Hypothetical Bubble burst Impact - SS vs PM

[T3F]

Prices for gold watches have risen, for the most part, only modestly since the "bubble" started, so I think they'll be affected less. Steel watches, on the other hand, have absolutely rocketed and have a long way to fall -- 116710BLNRs, for example, could be had for around MSRP two years back and have, at times, been close to double MSRP since then. Either way, when the bubble does eventually pop, you're going to lose a substantial amount of value on everything -- I certainly wouldn't be buying modern Rolexes at grey market prices as an investment right now.

[TheDude]

Some musings about how or why the bubble would burst:

-the bubble (or a very large percentage of it) could be comprised of speculative acquisitions and hoarding. If/when people have to convert inventory to cash and decide to “cash out” at a rate that’s faster than current prices will allow, the resulting correction will occur. The fall in prices would be tied to the portion of the bubble not attributable to actual real demand

-the bubble could be entirely due to actual supply and demand.

•scenario 1 - demand drops (don’t know why it would) and relative supply becomes higher. Prices drop

•scenario 2 - supply increases (don’t know how it would) and relative demand becomes lower. Prices drop


It’s hard to quantify anything based on all of these unknowns. I can tell you which scenario I think is most likely, but nothing for certain.


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[Jabbo84]

...yes it will burst and the AD will call you and beg you to come in. But when times are hard you won’t have the money to buy. So for you it’s a no win situation

[ra77man]

Originally Posted by T3F

Prices for gold watches have risen, for the most part, only modestly since the "bubble" started, so I think they'll be affected less. Steel watches, on the other hand, have absolutely rocketed and have a long way to fall -- 116710BLNRs, for example, could be had for around MSRP two years back and have, at times, been close to double MSRP since then. Either way, when the bubble does eventually pop, you're going to lose a substantial amount of value on everything -- I certainly wouldn't be buying modern Rolexes at grey market prices as an investment right now.

Agreed.

Originally Posted by TheDude

Some musings about how or why the bubble would burst:
-the bubble (or a very large percentage of it) could be comprised of speculative acquisitions and hoarding. If/when people have to convert inventory to cash and decide to “cash out” at a rate that’s faster than current prices will allow, the resulting correction will occur. The fall in prices would be tied to the portion of the bubble not attributable to actual real demand

-the bubble could be entirely due to actual supply and demand.
•scenario 1 - demand drops (don’t know why it would) and relative supply becomes higher. Prices drop
•scenario 2 - supply increases (don’t know how it would) and relative demand becomes lower. Prices drop
It’s hard to quantify anything based on all of these unknowns. I can tell you which scenario I think is most likely, but nothing for certain.
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Which in your opinion, is most likely?

[jimcameron]

If you havent done so already, buy every ss Rolex/Tudor you can source, regardless of price. On good authority I have been told that the Rolex family has hoarded a significant quantity of watches and intend on closing production of ANY future Rolex/Tudor watches. Their value should skyrocket. ........or did I just dream this?

[Manu74]

Just buy at MSRP and you won't have a problem at all.

[drgoro]

Lol

Originally Posted by beshannon

i'll get right on that analysis of high end luxury jewelry and let you know

[ardvarkshorty]

When I was in my AD last week I stumbled into Schrödinger's cat, he explained he had a purrfect hypothesis to the bubble bursting scenario.
He explained to me that 75% of the pubic who wanted to buy Roxel Watches , have dyslexia and in fact buying Rolex watches by mistake.
When they get told their mistake they will sell their Rolex watch, there will be plenty of Rolex back on the market, and thus the price will go back to normal.
Simple really !!

[TheDude]

Originally Posted by ra77man

Agreed.







Which in your opinion, is most likely?

There’s almost always speculation built into any hot market. The question is how much speculation and when pressure will squeeze speculators out.


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[dhknola]

Fascinating discussion. As a purely vintage collector, I find this fascinating how it will affect the vintage market in regards to any 'bubble bursting'.

[Muxi]

Fashion trend drastic change from current hype

[TreiseKL]

As far as vintage market goes, the bubble bursts when Greys realize there were no customer base for which the vintage market price inflation was intended for. For example, people hated vintage AP's in the past and now the prices tanked when Greys who bought into vintage APs based on the popularity of the recent AP models realized no one wants to buy vintage APs. So, is there enough customer base to support the vintage Rolex market? Time will tell but my guess is that as the older generation dies off that demand will disappear completely.

As far as SS market goes, the bubble bursting will affect SS models that are encroaching PM models the most. That'd be the SS Daytona and Pepsi GMT. Batgirl bubble is already bursting and prices are tanking. SS Daytona has nothing on PM Daytona other than the rarity. Pepsi GMT prices will no doubt tank.

As far as the almighty Submariner goes, the 116610 prices will no doubt fall but 114060 prices should stay in place due to the premium being not that high. 5-digits prices would fall as well.

[Setarip]

Originally Posted by Jim Smyth

I think Rolex is intentionally chocking off supply on SS models to drive up desire. People want what they cant have. What this has done is drove the secondary prices way up which means they will be now selling more higher profit PM versions since whats a few thousand more right?

This will allow them to price adjust upwards across the Board to get the Rolex brand more in line with a AP and Patek price point. Then in a few years after pricing has been adjusted they will have plenty of stock to sell at even higher prices.

They will use the Tudor brand to replace the now unavailable Rolex SS brand and also raise that pricing to the old Rolex prices for more of the entry level, first time buyer.

This way they will have it all.

+1

I see AD's pushing Tudors like they used to push Rolex as accessible to the common man

[peterpl]

SS will be most impacted percentage wise. Its where most of the flippers are and its where most of the hype and overpriced pieces are.

PM have risen slightly but I dont think anywhere near the percentage that SS have in recent years.

Many youtube/instagram watch channels are calling it the peak of the watch game at the moment. 5711s are dropping in price as with other Nautilus and Aquanaut models. The new BLNR is dropping fast compared to its initial release and the added tensions in HK are putting massive pressure on grays to release their holding stock into the market for all the SS sports models.

If HK doesnt improve soon I think by the end of the year we will see some market shift downwards. Its already happening in for sale threads the asking prices of some pieces have dropped alot.

Plus do you guys find it strange there is not a single "how much is my watch worth" or "how much can I make if I flip" thread in a while. LOL - these threads were at least 10 per day before.

All the flippers in this game are gone. Hard to make money now especially with the prices the grays are giving. They know market sentiment is changing and cooling.

[drefrank]

Originally Posted by beshannon

I'll get right on that analysis of high end luxury jewelry and let you know

Never thought it would be that straight forward!

[Strummer]

Originally Posted by Heller

While doing this analysis it struck me that Ten years ago a crack commando unit was sent to prison by a military court for a crime they didn't commit. These men promptly escaped from a maximum-security stockade to the Los Angeles underground. Today, still wanted by the government, they survive as soldiers of fortune. If you have a problem... if no one else can help... and if you can find them... maybe you can hire... The A-Team

Amazing. Made my day.

[locutus49]

When standard deviates come out to play, I suspect there is stochastic topping in the offing.

Originally Posted by m j b

Did you consider the cross-platform generalization of the standard deviation, or did you assume a rationalization of the inverted retracement of the policy?

Because, you know, if you didn't, well, then I'll have to disagree with your hypothesis there.