A note of caution on the current Rolex market

[1William]

Interesting post and responses. It is a matter of supply and demand and while we will see most markets fluctuate the cost of most luxury items increase over the years. It is like predicting rain, if you do it every day, eventually you will get it right. This is the new norm, within a range, and is what we are going to see. Always about the money and that is the reality of ownership. I prefer the watches and pay what I have to pay to get the watches.

[RJM25R]

[WalterW]

If you use c24 as your reference then you clearly have no idea what you’re talking about.

[tyguy74]

Originally Posted by Henrimontgomery

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

Haha love it!

[WatchNutcase]

Originally Posted by Patton250

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.

Sure I'd rather go back to 2015, but I was saying that 2018 sounds like what he was describing.

[IamJacky]

I mean, the biggest dip in recent years I've seen for Rolex watches was at the very beginning of the global COVID19 pandemic outbreak and an event of that magnitude only caused the dip for a brief period of time. As soon as the lockdown was over the secondary market skyrocketed and continues to rise till this day.

A lot of factors come into play and in my opinion it all boils down to:

1. The value of the currency is on the decline, so people want to transfer their cash/savings into assets, whether it be crypto currency, arts, gold, stocks, real estates, or Rolex watches.

2. SS Rolex watches are priced at the sweet spot, with the entry retail prices at roughly $7-10K with very little to no competition at this price range, it's where most people are willing or capable of spending on a luxury watch that most likely will not lose much of its value.

Also Rolex watches are known to be tough and durable, a well cared Rolex will outlast multiple lifetimes, which makes it an even better candidate as an asset. One of the worst possible scenario for Rolex is if there is some sort of major faulty movement/quality issue across one or more batches/lines of Rolex watches, which is likely never going to happen.

3. With the internet, social media exposure, FOMO and hype, the demand for these watches continue to rise, which further solidify the phenomenon that buying any SS Rolex will most likely not only retain its value, most even rised in value, which in turn attracts even more investment-type buyers, driving up demand even more.

Also, the internet and technology in general have not only helped exposing Rolex to the mass (all good words too), it has also made the buying/selling of watches easier than ever before. With easier, safer, more transparent transactions, the more liquid as an asset a Rolex watch becomes and more participants in the market.

4. Rolex's production output simply cannot catch up to its demand.

5. Rolex has some very iconic, classic watches like the Datejust, Submariner, GMT Master, Explorer, Daytona etc. that aesthetically change very, very little over decades, which means people do genuinely appreciate the look across generations and so it's not a fad or a trend that comes and goes, it's here to stay - unless for some reason the future generations gradually find the above models outdated and uninteresting.

I wouldn't say the Rolex market will continue to climb forever, but with these factors I just don't think there will ever be a crash where let's say a 116500LN Daytona plummets back down to its retail $12k retail price; there may be some corrections or plateau at some point depending on various factors, but as long as Rolex continues to produce the same quality products in similar quantities and do not make any significant/radical design changes, the demand will continue to dwarf supply, and so the market will remain high.

[envuks]

Originally Posted by grimps

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

I’m not sure I agree with this. I feel like prices were static for many years. A nice used sub was in the 3800-4200 ballpark. Pm pieces were in the low 20s. Then the financial crisis of 2008/2009 hit and prices dropped substantially from there, especially for PM. I vividly remember almost buying a clean 116718 for 14,500. I passed.


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[Oxfordian]

This bubble is only pertinent if you intend to sell your watch or if you bought when prices were at their peak and you're worried that you will take a hit if/when the bubble bursts.

If you intend to keep the watch and hand it on to your kids when you pass then it doesn't really matter, just enjoy wearing the watch.

[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

[Seddyspaghetti]

Wishful thinking. Yawnnnnn

[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!

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[Flint]

Originally Posted by 1William

Interesting post and responses. It is a matter of supply and demand and while we will see most markets fluctuate the cost of most luxury items increase over the years. It is like predicting rain, if you do it every day, eventually you will get it right. This is the new norm, within a range, and is what we are going to see. Always about the money and that is the reality of ownership. I prefer the watches and pay what I have to pay to get the watches.

Rolex recommended price I have no problem with , I have a problem with grey sellers buying from ADs and selling to people who are prepared to pay ridiculously high prices . If this is the new norm as you say , then it is very sad

[Watchcollector123]

Yawn

[VegasBaby]

The graph posted by the OP, although truw, has little or no value without "years/time" put next to it so that it can be measured. If the Bubble burst in 5 years, oh well. If it bursts this year, get out of the way!!!

[Locust]

Atrocious John Mayer g shock just sold out immediately. I wouldn’t wear that if you payed me. (Sorry John if you lurk). There are other variables at work but the graph is probably accurate and we are close to the peak of the mania.

[TIII]

Originally Posted by IamJacky

I mean, the biggest dip in recent years I've seen for Rolex watches was at the very beginning of the global COVID19 pandemic outbreak and an event of that magnitude only caused the dip for a brief period of time. As soon as the lockdown was over the secondary market skyrocketed and continues to rise till this day.

A lot of factors come into play and in my opinion it all boils down to:

1. The value of the currency is on the decline, so people want to transfer their cash/savings into assets, whether it be crypto currency, arts, gold, stocks, real estates, or Rolex watches.

2. SS Rolex watches are priced at the sweet spot, with the entry retail prices at roughly $7-10K with very little to no competition at this price range, it's where most people are willing or capable of spending on a luxury watch that most likely will not lose much of its value.

Also Rolex watches are known to be tough and durable, a well cared Rolex will outlast multiple lifetimes, which makes it an even better candidate as an asset. One of the worst possible scenario for Rolex is if there is some sort of major faulty movement/quality issue across one or more batches/lines of Rolex watches, which is likely never going to happen.

3. With the internet, social media exposure, FOMO and hype, the demand for these watches continue to rise, which further solidify the phenomenon that buying any SS Rolex will most likely not only retain its value, most even rised in value, which in turn attracts even more investment-type buyers, driving up demand even more.

Also, the internet and technology in general have not only helped exposing Rolex to the mass (all good words too), it has also made the buying/selling of watches easier than ever before. With easier, safer, more transparent transactions, the more liquid as an asset a Rolex watch becomes and more participants in the market.

4. Rolex's production output simply cannot catch up to its demand.

5. Rolex has some very iconic, classic watches like the Datejust, Submariner, GMT Master, Explorer, Daytona etc. that aesthetically change very, very little over decades, which means people do genuinely appreciate the look across generations and so it's not a fad or a trend that comes and goes, it's here to stay - unless for some reason the future generations gradually find the above models outdated and uninteresting.

I wouldn't say the Rolex market will continue to climb forever, but with these factors I just don't think there will ever be a crash where let's say a 116500LN Daytona plummets back down to its retail $12k retail price; there may be some corrections or plateau at some point depending on various factors, but as long as Rolex continues to produce the same quality products in similar quantities and do not make any significant/radical design changes, the demand will continue to dwarf supply, and so the market will remain high.

Valid points and would agree with some of your narrative. One thing that fails the smell test is the inflation will have peaked by/around March 2022 and yes people will park beaten down cash into perceived assets. After the inflation correction people will then again sell such assets and will flood the inventory of gold, real estate, and yes…even Rolex watches. The mechanism that pop bubbles is most often anchored by fear, bad policy, and perception. If I perceive the market is going to crash then I would want to pull out all of my investments before it happens…right? Rolex is not immune to this and to try and convince people to invest in Rolex because of social media, and it’s well built sounds more like a infomercial than macro economics.
My OWN perception is, watches are sitting on shelves longer and that’s during the holiday season. Eventually, most people and evens greys will have to liquidate assets, but at what cost to you? I’ll leave that part up to you.


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[alphadweller]

Does someone who pays multiples of retail price for a luxury item care about a possible buble burst? Probably not that much, but If the answer is yes, he/she should probably stay away from the grey market indeed.

Honestly, if I was rich I wouldn't give a rat's a** about paying $35k+ for a steel Daytona or whatever picks my fancy. Since I'm poor in relative terms, I do care and I don't buy luxury goods at inflated prices. My 2 cents.

[Mendota]

Originally Posted by VegasBaby

The graph posted by the OP, although truw, has little or no value without "years/time" put next to it so that it can be measured. If the Bubble burst in 5 years, oh well. If it bursts this year, get out of the way!!!

I'm only speaking to the graphic and I am not predicting in any way whether this applies to what we are experiencing or not. With respect to the graph, you can't put time on the X axis because you cannot measure this quantitatively. If you've studied bubbles you know each individual bubble can take a different amount of time to progress through the phases, whether it's a rapid inflation or slow inflation of the bubble. The purpose of the graphic is simply to show the market experiences along the way. It's not an actual graph measuring data. You'll also note that the Y axis doesn't show an actual monetary amount, for the exact same reason.

Here's another bubble graph which I personally feel provides a much better description of the behavioral psychology that occurs throughout each phase of a bubble.


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[Kelvin Knight]

I feel like someone from the ‘Blow-Off Phase’ made the chart and frustrated ‘Mania Phase’ people pretending to be from the ‘Stealth Phase’ always posts it as a “wArNiNg!”

[2001jesper]

Time will show.

Demand will obviously not drop off a cliff over night, but it's also naive to conclude that the past three years will dictate the future in eternity.

[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.


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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.


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[Robf52]

That’s why I only buy msrp from my AD. Have never bought grey and never will buy above list.


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[TexasRedNeck]

I learned so much from this thread. Thanks for all the thoughts and opinions. I just bought a 126660 JC. Apparently gray and apparently over priced. My first Rolex. Ive always wanted one but could never bring myself to do it. I hated poseurs and didn’t want to be seen as one and always found other things to spend my money on. Its odd. When you’re young and wear one I perceived that to be a poseur. When you have grey hair it’s par for the course.

So I was buying some bullion the other day at my local bullion dealer and saw the 126660 JC and thought it was stunning. I have pretty big wrists and that big case looked just right. And that dial…

So after looking around I found one and bought it. Because I love it. Sucks to overpay but I got what I wanted.

Now that I’ve learned from you gentlemen I guess I need to get on the list at an AD for my next one.

Who cares about the crash. And besides Rolex will be selling NFT watches in the Metaverse and the crypto kids will eat it up. Nike just bought an NFT shoemaker today so it’s just a matter of time.

Cheers!!


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[RollieNZ]

I think market liquidity is one aspect of the equation that doesn't get much attention.

Without the huge growth in grey dealers over recent years, e.g. chrono24, Watchbox and countless others, purchasing a watch with the aim of selling it at a profit would be more difficult.

Plus the Pre owned market is now world wide which increases the number of prospective buyers.

I've purchased numerous watches from overseas
Not so long ago this would not have been possible.

[pmoz]

As we don't have any statistics we don't know if it is actually rich people of overpays in the grey market or if it is just average joes who wants to get in on the hype, or people who think they make a solid 'investment'.

I agree that watches are an asset that can protect against inflation and be worn/enjoyed - definitely better investment than cash. If it is a better investment than stocks I highly doubt - sure we've seen the rise over the past decade, but so has the stock market. Obviously, some watch brands have been good 'investments' but how would you predict which ones, it is all obvious in hindsight but no one could've known and maybe in the future it will be different brands. While many talks investments, I would rather go buy a ton of Chrono24 or so shares should they IPO as they feed directly on thew watch hype rather than go buy an insanely priced Daytona to keep in a vault.

Obviously it is a good 'investment' if you get a Rolex at retail and sell in grey - I wouldn't call it an investment but rather a good flip (which is technically taxable many countries as you are running a business of buying/selling goods)

[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.

[blargle]

I wonder who in this thread are professional economists/investors? Probably 0 judging from the comments. OP is correct, this is not going to last.

[beshannon]

Originally Posted by blargle

I wonder who in this thread are professional economists/investors? Probably 0 judging from the comments. OP is correct, this is not going to last.

Why?

[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