A note of caution on the current Rolex market

[TimeAZ]

Originally Posted by ronricks

Originally Posted by Jaypremium

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Reminds me of one of my favorite Ali G skits.

https://www.youtube.com/watch?v=48TR0vUPQCs

"Everyone's seen one of these.... a Zen Diagram."
"Business will be worth... wait for it.... that is such a big number, I couldn't write it that way".

[SaintMickey]

Originally Posted by nollie85

ALL I repeat ALL asset prices have increased dramatically.

* Real Estate in pretty much the top 20 countries have skyrocketed. We are seeing 20%+ growth in many countries just in 2021 alone. Some real estate I'm looking at here in Brisbane and Sydney have doubled!!! Literally doubled from their 2019 prices.
* High end cars are insane. Some ppl asking $300k+ for a G63 AMG. Dont even start talking about Porsche and Ferrari.
* Luxury items like certain bags and other fine things in life are also surging.

Pretty much any asset that has some value has gone up. Heck even basic Toyota Corolla cars are costing the same used as they are brand spanking new.

Governments around the world have printed trillions and trillions of dollars recently. Everyone is cashed up and your $500 back in 2020 is not worth $500 today. Much much less. Hence the growth in all asset prices.

Todays price will be the normal price going forward.

Paid $37,500 for a white dial Daytona, huh?

[SaintMickey]

Originally Posted by Jaypremium

Sent from my iPhone using Tapatalk

https://www.youtube.com/watch?v=1t-gK-9EIq4.

The handshake seals the contract
From the contract, there's no turning back
The turning point of a career
In Korea being insincere
The holiday was fun-packed
The contract still intact

The grabbing hands grab all they can
All for themselves, after all
The grabbing hands grab all they can
All for themselves, after all
It's a competitive world
Everything counts in large amounts

The graph on the wall
Tells the story of it all
Picture it now, see just how
The lies and deceit gained a little more power
Confidence taken in
By a suntan and a grin

The grabbing hands grab all they can
All for themselves, after all
The grabbing hands grab all they can
All for themselves, after all
It's a competitive world
Everything counts in large amounts
Everything counts in large amounts
Everything counts in large amounts

[WatchNutcase]

Originally Posted by SubMillennial

Or it opens the floodgates as greys start panicking and liquidating their inventory to avoid holding the bag, with a lot of previous speculators staying away to avoid catching a falling knife.

Essentially what you're saying is bring us back to 2018, when there were waiting lists at AD's but it was still possible to get the call, and grey sellers had plenty of Rolex at more reasonable mark ups. For greys to panic and begin selling we would need to see a drop lower than the prices in 2018, as much as I'd like to see that I don't think that will happen anytime soon.

This could be due partly to crazy inflation, people have lots of cash right now and they're losing purchasing power so they're seeking to park their money in assets in hopes to retain value.

[envuks]

I do tend to agree with this perspective. The key question, as others have raised, is time. How long will it take? The worldwide economy seems to be on fire, with prices for everything from homes, cars, food, and more soaring.

At some point, watch prices will soften. They’ll likely continue to rise for a period as I do not feel we’ve seen the end yet. Maybe not even close. But EVENTUALLY, SOMETIME, I do agree the market will soften.

I’ve been in this game since around 2003/2004 and have seen many different waves of prices and availability even in that short period of time. The only constant is change

Buy and wear what makes you happy. Anything else is Tulip Mania


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[grimps]

Originally Posted by envuks

I do tend to agree with this perspective. The key question, as others have raised, is time. How long will it take? The worldwide economy seems to be on fire, with prices for everything from homes, cars, food, and more soaring.

At some point, watch prices will soften. They’ll likely continue to rise for a period as I do not feel we’ve seen the end yet. Maybe not even close. But EVENTUALLY, SOMETIME, I do agree the market will soften.

I’ve been in this game since around 2003/2004 and have seen many different waves of prices and availability even in that short period of time. The only constant is change

Buy and wear what makes you happy. Anything else is Tulip Mania


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I've been in the game around the same amount of time and have only ever seen prices rise except for mania after new releases.
I think prices might level out a little but with every man and his dog looking at high end watches these days I dont think we'll ever see the price fall through the floor.
The only way that'll ever happen is if Rolex ,AP Patek ect increase production and they'll never do that drastically

[amanbra]

Originally Posted by nollie85

ALL I repeat ALL asset prices have increased dramatically.

* Real Estate in pretty much the top 20 countries have skyrocketed. We are seeing 20%+ growth in many countries just in 2021 alone. Some real estate I'm looking at here in Brisbane and Sydney have doubled!!! Literally doubled from their 2019 prices.
* High end cars are insane. Some ppl asking $300k+ for a G63 AMG. Dont even start talking about Porsche and Ferrari.
* Luxury items like certain bags and other fine things in life are also surging.

Pretty much any asset that has some value has gone up. Heck even basic Toyota Corolla cars are costing the same used as they are brand spanking new.

Governments around the world have printed trillions and trillions of dollars recently. Everyone is cashed up and your $500 back in 2020 is not worth $500 today. Much much less. Hence the growth in all asset prices.

Todays price will be the normal price going forward.

100% agree this is a manifestation of inflation into assets, but I totally disagree that it's the new norm though. Some of these bubbles like NFTs etc i feel will plummet at some point some items may not. I'd say things like property are far more likely to hold vs watches. NFTs, Crytpo, Magic Cards etc far more at risk... Cars will equalise back out for Toyotas etc...

[MILGAUSS88]

Originally Posted by Ensign

I dunno - has the price of diamonds or gold gone down over the years?

I was not sure if you were disagreeing or being sarcastic.

You do know that gold just came out of a 10 year dip, and the dip before that lasted 20 years?

Similar market dips have been seen in diamonds as well.

[Sandpit]

Originally Posted by nollie85

ALL I repeat ALL asset prices have increased dramatically.

* Real Estate in pretty much the top 20 countries have skyrocketed. We are seeing 20%+ growth in many countries just in 2021 alone. Some real estate I'm looking at here in Brisbane and Sydney have doubled!!! Literally doubled from their 2019 prices.
* High end cars are insane. Some ppl asking $300k+ for a G63 AMG. Dont even start talking about Porsche and Ferrari.
* Luxury items like certain bags and other fine things in life are also surging.

Pretty much any asset that has some value has gone up. Heck even basic Toyota Corolla cars are costing the same used as they are brand spanking new.

Governments around the world have printed trillions and trillions of dollars recently. Everyone is cashed up and your $500 back in 2020 is not worth $500 today. Much much less. Hence the growth in all asset prices.

Todays price will be the normal price going forward.

And then one day, on a cold January morning you wake up to realise that the Fed is pulling back its market propping and may even look to increase interest rates, and that there are several huge chinese companies who are on the brink of default with seemingly little government support forthcoming.

Nobody knows what will happen. But something will happen. Prices today are not guaranteed tomorrow.

[nollie85]

Originally Posted by Sandpit

And then one day, on a cold January morning you wake up to realise that the Fed is pulling back its market propping and may even look to increase interest rates, and that there are several huge chinese companies who are on the brink of default with seemingly little government support forthcoming.

Nobody knows what will happen. But something will happen. Prices today are not guaranteed tomorrow.

Yeah......I'm sure you've heard of ppl forecasting a housing price bubble for the last 30+ years as well.

I still know guys sitting on the fence about buying a house from 20+ years ago. They are still renting today and still predicting housing is a bubble yet its increased at least 5-6 times the value since then.

Something they could have bought for $250k back then is like $1.5M+ now. As they say "when you predict something for long enough it eventually comes true doesnt it?"

Maybe another 30 years? maybe 50? who knows. I'll be dead by then.

[Sandpit]

Originally Posted by nollie85

Yeah......I'm sure you've heard of ppl forecasting a housing price bubble for the last 30+ years as well.

I still know guys sitting on the fence about buying a house from 20+ years ago. They are still renting today and still predicting housing is a bubble yet its increased at least 5-6 times the value since then.

Something they could have bought for $250k back then is like $1.5M+ now. As they say "when you predict something for long enough it eventually comes true doesnt it?"

Maybe another 30 years? maybe 50? who knows. I'll be dead by then.

I don't know what it was like for you, but I distinctly remember 2007 / 2008 house prices taking an absolute hammering. I remember because I bought a flat in October 2007 right before prices crashed.

[nollie85]

Originally Posted by Sandpit

I don't know what it was like for you, but I distinctly remember 2007 / 2008 house prices taking an absolute hammering. I remember because I bought a flat in October 2007 right before prices crashed.

There has been corrections maybe 10% max but when you have compounded yearly growth those so called "corrections" are insignificant.

Units/Flats are not as resilient as free standing houses. All I know is in Sydney anyway there is not a single free standing house under $700k anywhere in any suburb now. Median is now sitting at $1.5M.

Brisbane is also flying for free standing houses.

Units/Flats the demand for them is minimal. Everyone wants houses on its own land. The demand for flats and units have always been lower.

[Henrimontgomery]

Let me be, me and my tulip colored Rolexes. There is no bubble but those in my champagne.

[NYG1121]

Its not just watches. The entire environment is absolute scary. I would be very cautious

[grimps]

If you bought a watch at retail then you have nothing to worry about , even if you bought a watch at the current grey prices and intend on wearing it for the rest of your life you have nothing to worry about.

[PhilK]

Our local AD has been busy weeding out the speculators/investors from their 116500 queue for a few years now and they still have c. 400 people listed on their books for one. The challenge remains that of supply vs demand. I have never known a situation where the shelves are completely bare of stainless steel sports watches. I am not convinced this is the "mania" phase referred to in the original post. People simply cannot buy the watches they want. If supply was to suddenly quadruple then that might soak up part of the latent demand and take the heat out of some of the less desirable models but I cannot see that denting what is happening with Daytonas.

Having just checked on Chrono24, there are 250 of the more desirable white dial 116500 Daytonas for sale worldwide. 17 of these do not have papers so that reduces the pool to 233 where provenance is more comfortable. A further 20 turn out to be mis-listed and have black dials or substitute dials which takes the pool down to 213. 13 of these are being sold by private sellers which provides little comfort in terms of comeback if there's an issue. So, 200 watches in total for a demand that is likely to be in the thousands (if not the tens of thousands). That is before you consider the challenge of how many of these watches are actually available geographically close to where you live. Around 90 of these are 2021 models but even if that trend continues in years to come, that is not sufficient to satisfy demand.

As the end of the day, if you're wealthy enough to pay £10.5K for a new one, it's quite likely you're wealthy enough to pay £30K simply because it is something you want. People seem to think nothing of sinking £30K into a car which will be worth £12K in 3 years time. You're never going to have a situation where a secondary market Daytona is going to be worth less than list retail price so the downside is fairly limited. Most agree that the modern Daytona is a classic design. It is highly likely that the demand will never be met before the current model is discontinued which, in turn, will cause a further uplift in prices as all of those in the queue have to decide whether to buy the watch for their collections or give up altogether.

This is more than just an economic model.

[amanbra]

Originally Posted by PhilK

Our local AD has been busy weeding out the speculators/investors from their 116500 queue for a few years now and they still have c. 400 people listed on their books for one. The challenge remains that of supply vs demand. I have never known a situation where the shelves are completely bare of stainless steel sports watches. I am not convinced this is the "mania" phase referred to in the original post. People simply cannot buy the watches they want. If supply was to suddenly quadruple then that might soak up part of the latent demand and take the heat out of some of the less desirable models but I cannot see that denting what is happening with Daytonas.

Having just checked on Chrono24, there are 250 of the more desirable white dial 116500 Daytonas for sale worldwide. 17 of these do not have papers so that reduces the pool to 233 where provenance is more comfortable. A further 20 turn out to be mis-listed and have black dials or substitute dials which takes the pool down to 213. 13 of these are being sold by private sellers which provides little comfort in terms of comeback if there's an issue. So, 200 watches in total for a demand that is likely to be in the thousands (if not the tens of thousands). That is before you consider the challenge of how many of these watches are actually available geographically close to where you live. Around 90 of these are 2021 models but even if that trend continues in years to come, that is not sufficient to satisfy demand.

As the end of the day, if you're wealthy enough to pay £10.5K for a new one, it's quite likely you're wealthy enough to pay £30K simply because it is something you want. People seem to think nothing of sinking £30K into a car which will be worth £12K in 3 years time. You're never going to have a situation where a secondary market Daytona is going to be worth less than list retail price so the downside is fairly limited. Most agree that the modern Daytona is a classic design. It is highly likely that the demand will never be met before the current model is discontinued which, in turn, will cause a further uplift in prices as all of those in the queue have to decide whether to buy the watch for their collections or give up altogether.

This is more than just an economic model.

Yep but one day people realise is a totally overrated watch or it gets linked with pedophiles or some other criminals or realise they’re actually a tad common vs pateks etc etc and demand can literally disappear. Can’t count of stuff like this being bullet proof.


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[LJubel328]

M x V = P x Q

Keeping quantity, Rolex production (Q) constant, increased money supply coupled with new wealth (M) and the increased velocity (V) results in upward price pressure (P).

I feel like a smart economist forecasting the next recession!


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[pmoz]

We'll see what happens, it is hard to predict the future but I agree everything goes in cycles.

The current movements in Rolex is highly reflected that other brands also have limited supply. In addition, other brands that are very renowned in watch enthusiast community have not received the same love as Rolex - which could also change in the future, if they introduced some more consumer-palatable designs. Honorable mentions here are obviously Jaeger Lecoultre, Vacheron Constantin, Grand Seiko, IWC.

I am absolutely baffled about the recent auctions of Hulks in the US - some of them fetching USD 94K! This is 90's Nautilus range for a freaking Rolex jeez

Edit: As with many other fashion statements and items symbolising success/wealth, it will inevitably become unpopular/less popular. I saw a study in the US and the youth is predominantly wearing Apple Watch instead of Rolex in the upper socioeconomic layer, so this might give a shift in 5 years or so. Honestly, I am seeing that everyone has a Rolex these days - at least the places I go out, and the majority of these are not enthusiasts but rather want to flex. People who would never wear these kind of watches a couple of years back are wearing them now because of their value in symbol/fashion statement. It has really become what seems accessible to everyone as long as people want to spend the money at grey dealers, increasing the flex of wearing a Rolex.

This will inevitably fall as notion which I think will influence the prices again. But obviously, it could as easily move the other direction and keep steady at a certain X% premium of retail price for ever. To me it just seems counterproductive for Rolex to have the current situation, as their watches have become 'too popular' in my opinion. They want to keep it exclusive and yet I see 7/10 wearing a Rolex at the high-end bars in the inner city, all of them new of course (who cares about Red Subs, PM Daytonas, Bakelite GMTs) and rarely if ever see any Patek, Jaeger, Audemars, Vascheron. So to me the Rolex watch has become a very cliché flex these places, and I personally much prefer the vintage ones that you almost never see - complimented a guy with a Red Sub last summer, it was a killer look on leather strap. He was very happy to see an enthusiast as everyone always told him "Nice Sub, why is it not on a bracelet?".

[fania123]

So glad I get to sit on the sidelines and laugh at all this madness as I have no desire to purchase anything new.

[PhilK]

Originally Posted by pmoz

We'll see what happens, it is hard to predict the future but I agree everything goes in cycles.

To me it just seems counterproductive for Rolex to have the current situation, as their watches have become 'too popular' in my opinion. They want to keep it exclusive and yet I see 7/10 wearing a Rolex at the high-end bars in the inner city, all of them new of course (who cares about Red Subs, PM Daytonas, Bakelite GMTs) and rarely if ever see any Patek, Jaeger, Audemars, Vascheron.

I purchased a 16610LV in 2010 when the retail was just over £4K and the watch was sitting in an AD's window. Eleven years on, the new version of the watch costs over £7.5K and is now unobtainable. Would raising the price to £10K make a difference? Personally, I don't think it would. Contrary to doomsayers, there are a lot of successful start-ups and entrepreneurs out there who want to enjoy their money. They've worked hard for it and it is not Rolex's fault (or any other high-end watchmaker for that matter) that they want to spend it. Whether it be buying a nice house, a fast car, taking amazing holidays, a Rolex is not a particularly large purchase in that context. I think this is more of the case of demand completely outstripping supply with people happy to pay grey-market prices. Rolex make very attractive looking watches and have a global brand presence which attracts buyers to them. That is not going to change overnight.

[pmoz]

Originally Posted by PhilK

I purchased a 16610LV in 2010 when the retail was just over £4K and the watch was sitting in an AD's window. Eleven years on, the new version of the watch costs over £7.5K and is now unobtainable. Would raising the price to £10K make a difference? Personally, I don't think it would. Contrary to doomsayers, there are a lot of successful start-ups and entrepreneurs out there who want to enjoy their money. They've worked hard for it and it is not Rolex's fault (or any other high-end watchmaker for that matter) that they want to spend it. Whether it be buying a nice house, a fast car, taking amazing holidays, a Rolex is not a particularly large purchase in that context. I think this is more of the case of demand completely outstripping supply with people happy to pay grey-market prices. Rolex make very attractive looking watches and have a global brand presence which attracts buyers to them. That is not going to change overnight.

Hey, I am not taking anything away from Rolex, they have iconic designs and deserves the attention for their presence (heavily due to marketing though), but I completely agree it is an iconic brand and big fan myself "bow to the Crown".
You are kind of illustrating my point, I completely agree but these startup entrepreneurs, high net worth individuals, have absolutely no problem going to an AD buying a watch - honestly many of them would probably never buy 2.5X premium on it, as they are business savvy and know what things are worth.
The problem in the price and in my opinion its inevitable collapse is that if it were only succesful entrepreneurs and HNWI that bought, the 800K produced a year would probably suffice quite okay with all the second hand ones on top of it. The grey prices are driven by the excessive demand from average joe's that has either saved 10K for the first time of their life to buy watch to flex with. I see them all over town honestly, expensive watch, cheap shoes, suits, shirts, cars, whatever... Not that it is not okay, I am no snob myself but I am not overpaying for a Rolex as it does not reflect the actual value of the watch, but rather an Instagram-version of the person you want to be when you own the watch - which has nothing really to do with the watch but rather with whether you buy the watch or invest the money in starting your own business ;)

[Driver8]

Originally Posted by nosignalbmwdriver

LOL bro reaching

Love the "reaching" comments!

Just for clarity, I'm not "reaching" at all here.
I currently have 5 Rolexes myself so if the market turns that will only reduce the value of my own pieces, although as I've said many, many times I genuinely have no concern for the future value of my own watches - I buy them to wear and enjoy, and once they're bought it's a sunk cost as far as I'm concerned, never to be seen again. Plus I'm only interested in picking up one other reference, and that's a discontinued model that isn't considered overly "hot" or difficult to find. So I have no vested interest in the market either way.

My reason for the thread is that I'm an economist by qualification (and historically, by trade), and from an academic perspective I find it interesting to see behaviour that (so far at least) follows the pattern of a classic economic bubble.

Now, I'm the first to admit that a lot of economics is effectively educated guesswork (with the emphasis on 'educated'), but it's still prediction-based without the benefit of a crystal ball. Of course, nothing in life is set in stone until it happens - I just thought it'd be an interesting comparison to highlight.

So when might something happen and what form it might take? Who knows - some of these stages can take years. The unfortunate thing about economic bubbles is that they are predominantly only recognised as such AFTER the event. That said, I just think it's a foolhardy person who will try to claim that many of the current prices aren't delusional and driven by greed, with vast numbers of the non-WIS public trying to jump on board. All I'm saying is, the signs are there....

[Dyim]

Originally Posted by pmoz

Hey, I am not taking anything away from Rolex, they have iconic designs and deserves the attention for their presence (heavily due to marketing though), but I completely agree it is an iconic brand and big fan myself "bow to the Crown".
You are kind of illustrating my point, I completely agree but these startup entrepreneurs, high net worth individuals, have absolutely no problem going to an AD buying a watch - honestly many of them would probably never buy 2.5X premium on it, as they are business savvy and know what things are worth.
The problem in the price and in my opinion its inevitable collapse is that if it were only succesful entrepreneurs and HNWI that bought, the 800K produced a year would probably suffice quite okay with all the second hand ones on top of it. The grey prices are driven by the excessive demand from average joe's that has either saved 10K for the first time of their life to buy watch to flex with. I see them all over town honestly, expensive watch, cheap shoes, suits, shirts, cars, whatever... Not that it is not okay, I am no snob myself but I am not overpaying for a Rolex as it does not reflect the actual value of the watch, but rather an Instagram-version of the person you want to be when you own the watch - which has nothing really to do with the watch but rather with whether you buy the watch or invest the money in starting your own business ;)

Don't be too quick to judge a book by its cover.

I have gone out with my wife walking our dog on the trails near our house, dressed like bums, with me wearing a watch and her some jewellery that costs more than 95% of new cars out there. And doing the same driving my kid's car for a quick errand.

Of course, we were wearing it for our own enjoyment. Dissimilar to people you are alluding to.

Sometimes you just never know.

[pmoz]

Originally Posted by Dyim

Don't be too quick to judge a book by its cover.

Hear, hear! I completely agree - I am not trying to be prejudice, and I am totally on board with the thousands of people who enjoys the watches :D I meet plenty of HNWI who does not look like they are shoving cash, but again to the point earlier - they don't need to look like it because they got it (by not excessively wasting money on status symbols).

Sure some of the ones I judge will inevitably be misjudged, but honestly I am pretty sure the majority are not - including several close friends of mine (extended to their friends) have no idea what they are slapping on their wrist, other than it was expensive and is shining :p

While they are not as shallow as others, I am still baffled by the lack of appreciation of the craftsmanship as the focus is more on the symbolism of the watch. I wore my vintage Seamaster the other day to a party, 34mm on black crocodile strap, and half of them were like "why are you not wearing your Rolex? It is much nicer" - ehhh, I am rotating watches and highly appreciate the patinated enamel-like dial of the Seamaster and the elegant look/lack of bulkiness. But they don't care 'cos it's a shit old small watch at 1/15th the price of my Rolex :p

[Patton250]

Originally Posted by WatchNutcase

Essentially what you're saying is bring us back to 2018, when there were waiting lists at AD's but it was still possible to get the call, and grey sellers had plenty of Rolex at more reasonable mark ups. For greys to panic and begin selling we would need to see a drop lower than the prices in 2018, as much as I'd like to see that I don't think that will happen anytime soon.

This could be due partly to crazy inflation, people have lots of cash right now and they're losing purchasing power so they're seeking to park their money in assets in hopes to retain value.

Wouldn’t you rather go back to 2015? Every Rolex dealer had full inventory including Daytona‘s. In January 2016 I bought a Patek 5167 for 18K. Yes….18K!!!!! I saw that someone paid 76K last week for one on European watch company!!!! No sir. Give me 2015 again please. This whole thing is way out of control and embarrassing at this point. I don’t care how much money someone has if I found out they paid 76K for a 5167 I would ridicule them to their face.

The OP is right by the way. This whole thing started when the economy went bonkers in 2016. That’s a fact. It will crash when the economy crashes. That will happen sooner or later. Probably sooner. If I were smart I should sell my whole collection now and hold the money. When the economy crashes then I can buy a mansion on a lake.

[HMHM]

If you buy the watch because you like wearing it, you will still enjoy the watch even when the market crashes. It’s the same watch doesn’t matter what the market says.

[beshannon]

Originally Posted by Driver8

don't say I didn't warn you!

Warn of us of what?

[PhilK]

Originally Posted by HMHM

If you buy the watch because you like wearing it, you will still enjoy the watch even when the market crashes. It’s the same watch doesn’t matter what the market says.

Exactly.... People buy some assets (e.g. cars) knowing they will fall in value. Others speculate in the stock market hoping for a gain. I have paid a premium in the grey market twice now for a watch and I have no problem having done so. I have the enjoyment of the watches in my possession and that feeling is impervious to market fluctuations. Those who have purchased watches in the current market hoping for investment returns should be more nervous. They're unlikely to take a bath but, at the end of the day, you should only buy a watch to enjoy it (whether it be worn on your wrist or forming part of your collection).

[Ollie1982]

Originally Posted by WatchNutcase

The problem is the second prices decrease a little, or there's just a tad more availability at the AD there's still a lineup of thousands of buyers for essentially every Rolex model. These buyers aren't going away anytime soon, which makes it hard to believe that any price drops will be long lived. It's a ridiculous situation and really is frustrating for all of us.

You've changed your tune