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

[Caynuck]

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

[nyc11]

Think this is the new normal

[Gunnersaurus]

It won’t.

[REFZ]

I don't think so, at least not within 1-2 years.

[rolexinfl]

It wont. This is the new normal.

Anyone who talks of a bubble or 'tulips' or waiting for en economic downturn to make things 'normal again' is extremely ignorant.

It has been proven people will play this new game and pay these new prices, so there this is now the normal.

[Burbank90]

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

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[Brew]

I'm just trying to count the assumptions embedded in the question, gimme a couple.

[TswaneNguni]

China

[SimonUK82]

Originally Posted by nyc11

Think this is the new normal

This


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[rolexinfl]

Originally Posted by Burbank90

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

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No it wont, thats a pipe dream.

Sure maybe SOME Rolex owners may be fire selling their luxuries under their worth but you're still not going to be picking up SS models around 20% under their market worth even in an extreme downturn.

[Lemonvr6]

If the economy recedes, Rolex will curtail output. This is the new normal

[woof]

This is the new normal and it will only get worst.

[ccaballero]

This is the new normal. The idea that an economic downturn will have an effect presupposes that people pay to play in this market will be significantly impacted by downturn, which is unlikely.

[strafer_kid]

It's hard to say how things will go. Hopefully the future will not continue to be as crazy as things are right now, but it seems unlikely that it will go back to the day when the vast majority of pieces were attainable.

[Rolexism_]

This is how it will be always and forever. Rolex is not stupid flooding the market with their sought after pieces like other brands do Omegle, iwc, breitling. They want to be a company that is not easily available in a walk-in. Besides they are a foundation and do not have any stock options or shareholders to report to. They can do whatever they want whenever they want.


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[ricardo-sf]

bleh .. i just want a GMT

[ricardo-sf]

if the future is a normal where anyone can walk into an AD .. put in an order and get a watch in 3 to 6 months .. i can live with that ...

but if its this crazy grey market markup for hot watches .. where grey dealers can get all the inventory and buyers are left to get fleeced .. then that sucks.

[TswaneNguni]

The "new normal" ...excellent for my collection's value.There are always positives in any situation

[akamop]

Sadly normal is here.

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[ras47]

IF the Rolex market changes it will be an external event or events that act as the catalyst. Smart watches may be it. What's holding back smart watches is battery technology. The need to recharge is a huge factor. Put a battery that lasts a month or longer in an Apple Watch and the horology game will shift tidally.

[Dubshack]

When social media influencers move from automatic watches to the next thing.


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[Keepchasing]

Originally Posted by rolexinfl

It wont. This is the new normal.

Anyone who talks of a bubble or 'tulips' or waiting for en economic downturn to make things 'normal again' is extremely ignorant.

It has been proven people will play this new game and pay these new prices, so there this is now the normal.

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.

[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.

[Keepchasing]

To all those who think only some will sell their watches in an economic downturn...

The demand isn't exclusive to those who have cash for these watches. If you think people haven't financed them, well...

[Sandpit]

Originally Posted by rolexinfl

No it wont, thats a pipe dream.

Sure maybe SOME Rolex owners may be fire selling their luxuries under their worth but you're still not going to be picking up SS models around 20% under their market worth even in an extreme downturn.

That’s flipping it from one extreme to the other. “Back to normal” could simply be stock back on the shelves.

It’s logical to assume that in the event of a banking crisis / recession that luxury purchases would be much less of a priority to buyers. Not everyone that buys is a millionaire. A massive recession will impact the market. I have no doubts about that. If your house lost 20% of its value as well as your investments are you telling me you’d still be heading to the AD to buy the new latest, greatest GMT release?

Just to note: government, corporate and personal debt levels throughout the West have reached and exceeded record levels. We’re in uncharted territory again. Who knows what or when something will happen. But it will at some point. It’s inevitable.

[vicsdca]

There are too many people that want the market to back to normal for it to actually go back to normal. The bubble will only burst when people stop caring about Rolex. It might not happen anytime soon, unless there is a severe economic downturn.

[Kilometerman]

Originally Posted by ccaballero

This is the new normal. The idea that an economic downturn will have an effect presupposes that people pay to play in this market will be significantly impacted by downturn, which is unlikely.

A lot of economic analysis focuses on the marginal participants. And while I concede that a recession won’t impact the 1% of the 1% in a way that would preclude them from making a purchase of a high end watch, you’re forgetting about the marginal buyer.

The folks that have to save up to make that purchase and forgo other things, will think long and hard about paying that much over list in a falling market an when their job and/or income may be at more risk. When your brokerage account is down 20% or more, and your bonus or income is down year over year, buying yet another Rolex to round out your collection may get deferred.

It’s a little easier to swallow the idea of paying 80% over MSRP for a grey market watch when the market seems to justify that price, and you have a job, and your financial assets are being marked up every day.

If there was ever a sign of a bubble, it’s when people capitulate and say “this is the new normal” and “it’s different this time”. It is the very mindset that causes a bubble.

There’s nothing that has really changed from a secular standpoint about the market for high-end/luxury consumer goods.

IMHO, the only thing that has really changed (in the medium term) is central bankers’ use of QE as monetary stimulus. Central bankers are trying to generate some inflation, and they haven’t been very effective so far - at least in as much as inflation is measured through CPI or PCE or other traditional metrics. What QE has inflated is asset prices where wealth has already been accumulated - stocks, bonds, real estate, art, and other ultra high end collectibles. So, I’d venture to say that as long as the economy is healthy, and as long as monetary policy stays accommodative (QE), then sure, this will continue. But, at some point (maybe years and years from now), there will be an economic bump in the road, and there will be repercussions and unintended consequences of experimental monetary policy. And this too shall pass.

[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.

[csaltphoto]

Originally Posted by Kilometerman

A lot of economic analysis focuses on the marginal participants. And while I concede that a recession won’t impact the 1% of the 1% in a way that would preclude them from making a purchase of a high end watch, you’re forgetting about the marginal buyer.

The folks that have to save up to make that purchase and forgo other things, will think long and hard about paying that much over list in a falling market an when their job and/or income may be at more risk. When your brokerage account is down 20% or more, and your bonus or income is down year over year, buying yet another Rolex to round out your collection may get deferred.

It’s a little easier to swallow the idea of paying 80% over MSRP for a grey market watch when the market seems to justify that price, and you have a job, and your financial assets are being marked up every day.

If there was ever a sign of a bubble, it’s when people capitulate and say “this is the new normal” and “it’s different this time”. It is the very mindset that causes a bubble.

There’s nothing that has really changed from a secular standpoint about the market for high-end/luxury consumer goods.

IMHO, the only thing that has really changed (in the medium term) is central bankers’ use of QE as monetary stimulus. Central bankers are trying to generate some inflation, and they haven’t been very effective so far - at least in as much as inflation is measured through CPI or PCE or other traditional metrics. What QE has inflated is asset prices where wealth has already been accumulated - stocks, bonds, real estate, art, and other ultra high end collectibles. So, I’d venture to say that as long as the economy is healthy, and as long as monetary policy stays accommodative (QE), then sure, this will continue. But, at some point (maybe years and years from now), there will be an economic bump in the road, and there will be repercussions and unintended consequences of experimental monetary policy. And this too shall pass.

This is a part of it. Rolex has been a luxury brand for some time. When you go to an AD and see nothing but PM models, that is what Rolex mostly wants to sell. Heck, SS models at retail are something of a bargain considering you get the same watch as a PM model but at 25-30% of the cost. The PM material is worth at best, a few thousand dollars. It's whats inside, and/or the brand itself, that is valuable to people. The grey market is just correcting up the perceived value of the SS models.

Now a massive economic correction might affect SS at retail interest but not the PM models. Take the Daytona for example. 12.5K for SS and 40-60K for PM. Considering they are same watch basically, that SS model is a bargain. At 25K, it's more proportional to the PM pricing. That aftermarket price is what might move somewhat unless tastes are changing away from PM jewelry.

[Just1More]

Welcome to the new World of Rolex.