Market update.

[newonos]

No science or data here. Sorry. Just anecdotal.

Here's the article: Rolex prices in China plunging. Mentions a dude scooping up PPs at lower prices.
https://www.zerohedge.com/markets/bo...es-crash-china

Wonder what the cross-border flow of PPs look like over past year. Ie how many purchased new from AD went to China, whose consumer goods market was exploding. Or did some watches from there get moved here? Sort of a PP trade deficit...(or surplus?)

personal observation: My local AD has less inventory now than three months ago. Then, there was a pre-owned 5196j, pre-owned 5159g, 5524r and a gondolo. Now its just the gondolo and pre-owned 5196j. So I'm not seeing the market soften yet. Last quarter 2022 will be interesting.

[fsprow]

Originally Posted by newonos

No science or data here. Sorry. Just anecdotal.

Here's the article: Rolex prices in China plunging. Mentions a dude scooping up PPs at lower prices.
https://www.zerohedge.com/markets/bo...es-crash-china

Wonder what the cross-border flow of PPs look like over past year. Ie how many purchased new from AD went to China, whose consumer goods market was exploding. Or did some watches from there get moved here? Sort of a PP trade deficit...(or surplus?)

personal observation: My local AD has less inventory now than three months ago. Then, there was a pre-owned 5196j, pre-owned 5159g, 5524r and a gondolo. Now its just the gondolo and pre-owned 5196j. So I'm not seeing the market soften yet. Last quarter 2022 will be interesting.

…..
Not a market guru but with the US stock markets having a big monthly run up and cryptocurrencies stabilizing and inflation cooling, I wouldn’t be surprised to see watch prices stabilize since demand seems to be solid.

[SpectralDodo49]

If this recovery in the US market is anything like the 2008/9 one, then we may be off to the races.

And since most developed countries have sovereign wealth funds substantially composed of US stocks, I would expect Chinese and Indian buyers to rebound as their economy does. Russia, being embroiled in war, may recover more slowly.

But I could be wrong about everything.

[Vince_76]

It’s important to remember this:

There have been many public equities bull runs in history, and most did not coincide with the meteoric rise in watch prices. In fact, only 1 bull run has done so.

There are other things at play here, especially for something like a mass produced SS watch.

[SoPhilly]

Originally Posted by Vince_76

It’s important to remember this:

There have been many public equities bull runs in history, and most did not coincide with the meteoric rise in watch prices. In fact, only 1 bull run has done so.

There are other things at play here, especially for something like a mass produced SS watch.

Elaborate please... just trying to get a better understanding

[Vince_76]

Originally Posted by SoPhilly

Elaborate please... just trying to get a better understanding

Look at one of the most common litmus tests for economic health, the S&P. We’ve had numerous bull runs since the 1980’s, and secondary watch prices (particularly for new production/recent production models) have only slightly increased during each of those runs.

It’s just this past COVID-era bull market that coincided with the rapid rise of watch market. It’s therefore not fair to say that, if the the market picks up, watch prices will again be significantly buoyed.

This crazy run up in prices for watches has been driven by extraneous factors (COVID stimulus, more disposable income as people were confined to their homes etc.). That was the exception in this bull market run and that is why watch prices rose so significantly. It was the exception that caused the exception. Without it, things will revert to the mean.

[messikens]

Originally Posted by SoPhilly

Elaborate please... just trying to get a better understanding

I think this will come down as a once in a few decades event. As others have said, there has been a number of bull markets but they have largely gone on without inflating a lot of luxury asset prices outside of the ordinary demand for Veblen goods and the associated increases. Nothing like what was seen in the secondary market EVER historically.

I think you have seen a confluence of a number of factors :

1. A historical pandemic that basically shut down a lot of normal activities and ability to spend disposable income or distract yourself from work (aka no travel, vacations spend, sports and concert events, gambling)

2. Historic bull market for equities, bonds, housing prices and ridiculously low interest rates, leading to more real and subjective wealth

3. Crypto bubble, where people literally could 10x-100x their initial investment over 6-18months (and the investors are largely younger with more desires for luxury products and associated status)

4. Pervasiveness of social media and virality (instagram, YouTube) leading to a desire to keep up with rhe Joneses

5. Demand creating demand / follow the herd. Once it became apparent that there was some easy money to be made in the secondary market (I.e. Walk into an AD, buy a product at retail, potentially walk out with a theoretical windfall of between $5k-$100k depending on model), more regular people who would have NEVER spent that amount of money on a watch if the expectation was that you'd lose 20% once it's out the door (like in the old times) signed up for it just for the heck of it.


If you look at the environment now, look at how much of these factors have changed! Literally 1-3 is no longer the case, 4 can swing the other way and 5 is very fickle (once there's no windfall or it's questionable, a lot of opportunistic demand will just disappear)...


Sent from my iPhone using Tapatalk

[beshannon]

https://www.rolexforums.com/showthread.php?t=868447

[aarmoney]

Its a recession boys!

[beshannon]

Originally Posted by aarmoney

Its a recession boys!

Some people are going to be thrilled!

[SoPhilly]

Originally Posted by Vince_76

Look at one of the most common litmus tests for economic health, the S&P. We’ve had numerous bull runs since the 1980’s, and secondary watch prices (particularly for new production/recent production models) have only slightly increased during each of those runs.

It’s just this past COVID-era bull market that coincided with the rapid rise of watch market. It’s therefore not fair to say that, if the the market picks up, watch prices will again be significantly buoyed.

This crazy run up in prices for watches has been driven by extraneous factors (COVID stimulus, more disposable income as people were confined to their homes etc.). That was the exception in this bull market run and that is why watch prices rose so significantly. It was the exception that caused the exception. Without it, things will revert to the mean.

Originally Posted by messikens

I think this will come down as a once in a few decades event. As others have said, there has been a number of bull markets but they have largely gone on without inflating a lot of luxury asset prices outside of the ordinary demand for Veblen goods and the associated increases. Nothing like what was seen in the secondary market EVER historically.

I think you have seen a confluence of a number of factors :

1. A historical pandemic that basically shut down a lot of normal activities and ability to spend disposable income or distract yourself from work (aka no travel, vacations spend, sports and concert events, gambling)

2. Historic bull market for equities, bonds, housing prices and ridiculously low interest rates, leading to more real and subjective wealth

3. Crypto bubble, where people literally could 10x-100x their initial investment over 6-18months (and the investors are largely younger with more desires for luxury products and associated status)

4. Pervasiveness of social media and virality (instagram, YouTube) leading to a desire to keep up with rhe Joneses

5. Demand creating demand / follow the herd. Once it became apparent that there was some easy money to be made in the secondary market (I.e. Walk into an AD, buy a product at retail, potentially walk out with a theoretical windfall of between $5k-$100k depending on model), more regular people who would have NEVER spent that amount of money on a watch if the expectation was that you'd lose 20% once it's out the door (like in the old times) signed up for it just for the heck of it.


If you look at the environment now, look at how much of these factors have changed! Literally 1-3 is no longer the case, 4 can swing the other way and 5 is very fickle (once there's no windfall or it's questionable, a lot of opportunistic demand will just disappear)...


Sent from my iPhone using Tapatalk

Makes perfect sense but i guess the underlying elephant in the room is.... its not a "if prices will fall, lets say on SS models as Vince suggested but a when". Is that fair to say? Or do you guys think this is the new normal from exceptional time we're in?

[awu]

In addition to all those factors above, from many things that I've read is that the summer months are typically slow for watch sales anyways. People are traveling, on break, etc. The thing to look out for is if watch sales don't pick back up in a meaningful way come winter time, then I think you will see some more "discounts" on the secondary market. I think many big dealers that have liquidity are hoping to ride out the slow season and hoping things pickup in the winter time. If things don't, that's when I believe more pricing declines will happen.