Rolex prices won’t decrease with a global crisis

[Valedictorian]

Hello everyone

I saw a few posts speculating that grey market prices for Rolex watches might decrease over time and I wanted to share a representative graph that may convince you of the opposite. Historically, prices have stalled during the 2008-2009 financial crisis but kept climbing steadily afterwards. There are no dips in the time series (as opposed to Patek, which did correct their already exuberant MSRP downwards, but that’s a story for another time).

That being said, I’m aware the blue line in this chart only displays the MSRP of the (then) most popular SS model (i.e. Sub ND) but the point is that grey market dealers closely monitor this data on an almost daily basis, in combination with the prevalent market demand, to set their ludicrous prices.

Even when market demand slows down, the price delta between grey and MSRP will narrow down (as happened during the financial crisis almost a decade ago) but is still likely to remain several thousands of dollars above retail. Case in point is the new BLNR. When it first came out, some grey market dealers listed them for USD 23k in the first few weeks. However, they quickly corrected their asking price to a level below that of the BLRO when they realized the latter was still more desirable. The fact that the Rolex manufacture has now closed down until further notice won’t help from an availability standpoint either.

In summary, I agree with some of the views that I have read around here about the probability of grey market dealers to adopt a strategy of hoarding the sought-after SS pieces for better days, both to keep their already (or so-called?) modest profit levels intact as well as to avoid sending out the - in their views at least - wrong signal that market demand is on the verge of collapsing.

Data chart courtesy of ablogtowatch.com

[Roger Lococco]

I’m not seeing the link between your data and premium grey market pricing.

In my view, a more likely parallel is a price war among the grey market dealers.


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[newu5er]

Originally Posted by Roger Lococco

I’m not seeing the link between your data and premium grey market pricing.

In my view, a more likely parallel is a price war among the grey market dealers.


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Agree with you.

OP, here's the reality...grey market prices will align with the Rolex supply/demand as we move this this economic period because they are reflective of the market. RRP is not reflective of the market, so your graph provides no information relative to your hypothesis.

You can't say how close MSRP and grey prices will get because you don't have all the market data to say that. The best you can do is make the assumption that grey prices will come down as the market demand slows.

The other thing here is that grey dealers are now competing with each other more than ever with the shutdown of more ADs. Still, buyers will only pay what they will pay, so buyers control the pricing. The grey dealers in the strongest positions can hold inventory the longest, but very few standalone business can maintain that position for a long time. With that said, you will see smaller grey dealers lower prices first and either exhaust inventory and be out or it will pull down the pricing of the larger grey dealers. As a business owner myself, you can't just sit on inventory as it's a major part of the cost of running a business. Last, all grey dealers are taking a gamble when they decide to hold, even in the short term. The bottom could fall out next week or it could go up, we don't know.

[Deppe]

Originally Posted by newu5er

The bottom could fall out next week or it could go up, we don't know.

THANK YOU! It is really hard to come along common sense these days!

[newu5er]

Originally Posted by Deppe

THANK YOU! It is really hard to come along common sense these days!

[socalwatchcollector]

Originally Posted by deppe

thank you! It is really hard to come along common sense these days!

+2

[socalwatchcollector]

Originally Posted by Valedictorian

Hello everyone

I saw a few posts speculating that grey market prices for Rolex watches might decrease over time and I wanted to share a representative graph that may convince you of the opposite. Historically, prices have stalled during the 2008-2009 financial crisis but kept climbing steadily afterwards. There are no dips in the time series (as opposed to Patek, which did correct their already exuberant MSRP downwards, but that’s a story for another time).

That being said, I’m aware the blue line in this chart only displays the MSRP of the (then) most popular SS model (i.e. Sub ND) but the point is that grey market dealers closely monitor this data on an almost daily basis, in combination with the prevalent market demand, to set their ludicrous prices.

Even when market demand slows down, the price delta between grey and MSRP will narrow down (as happened during the financial crisis almost a decade ago) but is still likely to remain several thousands of dollars above retail. Case in point is the new BLNR. When it first came out, some grey market dealers listed them for USD 23k in the first few weeks. However, they quickly corrected their asking price to a level below that of the BLRO when they realized the latter was still more desirable. The fact that the Rolex manufacture has now closed down until further notice won’t help from an availability standpoint either.

In summary, I agree with some of the views that I have read around here about the probability of grey market dealers to adopt a strategy of hoarding the sought-after SS pieces for better days, both to keep their already (or so-called?) modest profit levels intact as well as to avoid sending out the - in their views at least - wrong signal that market demand is on the verge of collapsing.

Data chart courtesy of ablogtowatch.com

The watch market has never collapsed and never will. It's a luxury item. You will always have your money with certain brands. Up and down in prices yes, but with Rolex, Patek, and AP it has never happened. The people worrying if they are going to lose a few thousand on a watch and what's its worth every day of the week probably shouldn't own one in the first place.

[Mystro]

Originally Posted by socalwatchcollector

The watch market has never collapsed and never will. It's a luxury item. You will always have your money with certain brands. Up and down in prices yes, but with Rolex, Patek, and AP it has never happened. The people worrying if they are going to lose a few thousand on a watch and what's its worth every day of the week probably shouldn't own one in the first place.

^^Bingo^^. My 30 years in Rolex ownership agrees with this. Only the new fringe buyers worry or even care if they lose a few $K on a watch. It’s a “Luxury good” and normally purchased in that proper context.

People that buy a Steinway doesn’t sweat over the current value of appreciation or depreciation of their $85,000 piano. It’s a lifestyle and quality of life you either can afford or not.

[Hkspwrsche]

Originally Posted by Mystro

^^Bingo^^. My 30 years in Rolex ownership agrees with this. Only the new fringe buyers worry or even care if they lose a few $K on a watch. It’s a “Luxury good” and normally purchased in that proper context.

People that buy a Steinway doesn’t sweat over the current value of appreciation or depreciation of their $85,000 piano. It’s a lifestyle and quality of life you either can afford or not.

Agree 100%

[kieselguhr]

Originally Posted by socalwatchcollector

The watch market has never collapsed and never will. It's a luxury item. You will always have your money with certain brands. Up and down in prices yes, but with Rolex, Patek, and AP it has never happened. The people worrying if they are going to lose a few thousand on a watch and what's its worth every day of the week probably shouldn't own one in the first place.

Someone is going to call the quartz crisis on you I totally understand what you mean though.

Funny thing is, guys who have been collecting for years aren’t even concerned about watch prices pre and post covid-19. They’re all too busy putting out fires and securing future capital.

[socalwatchcollector]

Originally Posted by kieselguhr

Someone is going to call the quartz crisis on you I totally understand what you mean though

That's why I said certain brands

[Anton911]

Originally Posted by socalwatchcollector

The watch market has never collapsed and never will. It's a luxury item. You will always have your money with certain brands. Up and down in prices yes, but with Rolex, Patek, and AP it has never happened. The people worrying if they are going to lose a few thousand on a watch and what's its worth every day of the week probably shouldn't own one in the first place.

Well said and my sentiments exactly.
I am sick of threads about people who have got nothing better to do other than belly aching about when Rolex prices will collapse and how they will get a cheap SS model.
These people should not be buying Rolex watches in the first place if they are constantly worried about values day in day out and how they wish the Rolex market would collapse.
Sorry,it’s not going to happen.Stick to your Casio’s.

[TankTom]

Originally Posted by socalwatchcollector

The watch market has never collapsed and never will. It's a luxury item. You will always have your money with certain brands. Up and down in prices yes, but with Rolex, Patek, and AP it has never happened. The people worrying if they are going to lose a few thousand on a watch and what's its worth every day of the week probably shouldn't own one in the first place.

So true. I’ve said the same thing today on another thread. How many times do we see posts on ‘value’, ‘investment’, ‘is this a good price’ on this forum? Why? Because most on here place too much importance on the financial side of buying a luxury watch - and it’s because they don’t really have the money to afford one in the first place.

[newu5er]

Originally Posted by TankTom

and it’s because they don’t really have the money to afford one in the first place.

Complete nonsense. You can't make sweeping generalizations like that and be taken seriously.

Some of the most wealthy people I know are extremely budget conscious and don't forget some of what draws people to Rolex is the fact that they hold value decently.

[DocHolliday]

Originally Posted by newu5er

Complete nonsense. You can't make sweeping generalizations like that and be taken seriously.



Some of the most wealthy people I know are extremely budget conscious and don't forget some of what draws people to Rolex is the fact that they hold value decently.

Bingo. TankTom and socialwatchguy have no clue what they are talking about. The wealthiest people I know are the most cost conscious. It’s not about how much you have, it’s more about how smart you want to be with your money. That’s like saying wealthy people don’t care what price they buy stock at. Complete nonsense.


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[garyk]

Originally Posted by DocHolliday

Bingo. TankTom and socialwatchguy have no clue what they are talking about. The wealthiest people I know are the most cost conscious. It’s not about how much you have, it’s more about how smart you want to be with your money. That’s like saying wealthy people don’t care what price they buy stock at. Complete nonsense.


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+1

Watch out, You may have called out someone here that got all up in my grill on another thread for who knows what reason?!

[TopDog2315]

Originally Posted by DocHolliday

Bingo. TankTom and socialwatchguy have no clue what they are talking about. The wealthiest people I know are the most cost conscious. It’s not about how much you have, it’s more about how smart you want to be with your money. That’s like saying wealthy people don’t care what price they buy stock at. Complete nonsense.


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100% agree here!


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[Hollie_Rollie]

Originally Posted by TankTom

So true. I’ve said the same thing today on another thread. How many times do we see posts on ‘value’, ‘investment’, ‘is this a good price’ on this forum? Why? Because most on here place too much importance on the financial side of buying a luxury watch - and it’s because they don’t really have the money to afford one in the first place.

Yup. And they’ll be the first to flood the market trying to sell off to raise funds for a mortgage payment or car payment

[calishine]

Yes, Rolex prices will decrease and they already have to a minor degree. I disagree with the OP.

What it won’t do is completely collapse.

[omx5o]

Two reasons for prices going up.

1. China appears to be back to normal, and that is where a lot of demand has been recently.

2. Rolex have halted production. Will take a while to get supply going again.

[mml4]

Originally Posted by omx5o

Two reasons for prices going up.

1. China appears to be back to normal, and that is where a lot of demand has been recently.

2. Rolex have halted production. Will take a while to get supply going again.

Yes to the above. The question is whether or not conspicuous consumption will still be the "in thing" or will the pandemic act as a pivot point for a change in buying behavior. If I were Chanel,Rolex etc. I would at least be concerned in what direction buying habits will take when this is over.
I don't think the last four years' habits will continue. The WIS market will still be there but we were not the driving force behind the 28K Daytona to begin with.

[dmash]

Originally Posted by mml4

Yes to the above. The question is whether or not conspicuous consumption will still be the "in thing" or will the pandemic act as a pivot point for a change in buying behavior. If I were Chanel,Rolex etc. I would at least be concerned in what direction buying habits will take when this is over.
I don't think the last four years' habits will continue. The WIS market will still be there but we were not the driving force behind the 28K Daytona to begin with.

I commented on this previously. Tons of my friends with designer stuff have it stuffed up now and are showcasing a very ‘minimalist’ style. They were legitimately criticized for showing any type of money on IG with so many currently losing jobs, etc. This could be a start of a trend against brand name excessively priced luxury goods, you never know.

[interestedwatcher]

Originally Posted by dmash

I commented on this previously. Tons of my friends with designer stuff have it stuffed up now and are showcasing a very ‘minimalist’ style. They were legitimately criticized for showing any type of money on IG with so many currently losing jobs, etc. This could be a start of a trend against brand name excessively priced luxury goods, you never know.

I'm with you 100 percent - the tide has turned in the last month, and it is just going to get worse. Look at how land lords are portrayed on Reddit and Twitter (sometimes deservedly).

Right now someone would look at a 40000 dollar watch, and just think that's two casual workers annual salary, why should that guy have that?

Not right, but read the room.

[dmash]

Originally Posted by interestedwatcher

I'm with you 100 percent - the tide has turned in the last month, and it is just going to get worse. Look at how land lords are portrayed on Reddit and Twitter (sometimes deservedly).

Right now someone would look at a 40000 dollar watch, and just think that's two casual workers annual salary, why should that guy have that?

Not right, but read the room.

Yup, I live in NYC and have plenty of friends who were decked out with designer goods and it’s all over their IG. They have stories posted now about how they’ve ‘rethought their life and priorities’, all kinds of stuff. These are the EXACT same people who didn’t even wear a watch 5 years ago, but would have on a gold Daytona last year.

It’s incredible how fast trends can change.

[WatchNutcase]

Originally Posted by omx5o

Two reasons for prices going up.

1. China appears to be back to normal, and that is where a lot of demand has been recently.

2. Rolex have halted production. Will take a while to get supply going again.

And one reason for prices going down.

1. A global pandemic

[Rori]

Originally Posted by Valedictorian

Hello everyone

I saw a few posts speculating that grey market prices for Rolex watches might decrease over time and I wanted to share a representative graph that may convince you of the opposite. Historically, prices have stalled during the 2008-2009 financial crisis but kept climbing steadily afterwards. There are no dips in the time series (as opposed to Patek, which did correct their already exuberant MSRP downwards, but that’s a story for another time).

That being said, I’m aware the blue line in this chart only displays the MSRP of the (then) most popular SS model (i.e. Sub ND) but the point is that grey market dealers closely monitor this data on an almost daily basis, in combination with the prevalent market demand, to set their ludicrous prices.

Even when market demand slows down, the price delta between grey and MSRP will narrow down (as happened during the financial crisis almost a decade ago) but is still likely to remain several thousands of dollars above retail. Case in point is the new BLNR. When it first came out, some grey market dealers listed them for USD 23k in the first few weeks. However, they quickly corrected their asking price to a level below that of the BLRO when they realized the latter was still more desirable. The fact that the Rolex manufacture has now closed down until further notice won’t help from an availability standpoint either.

In summary, I agree with some of the views that I have read around here about the probability of grey market dealers to adopt a strategy of hoarding the sought-after SS pieces for better days, both to keep their already (or so-called?) modest profit levels intact as well as to avoid sending out the - in their views at least - wrong signal that market demand is on the verge of collapsing.

Data chart courtesy of ablogtowatch.com

Wait and see.
PS: this crisis is not a normal one, this is unprecedented and so the graph will be.


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[ap1]

Originally Posted by Rori

Wait and see.
PS: this crisis is not a normal one, this is unprecedented and so the graph will be.


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Correct. Your 30 years of history don’t really include this black swan event

[enginerd]

Originally Posted by Rori

Wait and see.
PS: this crisis is not a normal one, this is unprecedented and so the graph will be.


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Exactly! How many of you speculating have been through a global pandemic of this scale? Not a one.

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[arcampado]

OP is right IMO. I think that grey dealer prices on some SS models (black subs, DJ, etc) will come down in price but won’t drop below MSRP. High demand SS models (Daytona, Hulk, GMT & Sky Dweller) will still continue to be in high demand (despite a recession) and with Rolex closing their production facilities supply will be limited and these models will be even harder to get.

Personally, I’m convinced that the Rolex brand is recession proof. Those that can afford to buy one and are big spenders at ADs will continue to get all of the high demand pieces and those that are not will continue to wait. Just my 2 cents.

[The Argonaut]

Originally Posted by arcampado

I’m convinced that the Rolex brand is recession proof.

What does that mean? Always worth MSRP? 10% more, 10% less? Another number? Yes, Rolex watches will always have an intrinsic value. The question is what. This might start as a recession, but could easily verge into depression. At that point, a Rolex will be worth whatever someone will pay for it.