What will burst the Rolex bubble...

[ROlesorusLEX]

Originally Posted by mountainjogger

From the article:



[A] watch is also a practical asset... A Rolex is like an international traveler’s check that gets accepted everywhere in the world. And what is good to understand is that, especially with a Rolex, there is a bottom when it comes to cash value. Right now, the market for Rolexes is booming, but if it ever stops doing that, the price you can get for your Rolex will never drop below a certain minimum. And that’s because traders will always be willing to buy your Rolex no matter the state of the economy.



I take issue with the concept of watches as assets. I also take issue with their argument that there is a floor for prices.

I wouldn't say their take is completely wrong.

If you're on vacation in a suddenly hostile land with a Rolex on the wrist, and a "federale" or other sort of semi-legal entity doesn't want to play ball with whatever gets you the hell outta town, a Rolex may get you home.

In other words, Rolex as investment isn't all that bright long term. However, Rolex as a hedge against corruption may not be so far off in some cases. . .

They have inherent barter value, unlike nearly every other luxury good.

Sent from my KB2005 using Tapatalk

[Llamathurst]

Just picked up this one... Obligatory Rolex content... was wearing RG GMT when I took the photo.

[francoamerican]

Originally Posted by ROlesorusLEX

I wouldn't say their take is completely wrong.

If you're on vacation in a suddenly hostile land with a Rolex on the wrist, and a "federale" or other sort of semi-legal entity doesn't want to play ball with whatever gets you the hell outta town, a Rolex may get you home.

In other words, Rolex as investment isn't all that bright long term. However, Rolex as a hedge against corruption may not be so far off in some cases. . .

They have inherent barter value, unlike nearly every other luxury good.

Sent from my KB2005 using Tapatalk

I think this is a less likely scenario than say about a million other things happening in one’s lifetime.

[Moondoggy]

Originally Posted by sirC

Complete BS

+1

The naivety is astonishing.

[chaokuay]

Originally Posted by ROlesorusLEX

I wouldn't say their take is completely wrong.

If you're on vacation in a suddenly hostile land with a Rolex on the wrist, and a "federale" or other sort of semi-legal entity doesn't want to play ball with whatever gets you the hell outta town, a Rolex may get you home.

In other words, Rolex as investment isn't all that bright long term. However, Rolex as a hedge against corruption may not be so far off in some cases. . .

They have inherent barter value, unlike nearly every other luxury good.

Sent from my KB2005 using Tapatalk

Looking at Asia and corruption... name a better duo

[JP.]

Originally Posted by mountainjogger

J.P., I have followed your reviews for a while. Great style but even greater knowledge base.

My concern is that the majority of people on this forum that look at watches as investments do not have your level of expertise. Many think they do. But most do not. And that can be a dangerous combination - lacking knowledge and then investing in watches are cars with the bandwagon belief that they will all continue to rise.

Just my opinion. And great pics by the way.

Thank you Sir.

I never looked my watches as investments. I never even thought about that. I just lusted after certain 5-digits and bought them. After that I've had ZERO interest in buying more and more all the time.

But... I bought this back in 2008 for 3800 euros. Full set. Sure it was a great price even back then... but how did the world change after that... and how did we become so much wealthier? Or did we really... is it just all printed money and loan?

[Calatrava r]

When the deep pockets crowd moves on from watches in general, should that ever happen, demand for Rolex will fall and the bubble will have burst. But for the foreseeable future, watches are cool, so the bubble is safe.

[RoscoPico]

Originally Posted by Harry-57

In the UK, property has been bonkers. It is now putting off prospective buyers and this will exert a brake on the market. Classic car values are falling. I was reading an article in Autocar last week - something like 20-25% down on two years ago.

Really ? Classic cars seem to be like watches here in the US, through the roof.
Seems like the more I drive my old Tacoma the more it's worth

[QuelleHeureEstIl]

Can we first set some definitions.
Investment: you buy an asset because you expect to generate a cash flow.
Speculation: you buy an asset because you expect the price to increase and generate a positive margin when selling.

The key difference: with one you generate revenue with the other you expect a gain based on the asset price difference.

Buying a watch to rent it to customers => investment.
Buying a watch to sell it because market price will move up => speculation.
Buying a share which give each year a dividend => investment.
Buying a share which you expect to go up in the coming months/years => speculation.

Forces pushing the prices up:
- Free money: FED explicitly said that low interest rate was over during their last FOMC meeting.
- Good Economy: FED explicitly said they want to cool it hard because of inflation. They want more unemployment to avoid auto-fueled inflation through wages increases. (Inflation a-la-70s)
- China: In the latest Richemont report, the CEO said that they expect China economy to suffer in the future and for longer (vs USA).

I think we are going back to normal: you pay a high premium on latest released models, (neo-)vintage models of collectability.

For over 2 years, the watch market was behaving like the real estate market in China (before its crash): it was flooded by speculators buying and believing that a greater fool would buy it at a higher price.

If houses stay empty or watches are not on the wrist, a catastrophic end is expected.

PS: Speculation is not a bad word or practice.
PS: Cryptos, watches and pokemon cards are not store of value.

[sudo_root]

Originally Posted by QuelleHeureEstIl

Can we first set some definitions.
Investment: you buy an asset because you expect to generate a cash flow.
Speculation: you buy an asset because you expect the price to increase and generate a positive margin when selling.

Buying a watch to rent it to customers => investment.
Buying a watch to sell it because market price will move up => speculation.

Forces pushing the prices up:
- Free money: FED explicitly said that low interest rate was over during their last FOMC meeting.
- Good Economy: FED explicitly said they want to cool it hard because of inflation. They want more unemployment to avoid auto-fueled inflation through wages increases. (Inflation a-la-70s)
- China: In the latest Richemont report, the CEO said that they expect China economy to suffer in the future and for longer (vs USA).

I think we are going back to normal: you pay a high premium on latest released models, (neo-)vintage models of collectability.

For over 2 years, the watch market was behaving like the real estate market in China (before its crash): it was flooded by speculators buying and believing that a greater fool would buy it at a higher price.

If houses stay empty or watches are not on the wrist, a catastrophic end is expected.

PS: Cryptos, watches and pokemon cards are not store of value.

Always refreshing to read something based on logic and common sense, the people that got into watches due to the hype are going to get burned so badly they won’t ever come back.

The hobby will return to the hobbyist’s and speculating will be left to actual asset classes. For anyone who thinks “eventually” watches will grow back to their old all time highs, I’d implore to ask them how their Furbie values are doing today.

[joa]

>PS: Cryptos, watches and pokemon cards are not store of value.

nothing is ever a store of value, for each "thing" you put your money in i can give you a scenario where it will suffer a material loss. no need to single out these three (arguably very emotion-inducing) things.

[garyk]

Originally Posted by Mystro

I have a garage of air cooled 911’s collected over the last few decades. Market prices are only still going up as well as guys like me that have a few won’t sell them.

Thanks for posting this photo. Amazing Targa.

[mountainjogger]

Originally Posted by QuelleHeureEstIl

Can we first set some definitions.
Investment: you buy an asset because you expect to generate a cash flow.
Speculation: you buy an asset because you expect the price to increase and generate a positive margin when selling.
[/B]

Not my area of expertise, but where does your definition come from?

Merriam Webster defines investment as:

the outlay of money usually for income or profit (emphasis added)

https://www.merriam-webster.com/dictionary/investment

And this from Forbes.

1. Know the Difference in Investing vs. Speculating
All definitions vary slightly, but most are along the same lines. An investment is an asset or item acquired with the goal of generating income or appreciation in the future. Speculation is a financial transaction that has substantial risk of losing all value, but with the expectation of a significant gain. (emphasis added)

https://www.forbes.com/sites/greatsp...h=366041d338b1

[QuelleHeureEstIl]

Originally Posted by joa

nothing is ever a store of value...

That has been the debate since the creation of cryptos: is it a currency or a store of value.

The cynics did not care: pump and dump.

[QuelleHeureEstIl]

Originally Posted by mountainjogger

Not my area of expertise, but where does your definition come from?

Merriam Webster defines investment as:

the outlay of money usually for income or profit (emphasis added)

https://www.merriam-webster.com/dictionary/investment

And this from Forbes.

1. Know the Difference in Investing vs. Speculating
All definitions vary slightly, but most are along the same lines. An investment is an asset or item acquired with the goal of generating income or appreciation in the future. Speculation is a financial transaction that has substantial risk of losing all value, but with the expectation of a significant gain. (emphasis added)

https://www.forbes.com/sites/greatsp...h=366041d338b1

Actually these definition are with a "political view".

The definition by Warren Buffet is a must view: https://www.youtube.com/watch?v=_UZuGGDYwzI

But his explanation is actually a more "technical" explanation than emotional/political (Forbes, etc). Often, speculation is indirectly said to be predatory, aggressive, socially negative or being a pure risk which is not the case.

As there is a negative image with "speculation", a lot of sellers ban this word and only speak about investing because it is reassuring.

PS: English is not my language, so I may not phrase things correctly and make a lot of errors. WB's English is a lot better than mine. :)

[gerry100]

When the "addressable market" is satisfied.

We dont know how big it is except that its bigger than the 1 million watches that Rolex produces annually

[mountainjogger]

Originally Posted by QuelleHeureEstIl

Actually these definition are with a "political view".

The definition by Warren Buffet is a must view: https://www.youtube.com/watch?v=_UZuGGDYwzI

But his explanation is actually a more "technical" explanation than emotional/political (Forbes, etc). Often, speculation is indirectly said to be predatory, aggressive, socially negative or being a pure risk which is not the case.

As there is a negative image with "speculation", a lot of sellers ban this word and only speak about investing because it is reassuring.

PS: English is not my language, so I may not phrase things correctly and make a lot of errors. WB's English is a lot better than mine. :)

I was just curious. And BYW, I think your English is fine my friend.

[Turbo Racer]

I think these past few posts are pretty informative as a primer for finance.

Regardless of technical definitions, I see watches as both investment and speculative. Buying a Daytona or a nautilus over the last year or so has been a speculative proposition for many. Markets go up/down and watches are no different.

Looking like a buyers market more and more. Bad time to sell.


Sent from my iPhone using Tapatalk

[QuelleHeureEstIl]

Originally Posted by mountainjogger

I was just curious. And BYW, I think your English is fine my friend.

Stay curious, it will keep you young!

When I understood the difference between speculation and investment, I realized that I was offered a bulls*, marketing, scam detector. It also helped me understand the origin, the risks, the consequences (legal, fiscal, etc) of the potential gain/lose/owning.

Take care. :)

[Toproll85]

It's a bit complicated at the moment with the war and Russia, which can no longer buy anything. China especially, an important watch market, is undergoing strict Covid containment measures. All this should start again before the end of the year, but no one has a crystal ball, it's true. People are panicking a bit, and everyone is looking more to sell than to buy. This is the time for the smart to do good business. Because we agree, the situation has not changed and will not change anytime soon, you return to your retailer and nothing is available immediately. The market will remain strong. You can't find anything in high demand close to list price, even years from now. Economic growth (inflation) plus the fact that there are always more and more millionaires and billionaires and people who are not necessarily wealthy but financially comfortable (everything is verifiable, this is not an invention). A little regulation that being said won't hurt, there is little nonsense for certain watches, especially 3 simple steel needles, it's incomprehensible hype (at least for me)...

[bezler]

Originally Posted by mountainjogger

Not my area of expertise, but where does your definition come from?

He's using non-standard definitions. Appreciation is certainly an aspect of investment.

[Adam84]

Tell me you’re a flipper without telling me you’re a flipper lol….wonder who just offloaded 8 Bb58s in one go? …speculation of course but weird how 8 turn up on the same day and same age

https://www.watchfinder.co.uk/new-arrivals

[Harry-57]

Originally Posted by RoscoPico

Really ? Classic cars seem to be like watches here in the US, through the roof.

Yes really, according to research by the UK motoring press. There are pockets of non movement, some 80s icons being particularly strong in the UK, but the 50s and 60s classics are down on average. This is where the big "investment" money goes on cars that tend to go straight into storage or on display, as opposed to being properly used.

I'm not so sure watches are holding either, although they can dip a bit this time of year. My AD put me on their blue Jubilee Sky Dweller list last November and I got the call yesterday. Unless I have been paradoxically fortunate, prospective buyers are passing, some even at MSRP.

[rolexdream]

The market is crashing now, even gmt’s are not selling priced 20% off their prices 2 months back

[1665fan]

Originally Posted by rolexdream

The market is crashing now, even gmt’s are not selling priced 20% off their prices 2 months back

They are still double their retail value……nowhere near a crash lol

[underpar]

Originally Posted by rolexdream

The market is crashing now, even gmt’s are not selling priced 20% off their prices 2 months back

Asking prices on the CHNR has dipped below 24k on the grey market.

The RB was one of the last pieces to jump on the hype train and now seems to be the leader of the fall.
Like an outgoing tide...

[Cambo]

Rolex, as a product, will never crash. Grey markets and fly by night dealers might. At their own peril I might add….live by the sword and all that. Those of us that own watches (purchased at MSRP or lower), even observed with cautious optimism that the rising prices may be a boon but, as our lives didn’t depend on it, didn’t (don’t) get too excited with this correction. I plan on getting my next Rolex at my AD at MSRP. But when my next model shows up, I’m not waiting for any “bubble” to burst.
It’s called “speculation” and history of full of winners and losers.

[snyde]

“Rolex will be available at AD again”

Rolex: “limit supply snd increase prices 15% for the next 5 years”


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[francoamerican]

Originally Posted by Cambo

Rolex, as a product, will never crash. Grey markets and fly by night dealers might. At their own peril I might add….live by the sword and all that. Those of us that own watches (purchased at MSRP or lower), even observed with cautious optimism that the rising prices may be a boon but, as our lives didn’t depend on it, didn’t (don’t) get too excited with this correction. I plan on getting my next Rolex at my AD at MSRP. But when my next model shows up, I’m not waiting for any “bubble” to burst.
It’s called “speculation” and history of full of winners and losers.

By bubble I think what’s meant is second hand watches selling for greater than MSRP. It’s very unlikely (and actually folks have admitted it on here) that people are buying every Rolex offered at MSRP - which would NOT likely be the case if second hand watche sold for less than new ones. It’s more common for people have like 5-10 or many more rolex than people used to. Maybe the momentum lasts forever, but the world is not *that* different that 5 years ago so it also seems likely this is transient.

Also Rolex really don’t have many tricks up their sleeve either as far as hot steel watches in the transition to six digit once the blro was available with oyster and the Daytona got a ceramic bezel.

Even if they stay above MSRP the if you paid 50k for a 6 digit Daytona your probably would only be offered 30k for it by a dealer. That’s a decent hit (a lot more than most stocks)

[G23Guy]

Originally Posted by snyde

“Rolex will be available at AD again”

Rolex: “limit supply snd increase prices 15% for the next 5 years”

LOL.

As they are currently upping production 25% over last year with that new factory coming on line.