Are we in a Rolex price bubble

[Robf52]

New economic forces that aren't fully understood are in play.[/QUOTE]

From a US perspective, we do seem to be entering uncharted waters in terms of government deficit spending and wealth inequality and currency devaluation. Where it ends or leads is anyone's guess. My take is it will not end well. I think a move to hard assets as a potential safe harbor is directly benefitting Rolex who is universally recognized as an enduring and stable brand.

[suux88]

how much do you think CO-vir is influencing this bubble

[thenewrick]

When wealthy people are stuck inside all day alone and on computers you see a lot of spending. Normally it would be going towards travel, expensive events, restaurants, clothes. When people feel isolated they often buy jewelry; something to take a photo on social media and get some likes.

[trippinjimmy]

Originally Posted by Innocenti

Is there the same waiting lists with omega ?

Only with the ed white or new snoopy


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[hassantg]

Probably, most rapid increases can be termed as bubbles.

honestly the question here is not if we are in a bubble but is it about to pop.... all the signs point to not anytime soon.

[Chester01]

I am in the clear minority but the market is not a healthy one. The average consumer that walks in and gets stone walled on a bait and switch (do you have any subs, uh no, we have a two tone date just) and then laughed at when they try to get a SS watch is poor customer experience. Rolex is making plenty as their watches MSRP go up, but other than celebs and some WIS when folks are turned away at the AD they will likely not come back, and are not going to go to a gray dealer to pay triple.


People equate the inst hype with demand, but the gray is playing a large role in that demand and people never ask why the gray market exists? The gray market exists because AD does not move enough stock in a consistent basis, so the gray comes in takes dibs on the few hot models and buys up the less desirable models. Not healthy and for most Rolex buyers (one off buyers) they will move on and move onto Apple watches that will get better and better. Rolex and the lux models will raise their prices as they sell less watches but want to make the same revenue.

[thenewrick]

Originally Posted by Chester01

I am in the clear minority but the market is not a healthy one. The average consumer that walks in and gets stone walled on a bait and switch (do you have any subs, uh no, we have a two tone date just) and then laughed at when they try to get a SS watch is poor customer experience. Rolex is making plenty as their watches MSRP go up, but other than celebs and some WIS when folks are turned away at the AD they will likely not come back, and are not going to go to a gray dealer to pay triple.


People equate the inst hype with demand, but the gray is playing a large role in that demand and people never ask why the gray market exists? The gray market exists because AD does not move enough stock in a consistent basis, so the gray comes in takes dibs on the few hot models and buys up the less desirable models. Not healthy and for most Rolex buyers (one off buyers) they will move on and move onto Apple watches that will get better and better. Rolex and the lux models will raise their prices as they sell less watches but want to make the same revenue.

There's a lot of folks on this forum happy to pay 5x, bundle, money is no object to get the watches they want.

[jarecki]

What would be interesting to see (but is most probably impossible) is to analyze how many Rolex watches are bought by customers at MSRP versus at grey market prices.

Here on this forum we are mostly obsessed WISs and talk about grey all the time, but my guess is the majority of regular Rolex buyers just buy them at ADs at MSRP - either by having purchase history, waiting in line, or sheer luck.

So if globally most customers buy at MSRP, then the high secondary market prices are great for them, as it feels good to know the watch will hold value. This is also great for Rolex as it drives insatiable demand, and I’m sure Rolex is making generous margins at current MSRPs, with no need to raise prices.

[IamJacky]

Originally Posted by Chester01

I am in the clear minority but the market is not a healthy one. The average consumer that walks in and gets stone walled on a bait and switch (do you have any subs, uh no, we have a two tone date just) and then laughed at when they try to get a SS watch is poor customer experience. Rolex is making plenty as their watches MSRP go up, but other than celebs and some WIS when folks are turned away at the AD they will likely not come back, and are not going to go to a gray dealer to pay triple.

I can't speak for others but that wasn't my mentality. Sure, when an AD brushed me off when I inquired about a certain models it leaves a bad impression for me, but it's not towards Rolex and their watches, instead it's to the specific SA that brushed me off.

I remember buying my first Rolex in 2012 (a Datejust II), although the SA offered a 8% discount I tried to bargain further with the SA, the SA almost seemed to look down on me with a "Don't you know this is a Rolex?" look, I was thinking well this is my first time spending this amount of money and I don't need this type of attitude. So I proceeded to buy the same exact watch at another AD for the same price.

In 2017 I was determined to get a 116500LN and again I went to my local ADs and asked about it, I didn't know any better, had no clue that Daytonas were so popular that there was a "waitlist". Again I was met with this "Don't you know it's a Daytona? you expect to just walk in and get one?" type of attitude. After so many visits to so many ADs I came to the conclusion that it was impossible to get it in the ADs, so I went grey.

In hindsight I admit I was very naive thinking just because I was prepared to pay the MSRP I automatically deserved to get one.

But my point is that being brushed off by the ADs do not tarnish my view towards Rolex and their watches, not even the AD - just that specific person. I still want the watch and am willing to pay premium to get it. I treat others the way I'd like to be treated and so I will just not buy from the same person who gave me crappy attitude.

[jagwap]

The Rolex bubble will not survive a credit, currency, housing or stock market bubble bursting. Any one of them will undo the over confidence which is propping up the unrealistic artificial growth in these areas, and they are all ripe.

Rolex will still be a solid product, but it will not make sense to pay over the odds for one, as everyone will be cautious spending that much on an unnecessary item when things are uncertain.

[Brich436]

I recommend establishing a relationship with an AD and purchasing your Rolex watch at retail from them. I would only go grey if you want the watch immediately and don’t care about valuation.

I buy and keep my watches so I don’t care about resale value. If you buy from the AD and decides you want to trade in or sell for a new watch you won’t get hurt buying Rolex (even the unpopular models).

Values have soared on the secondary market due to demand soaring (especially from China). You can avoid this by buying new from the AD.


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[imsayingthough]

no

[GoingPlaces]

I think we are, however the bubble may turn out to be less pressurized than the traditional sense. We may see a softening or decline on some models but not likely a crash. Daytona's, Nautilus, Ro's will continue to command premiums and won't drop. Demand is too deep and worldwide.

[Tensai]

No.
Zzzzzzzzzz.....

[Driver8]

Originally Posted by fsprow

History demonstrates that "bubbles" are never recognized until after the fact.

My recommendation is not to try to figure out future pricing. If you can afford a purchase and feel the price is "OK" (very subjective) then go ahead. Don't buy anything if you are going to worry later about whether you paid too much.

Watches are to enjoy and use, not to treat as commodities -- at least in my view.

This 100%.

People think that bubbles like this (and it IS a bubble by economic definition) are never-ending gravy-trains... right up until they aren't.

There are plenty of large scale economic examples throughout history where people eventually got caught out. For example -

- Sub-prime lending and the US Housing market in the late '90's to late 2000's.

- The dotcom bubble during the 90's.

- The Cryto-bubble of 2017/8 (although it's obviously rallied again since)

No-one got involved in those situations thinking it was a bubble that would eventually burst.

It's worth noting that although the causes and mechanics of every economic bubble are different, there is always generally a willingness by those invested in it to ignore their own in-built sense of caution, and to ignore history. I'd say that's definitely the case here with Rolex.

The only reason we see £13k watches trading for £30k is because of hype and FOMO. Most of it is driven by social media and the need for social acceptance, and to "appear" wealthy and successful. Yes, supply cannot currently meet demand, but supply and demand curves for luxury goods are often highly fickle. Luxury goods are highly elastic - i.e. if income goes up, then demand for luxury goods goes up even higher in percentage terms. Likewise, if income goes down then demand for luxury goods go down by a greater percentage. By their very definition, luxury goods are non-essential, and are therefore at the whim of both consumers, and also other market developments. If we have another stock-market/economic or housing price crash, you can rest assured that luxury will be the last thing on people's minds.

That said, I'd say that Rolex is far more inelastic at the moment than most luxury goods, but that certainly doesn't make them immune from a market correction, and that correction could even be instigated (either directly or indirectly) BY Rolex. For example, on a micro-level, I'm sure there are people out there who paid over the odds recently for Explorer II's (or platinum Daytonas) in the hope of making a killing if they were discontinued. Some of those people are probably now in the hole for several thousand for a while....

Watches (even Rolexes) are inherently risky to consider as anything more than luxury playthings to be enjoyed. If you can afford it, buy at RRP all day long. Equally if you can afford it, and can also afford to lose it, buy grey all day long if it's a watch you want to buy and enjoy. But if you buy grey in the hope that you'll be retiring to the Caymans in a couple of years on the profits, then IMO think again. Nothing lasts forever ; it's just a matter of when (and it could be a while yet) and how much of a correction.

[R.bartlett]

The elephant in the room is that unlike very high end luxury items there are a lot of these watches around in inventories. AD's maybe pushing them out to the flippers but a lot stay there. look at the for sale forum. It's full of words like 'bump' and 'up' and 'offers'

Chrono Browse 67,433 results for "Rolex".. now we all know, a certain % of those ads the watch doesn't exist (or at least with the advertiser) but that still leaves a huge amount of watches available. I'm watching one particular model since January and definitely seeing the froth coming off. More available and the average price is down. However I don't follow every model/prices as they don't interest me

That's without even factoring any mashoosive recession which is a 50/50 now IMHO>

IF(big if) a recession comes the greys will feel the pinch and start to off load watches, rich or rather the newly rich bit coin type rich will suddenly be over exposed like they are in every recession and off load assets.

Every time there is a unnecessary boom there are people ready to shout "but this time it's different" usually just before the crash

we shall see

[mk2jag]

All was relatively normal till about 2012 when Rolex started to gain massive worldwide attention from investors, watch enthusiasts and regular watch buyers. I've been watching things only get worse ever since. A few years ago Datejusts were everywhere but now they're becoming scarce like the subs just 4 or 5 years ago....the bubble,,,,, im not sure what to say about that but I definitely don't expect to see any change in the Rolex watch buying culture in the future....Ill be curious what Tudor does in the coming 5 to 10 years...im willing to bet that they will follow a similar path.....

[NewbieRollie]

Won’t be going back to normal any time this decade lol


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[G3Z]

The issue with Rolex now, is that so many are bought and tucked away in a safe. So in decades to come, stumbling across a ‘NOS’ Rolex is going to be so easy. It’s not going to be like the vintage ones we see now which are few and far between. There’s going to be 100’s of NOS Kermit and Cermits, for example. The market will be saturated for choice.

[AK797]

Originally Posted by Driver8

This 100%.

People think that bubbles like this (and it IS a bubble by economic definition) are never-ending gravy-trains... right up until they aren't.

There are plenty of large scale economic examples throughout history where people eventually got caught out. For example -

- Sub-prime lending and the US Housing market in the late '90's to late 2000's.

- The dotcom bubble during the 90's.

- The Cryto-bubble of 2017/8 (although it's obviously rallied again since)

No-one got involved in those situations thinking it was a bubble that would eventually burst.

It's worth noting that although the causes and mechanics of every economic bubble are different, there is always generally a willingness by those invested in it to ignore their own in-built sense of caution, and to ignore history. I'd say that's definitely the case here with Rolex.

I think many knew the Dotcom bubble was primed to burst and were ready to sell as I was once the market turned, in fact many thought the old Y2K bug was going to crash that bubble and the world economy, remember the fear on Millenium night? As for the Housing boom, well anyone looking slightly into how subprimes were being sold to No income No job losers could see this was unsustainable, and a few films have been made on people shorting that market. Crypto everyone knows is a seesaw and highly risky, no one thinks that market is going to rise in a sustained and stable way.

The point is bubble's burst because people have options to sell and buy other stocks or investments or just sell and keep the cash.

The watch market and Rolex's position in it is very different to these liquid and competitive markets, and will be unchanged unless Social media disappears to cool demand, or a new brand emerges to rival Rolex's monopoly in the 5-20K watch bracket, or a rival status luxury good emerges to replace watches in this price bracket, thus the market will continue to be pretty buoyant - the above black swans will need to happen to crash this market in a stockmarket style, and even then most likely it will just be a slow fade down to pre '16 normality, as cartel greys will not slash prices like marketmakers in an efficient market.

[iTreelex]

Where there's bubbles there's soap. And where there's soap there's... wait is this financial advice?

[rlx123]

Originally Posted by Innocenti

Does this turn anyone else off Rolex?

I think it’s the opposite.


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[afmars]

I do wonder if some of the hyped PM pieces are in a bubble. Are end-users are actually buying JM and platinum Daytona’s for 7 figures or is it just a gray market Ponzi scheme where buyers are just buying them to sell to the next guy for a few thousand more.

[Computantis]

Originally Posted by jagwap

The Rolex bubble will not survive a credit, currency, housing or stock market bubble bursting. Any one of them will undo the over confidence which is propping up the unrealistic artificial growth in these areas, and they are all ripe.

Rolex will still be a solid product, but it will not make sense to pay over the odds for one, as everyone will be cautious spending that much on an unnecessary item when things are uncertain.

I agree with the fundamentals of your post. I thought the same thing would happen when Covid shut down the world. Boy was I wrong.

[Chester01]

Originally Posted by IamJacky

I can't speak for others but that wasn't my mentality. Sure, when an AD brushed me off when I inquired about a certain models it leaves a bad impression for me, but it's not towards Rolex and their watches, instead it's to the specific SA that brushed me off.

I remember buying my first Rolex in 2012 (a Datejust II), although the SA offered a 8% discount I tried to bargain further with the SA, the SA almost seemed to look down on me with a "Don't you know this is a Rolex?" look, I was thinking well this is my first time spending this amount of money and I don't need this type of attitude. So I proceeded to buy the same exact watch at another AD for the same price.

In 2017 I was determined to get a 116500LN and again I went to my local ADs and asked about it, I didn't know any better, had no clue that Daytonas were so popular that there was a "waitlist". Again I was met with this "Don't you know it's a Daytona? you expect to just walk in and get one?" type of attitude. After so many visits to so many ADs I came to the conclusion that it was impossible to get it in the ADs, so I went grey.

In hindsight I admit I was very naive thinking just because I was prepared to pay the MSRP I automatically deserved to get one.

But my point is that being brushed off by the ADs do not tarnish my view towards Rolex and their watches, not even the AD - just that specific person. I still want the watch and am willing to pay premium to get it. I treat others the way I'd like to be treated and so I will just not buy from the same person who gave me crappy attitude.

I get it, but we here are WIS and we will stick to it and be persistent. The reality is many more will simply walk out and do not even know about the gray market. Its a really bad from the user experience standpoint. It’s like a joke here are the new models but you can’t get them anyway. It’s not healthy.


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[R.bartlett]

Originally Posted by afmars

I do wonder if some of the hyped PM pieces are in a bubble. Are end-users are actually buying JM and platinum Daytona’s for 7 figures or is it just a gray market Ponzi scheme where buyers are just buying them to sell to the next guy for a few thousand more.

people get confused by asking price and worth. Paul Thorpe put a video about how the greys were over inflating the market by putting on fake adverts at inflated prices so the high asking price becomes the new normal and the next grey just adds 5% and up it goes again..

[Chester01]

Originally Posted by thenewrick

There's a lot of folks on this forum happy to pay 5x, bundle, money is no object to get the watches they want.

Maybe, but that’s not viable for most and the reality other than some WIS and some celebrities there appear to be fewer and fewer that can access these watches. The hype train makes it seem like there is all this demand but among who some celebs and insta heros? Data indicates most are wearing Apple watches and more and more are wearing them and folks with the money to get Rolex.


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[ndrs63]

Absolutely not, barring any economic impact or calamity that would affect everything. I can tell you are new to the community, as this topic has popped up time and again


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[McinRolex]

We are in COVID bubble.
Luxury goods demand spiked due to some "free COVID money" (Stimulus, Unemployed Insurance, stock market).

People who can meet their ends buy something they dreamed of with this "disposable money", they buy gold watches instead of G-Shock. They buy LV instead of Michael Kors.

[dwjez14]

Isn’t everything In a bubble right now just waiting to pop ????