A note of caution on the current Rolex market

[Driver8]

I realise this will be something of "shout at the hurricane" post on my part, but I just thought I'd post this after seeing some prices on C24 that are absolute lunacy.

For example -
£40k for a NOS bog standard 116610LV
£60K for a NOS Omani-engraved 116610LV
£75K for new UAE-engraved 116500LN
£775k for a new 116595RBOW
etc.

I know many of you believe (or at least want to believe) that prices will carry on increasing forever unchecked, that this situation isn't a bubble, and that it's somehow a "new normal", etc, so I thought I'd just try to be a voice of caution once again.

Below is a graph of a typical economic bubble. This graph is pretty well known as a general economic/investment model, and has been around for years (so it's not been created to match the current Rolex situation to date).



Now, while this graph is not directly related to Rolex watches, you only need to take a cursory glance at it to recognise the parallels. Only a fool would try to claim we are currently in anything other than the Mania Phase at the moment. Notice how that section of the graph is also denoted as "Public" - again, exactly mirroring what's happening now - i.e. the public at large (many with zero previous interest in watches) have suddenly become aware of soaring prices and have blindly jumped on board thinking only of the dollar signs.

We have clearly been through the 'Media Attention' (i.e. social media) stage, we have seen 'Enthusiasm' whereby people took advantage of that attention and speculated a little with their asking prices. I think we've been in the 'Greed' stage for some time, especially in certain grey market quarters, and now I think we're plunging headlong into the 'Delusion' phase with some of the insane prices being asked at the moment. And then of course there are those who already talk about "the new normal".... which is just another way of saying the 'New Paradigm'. Take from that what you will....

Another thing to note is how many people like to say that prices have always gone up over time... and that's absolutely true as long as you take a long enough time horizon. Rolex prices have indeed tended to follow the dotted Mean line on the graph, in much the same way as the housing market - i.e. over a long enough period, the mean trajectory is always one of gradual growth.... but with various booms and busts along the way.

Of course I don't expect to change any hearts and minds with this post, and the timescales for each phase aren't remotely set in stone. However I think most people should be able see the parallels between this graph and the current Rolex situation. So my advice would be to just exercise a modicum of caution.... and don't say I didn't warn you!

[1665fan]

Saw this last year…..yawn…..prices will settle down the next economic crash…that’s it

[Driver8]

Originally Posted by 1665fan

Saw this last year…..yawn…..prices will settle down the next economic crash…that’s it

Well good for you (yawn), but judging by some of the beliefs on here, a lot of people apparently haven't ever considered it.

[Locust]

6.5 mil for a blue watch. Absolutely in the delusion phase

[SubMillennial]

[1665fan]

Originally Posted by SubMillennial

[ronricks]

Originally Posted by SubMillennial

[subtona]

Word to the wise

[Santiago32]

Can’t wait to buy a YG Daytona with no hoops to jump through or gray premiums.

[avidflyer]

Originally Posted by Santiago32

Can’t wait to buy a YG Daytona with no hoops to jump through or gray premiums.

Not long ago....and with a discount.....remember seeing a yellow gold with green dail just setting at my AD

[just1time]

Putting inflation aside, I don't think this is factoring the amount of "new" money in the world...This trend won't die off easily without something catastrophic happening and forcing it.

[Slimpee]

Originally Posted by just1time

Putting inflation aside, I don't think this is factoring the amount of "new" money in the world...This trend won't die off easily without something catastrophic happening and forcing it.

See “New paradigm” and “Denial”

🤣

[SaintMickey]

It's interesting but without "Years" in the bottom "Time" line its not really actionable or anything I can do with or about it.

I've never come near the "greed" plateau or bought a $33k Daytona or an overpriced BLRO so...I don't feel sorry for those caught in between the green and delusion stages.

Until then I will not worry about the value of my watches, I will always only buy at or below MSRP and I will wear the snot out of them.

I guess I know why I won't pull the trigger on a used Daytona that is selling over its original MSRP!

Qu'ils mangent de la brioche !

[Jerrocop]

Can't wait for demand to lessen. In the meantime, there are plenty of other watch brands to drool over and add to the collection. I'm trying to have fun with this hobby rather than complain or bug my AD incessantly. Rolex is awesome and I certainly love the one I have but there are other watches out there that are cool too.

[knighty88]

Originally Posted by jerrocop

can't wait for demand to lessen. In the meantime, there are plenty of other watch brands to drool over and add to the collection. I'm trying to have fun with this hobby rather than complain or bug my ad incessantly. Rolex is awesome and i certainly love the one i have but there are other watches out there that are cool too.

+1

[JC316]

Originally Posted by Jerrocop

Can't wait for demand to lessen. In the meantime, there are plenty of other watch brands to drool over and add to the collection. I'm trying to have fun with this hobby rather than complain or bug my AD incessantly. Rolex is awesome and I certainly love the one I have but there are other watches out there that are cool too.

I agree with you 100%!!! I couldn't have said it any better myself!

Sent from my SM-G977N using Tapatalk

[nosignalbmwdriver]

LOL bro reaching

[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....

[SaintMickey]

And its not just "Rolex" all the "big brands" have models that are silly even a plain Jane VC Overseas 3 hander MSRP $22k...$53,477
https://www.chrono24.com/vacheroncon...id21232853.htm

Or how about a $9000 Speedmaster with a dog on it! $48-$52k.

https://www.google.com/shopping/prod...a9QAawQ9pwGCAs

https://www.ebay.com/itm/27504984276...xoC7t4QAvD_BwE

[Ensign]

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

Maybe Rolex is a modern form of gold. Gold doesn’t decay and is universally recognizable. Rolex last more than a lifetime; longer if a safe queen. The brand is almost as well known as gold.

[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.

[SaintMickey]

There will be two camps here.

Those that have bought OVERPRICED and those who have not. Should be fun to hear the theories and arguments.

[Harry-57]

This pattern may well apply to the luxury watch market. It certainly can't and won't stay as it is, which appears to be a continuous up trend, with the odd wiggle, although Christmas usually pumps it a bit. The question that no one can answer is the scale along the x axis. It could be months, years, decades, even generations.

The market has been through some big swings in the 100 and some years that Rolex have existed. So far, some twists and turns aside, Rolex watches seem to have been relatively strong retainers of value compared to original MSRP. Sometimes exceeding MSRP, sometimes not, but retaining more value than most other brands. I doubt that will change much. But who knows?

[brandrea]

Originally Posted by Harry-57

… It certainly can't and won't stay as it is …. The question that no one can answer is the scale along the x axis. It could be months, years, decades, even generations. …

This is a pretty salient point.

[greeneyedguy]

If you think in terms of emerging industry and productivity then society as we know it is in the throws of the roaring times. Overnight millionaires abound are jumping into the watch game every day. Either your riding the wave of technological evolution or your getting swept up. Things like crypto are becoming interwoven into the global financial system as we speak and there is enough productivity to keep the watch game rollin to new heights for years to come.

[shaunylw]

Until real estate prices return to any sort of normalcy, i believe Rolex will continue to climb. Prices shocked me two years ago and now i feel like i am used to the absurdity. When a black ceramic Daytona hits 50k next year, it will not surprise me. At some point it will soften and stop climbing but i don’t ever foresee a time where it returns to “normal”. I don’t foresee a time it returns to even slightly over MSRP.

Younger folks are making absurd amounts of money on crypto and too many people want Rolex for the wrong reasons (investments). Grey sellers pump the price up by passing them back and forth, so this cycle will continue. If a pandemic can’t stop the climb, the fed raising the rate or market pullback isn’t going to stop it either IMO.

[arcampado]

Originally Posted by shaunylw

Until real estate prices return to any sort of normalcy, i believe Rolex will continue to climb. Prices shocked me two years ago and now i feel like i am used to the absurdity. When a black ceramic Daytona hits 50k next year, it will not surprise me. At some point it will soften and stop climbing but i don’t ever foresee a time where it returns to “normal”. I don’t foresee a time it returns to even slightly over MSRP.

Younger folks are making absurd amounts of money on crypto and too many people want Rolex for the wrong reasons (investments). Grey sellers pump the price up by passing them back and forth, so this cycle will continue. If a pandemic can’t stop the climb, the fed raising the rate or market pullback isn’t going to stop it either IMO.

Well stated. I believe this to be a plausible synopsis.

[azs.77]

Luxury brands are on an upward trend in general. The ‘affordability’ of Rolex as a luxury watch along with some excellent marketing has propelled it into a different trajectory. Considering Rolex thinks decades/century ahead, the decreased supply makes sense.


Sent from my iPhone using Tapatalk

[Robf52]

Originally Posted by azs.77

Luxury brands are on an upward trend in general. The ‘affordability’ of Rolex as a luxury watch along with some excellent marketing has propelled it into a different trajectory. Considering Rolex thinks decades/century ahead, the decreased supply makes sense.


Sent from my iPhone using Tapatalk

I agreed right up until you stated Rolex has decreased supply. It's pretty well accepted that Rolex produces 800k to 1 million watches per year; the tsunami of unrelenting worldwide demand dwarfs the ongoing supply....simple supply:demand imbalance with no end in sight. Rolex does indeed think long-term with their highest goal being protecting and enhancing the brand.

[TIII]

Originally Posted by Robf52

I agreed right up until you stated Rolex has decreased supply. It's pretty well accepted that Rolex produces 800k to 1 million watches per year; the tsunami of unrelenting worldwide demand dwarfs the ongoing supply....simple supply:demand imbalance with no end in sight. Rolex does indeed think long-term with their highest goal being protecting and enhancing the brand.

Yawn.. are you still talking about demand? Demand will always be there for Ferrari, Lamborghini, LV, Hermes, Rolex, PP, AP, PS5, etc…..The list goes on. But the effects of buying for an investment when clearly there will be a correction in the economy very soon is simply risky. So let’s say 50% of people buy a watch for investment. That’s 50% that will be out of the watch industry soon. Greys will be affected and prices will go down. But, then again you may have skin in the game. Keep the upselling.


Sent from my iPhone using Tapatalk