supply does not increase in order to maximise profits.

This is completely different from profit-driven entities like property developers whose profits follow cycles very much, or tulips where the supply is infinite.

Rolex does not care for exceptional profits in times of exceptional opportunity. It cares for brand value and their strategy is aimed very much at preserving it even in times of acute financial stress by ‘capping’ supply and MSRP simultaneously.

Let the grey market do what it will, for it is full of speculators (like any market when it’s running hot). As a primary participant in this market, Rolex is doing an awesome job of protecting the interests of buyers who have paid at or below MSRP.

Heard of the people in China who riot because the developers they bought properties from when the market was hot cut selling prices when the market cooled?

Not that Rolex owners would do the same, presumably. But that is the exact scenario that Rolex wants to avoid.

Which is exactly why they won’t a) increase MSRP sharply and b) increase supply in tandem because they know how short sighted such s move would be.

The market won’t run hot indefinitely. A lot of speculators will burn. It’s inevitable.

For the average non-speculator who wishes to acquire a popular piece from an AD though, shit out of luck unfortunately, recession or no recession.

And investor isn’t a word I would use to describe anyone who flips Rolexes for money. Actually professional grey dealers excepted, although they are more middle men than anything actually.

Anyone who seriously invests in anything knows that this is not a serious investment class capable of producing the risk commensurate returns compared with many other classes.

Most flippers are speculators, many of whom have been nothing more than lucky and are not aware enough to know that a rising tide is what made it possible, and not in fact any skill.




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[teck21]

Then again, I find people frequently arguing at cross purposes in this kind of thread.

They appear to be two distinct markets for Rolex SS professional models.

One is running hot, the other is not because it is price controlled, and not market determined.

I guess the bottom line is, in a financial crisis, one market is going to feel a lot of pain.

The other one will carry on, like it always does. Guess which is which.


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[Dlong]

I remember selling real estate in the early 80’s. Interest rates were 12 3/4. People said, “ you’ll never see 5% rates ever again”.

The one thing we learn from history is that we don’t learn from history.

[kingSubTT]

Originally Posted by Dlong

I remember selling real estate in the early 80’s. Interest rates were 12 3/4. People said, “ you’ll never see 5% rates ever again”.

The one thing we learn from history is that we don’t learn from history.

And house in Bay Area was 60k. Now 1.3million. I don’t mind paying 12.75% if I can get it for 60k now

[teck21]

Originally Posted by kingSubTT

And house in Bay Area was 60k. Now 1.3million. I don’t mind paying 12.75% if I can get it for 60k now

Lol, excellent riposte to sweeping ‘you don’t know your history’ statements.


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[sillo]

Originally Posted by NavalFlight

Large watches are hot one year, small the next. This brand is hot, then the next. Yellow gold was popular, now its white metals. Skeletonized watches are hot, then they won’t be. .

Rolex has never been part of this cycle though. A GMT has been essentially the same aesthetic since the 6542. Same for the Sub, Datejust, etc. They're timeless and that's one of the reasons the the brand is so strong. The changes are slow and calculated.

[NavalFlight]

Originally Posted by sillo38

Rolex has never been part of this cycle though. A GMT has been essentially the same aesthetic since the 6542. Same for the Sub, Datejust, etc. They're timeless and that's one of the reasons the the brand is so strong. The changes are slow and calculated.

I was giving watch examples of the cyclical nature of markets. Whether the GMT, or Daytona for that matter, are relatively unchanged over the years isn’t relevant to the underlying point of my post.

Watches are fashion related luxury goods and just because the market is on fire now doesn’t mean that this is “the new normal.”

Again...