Should/can we stop calling this a "bubble"?

[Acquisition40]

Why do we assume that this is a "bubble"?

If we look at the more recent timeline, of say, the past 100-200 years, there still has been population, economic growth, inflation, etc., inclusive of momentary economic downturns. Looking at a longer timeline of 1000 years or more, same deal. The world survived the Black Plague.

The .com bust was there, but eventually tech prevailed and still does with much intention and hope for improved communication, logistics, AI, etc. Medicine is arguably still in its early stages, as can be debated for the rest of science and many aspects of humanity.

Watch sales, in both absolute and relative scales, have been climbing compared to 10, 25, 50 years ago. And for "bubble"-pieces, there's definitely more people than can afford these watches than not (supply/demand as case and point). Economically speaking, it's more so "do they want it?" as opposed to "do they need it?"

Don't we define economic bubbles as situations in which people/institutions have artificially overreached and exploited market conditions for some sort of economic gains at an unsustainable rate?

However, if it's sustainable, then we just call it strong economic growth, right? When the supplying power and buying power are both legitimate and strong.

So isn't it also safe to assume that this is a great growth spurt that may slow, but it could never "crash" to a point where it'll actually negatively affect the watch-collecting base. And emphasizing "watch-collecting base" because grey-dealers that stock up on inventory or perhaps companies like AP that re-strategize to condense their distribution network actually may be economically affected.

The term "hype" or "very, very, crazy popular" sounds more fitting, but I don't see who is exploiting the system to create an artificial demand. When people want something because of pop culture or a fad, that's still legitimate demand, though it may not be ever-lasting (but nothing is really ever-lasting, anyways). If (and a big "if") PP or AP is squeezing supply purposely to create this hype, then they're also not making money when they can, since they're not getting any of the benefit from grey-market trading margins. Maybe they get marketing benefits, but no financial gains, which every economic bubble situation exploits.

If prices of these desirable watches come down to MSRP or even to previous points where they were discounted a bit, is that a "bubble burst"? Or does that just apply to speculators? Maybe the rest of the watch community calls it "the fad just moved on" or "strong growth/demand period is over".

Just asking if there's more to this because it seems like the term "bubble" is used when people think things are overvalued and trading as such in the collective marketplace.

But for long-term lovers and collectors, what do we have to lose? Has anyone ever lost money on a time-piece that they held on to for more than 10 years? Do we even care?

S

[beshannon]

Originally Posted by Acquisition40

Why do we assume that this is a "bubble"?

Only the desperate believe it is a bubble, most of us do not use this term here

[Acquisition40]

Originally Posted by beshannon

Only the desperate believe it is a bubble, most of us do not use this term here

Love the confidence!

[MichaelFlash]

Originally Posted by acquisition40

love the confidence!

lol!

[Simon.DGV]

Originally Posted by Acquisition40

Love the confidence!

Success is about confidence.
good time piece will eventually outperforms.

[interestedwatcher]

Originally Posted by beshannon

Only the desperate believe it is a bubble, most of us do not use this term here

eh - you're telling me that a BLNR at close to 17000 USD is not in line for a correction?

No one is going to suggest that the bottom will fall out and you can get SS in stores without a wait, (well at least until a recession), but I wouldn't be buying a BLNR et all at full grey prices. I'd grab them at RRP all day long though.

[beshannon]

Originally Posted by interestedwatcher

eh - you're telling me that a BLNR at close to 17000 USD is not in line for a correction?

No one is going to suggest that the bottom will fall out and you can get SS in stores without a wait, (well at least until a recession), but I wouldn't be buying a BLNR et all at full grey prices. I'd grab them at RRP all day long though.

Of course you would but you can't.

The market sets the price, if they sell at 17K then that is what the market will bear. Wishing that you can buy one at the artificially low MSRP set by Rolex is a nice goal.

[PJ S]

Originally Posted by beshannon

Of course you would but you can't.

The market sets the price, if they sell at 17K then that is what the market will bear. Wishing that you can buy one at the artificially low MSRP set by Rolex is a nice goal.

It’s not really, since the market is the market at large, not a smattering of individuals who can afford to be blasé about the price in order to obtain instant gratification rather than await their turn.
If it was what the market would bear, Rolex (and the others) would’ve set the price at that level.

[beshannon]

Originally Posted by PJ S

If it was what the market would bear, Rolex (and the others) would’ve set the price at that level.

And yet they have not.

Why?

So the secondary market takes over.

Those wishing for lower prices should ask themselves why? Because they want to buy? Because they want the value of all watches to decline?

[JR16]

More of a pimple than a bubble IMO


Sent from my iPhone using Tapatalk Pro

[Russell996]

We are most certainly in a bubble for certain sports pieces and brands - Nautilus/Aquanaut/RM/Daytona etc etc - the question is not is it a bubble but will it burst or simply deflate in a controlled fashion - the jury is still out on how it will end.

[Calatrava r]

Most of the watch market is certainly not in a bubble. Most models are hard to sell without discounts and drop substantially from there. The fact the masses are only chasing a few select SS models and the manufacturers are not meeting the demand has created an extreme supply/demand imbalance. I do not expect to see equilibrium in the SS market any time soon.

[Acquisition40]

Originally Posted by Calatrava r

Most of the watch market is certainly not in a bubble. Most models are hard to sell without discounts and drop substantially from there. The fact the masses are only chasing a few select SS models and the manufacturers are not meeting the demand has created an extreme supply/demand imbalance. I do not expect to see equilibrium in the SS market any time soon.

Right. Just the handful of models out of thousands out there. Kind of like how the best pieces of real estate are always at a premium and in short supply? Hard to call it a bubble when it's such a small portion considering how big the rest of the industry is.

[GreenLantern]

Most popular models are in a bubble.

When you see grey market dealers hoarding to manipulate prices and control the market of over-hyped models, you cannot conclude anything else other than: this is a speculative bubble.

[FYI, I own most of these models, so no, I am not one of the "desperate."]

https://www.instagram.com/p/B7yFQGCglAr/

https://www.instagram.com/p/B7pAPE_AOax/

https://www.instagram.com/p/B7MroVRgh8g/

https://www.instagram.com/p/B7ItdCqgcRN/

https://www.instagram.com/p/B6wW64Vg5Md/

https://www.instagram.com/p/B8ODYwtAoIT/

[Acquisition40]

Originally Posted by GreenLantern

Most popular models are in a bubble.

When you see grey market dealers hoarding to manipulate prices and control the market of over-hyped models, you cannot conclude anything else other than: this is a speculative bubble.

[FYI, I own most of these models, so no, I am not one of the "desperate."]

https://www.instagram.com/p/B7yFQGCglAr/

https://www.instagram.com/p/B7pAPE_AOax/

https://www.instagram.com/p/B7MroVRgh8g/

https://www.instagram.com/p/B7ItdCqgcRN/

https://www.instagram.com/p/B6wW64Vg5Md/

https://www.instagram.com/p/B8ODYwtAoIT/

Right. So greys amass a big inventory, so they can make money. Might be a stretch to say they have control over the market of popular models though. Greys are going to have to hold an absolute ton of inventory to be able to control market and manipulate prices. What percentage of these models produced are floating around in greys? I see 1,081 results for BLNRs; 552 results for 5711s; 6,229 for Daytonas (SS and PM) on Chrono24. I'm sure there are other greys out there with undisclosed inventory and those not on Chrono24, but either way, it doesn't seem like a runaway situation to me.

Maybe they're holding onto 70 shares of BLNRs and another 100 shares of HULKs, and sure they're trading high. I guess if people want to call individual TSLA, AMZN, GOOG, APPL stock prices (or as a small tech collective) a bubble, then that's fine, too. Some call it, "trending," "well-performing," "overvalued," even "unicorns." "Bubble" comes with so many more implications than overvalued and/or even manipulated commodities. "Bubble" is more fun to say for sure, though.

[benlee]

Originally Posted by Acquisition40

Right. So greys amass a big inventory, so they can make money. Might be a stretch to say they have control over the market of popular models though. Greys are going to have to hold an absolute ton of inventory to be able to control market and manipulate prices. What percentage of these models produced are floating around in greys? I see 1,081 results for BLNRs; 552 results for 5711s; 6,229 for Daytonas (SS and PM) on Chrono24. I'm sure there are other greys out there with undisclosed inventory and those not on Chrono24, but either way, it doesn't seem like a runaway situation to me.

Maybe they're holding onto 70 shares of BLNRs and another 100 shares of HULKs, and sure they're trading high. I guess if people want to call individual TSLA, AMZN, GOOG, APPL stock prices (or as a small tech collective) a bubble, then that's fine, too. Some call it, "trending," "well-performing," "overvalued," even "unicorns." "Bubble" comes with so many more implications than overvalued and/or even manipulated commodities. "Bubble" is more fun to say for sure, though.

You're be surprised at the massive amount of inventories hold by greys. Even in the city like Jakarta where I lived in, a supposedly 3rd world country, I can go to this mall where many of the grey dealers operate, and I can buy any "hot model" I want on the spot, including white dial C-Daytona, 5711, you name it, but of course at inflated premium prices. I have no idea how they get the stocks but it looks likely these stocks are sold by ADs as well as flippers. Same can be said of Singapore, Bangkok and Hong Kong. And that is not including grey dealers that only operate online.

[Acquisition40]

Originally Posted by benlee

You're be surprised at the massive amount of inventories hold by greys. Even in the city like Jakarta where I lived in, a supposedly 3rd world country, I can go to this mall where many of the grey dealers operate, and I can buy any "hot model" I want on the spot, including white dial C-Daytona, 5711, you name it, but of course at inflated premium prices. I have no idea how they get the stocks but it looks likely these stocks are sold by ADs as well as flippers. Same can be said of Singapore, Bangkok and Hong Kong. And that is not including grey dealers that only operate online.

I see! Has PP and Rolex been cracking down on ADs in SEA as well?

edit: Do you think they have enough inventory to manipulate/control the grey market pricing? Do you think if all the greys in the world immediately relinquished all of their inventory, would there still be a lack of supply to fulfill demand?

[The Argonaut]

Perhaps I'm mistaken here but I've not seen anyone refer to a "bubble" over the entire watch industry. As others have said above, a handful of PP and AP SS models and most Rolex SS pieces are in a bubble--most definitely. As to the rest, there is no bubble.

[Acquisition40]

Originally Posted by The Argonaut

Perhaps I'm mistaken here but I've not seen anyone refer to a "bubble" over the entire watch industry. As others have said above, a handful of PP and AP SS models and most Rolex SS pieces are in a bubble--most definitely. As to the rest, there is no bubble.

True, not the entire watch industry. It's an interesting distinction to say that only the handful of PP/AP/Rolex SS models are in a "bubble". Isn't it kind of like saying TSLA, AAPL, AMZN, GOOG (for example) are in a bubble, but not the entire tech industry?

It's interesting because situations like those would be generally referred to as "overvalued" based on how we feel/think about it. So how can we say that a few individual models are in a "bubble" when we can't even include them in a definite category?

[GreenLantern]

Originally Posted by Acquisition40

True, not the entire watch industry. It's an interesting distinction to say that only the handful of PP/AP/Rolex SS models are in a "bubble". Isn't it kind of like saying TSLA, AAPL, AMZN, GOOG (for example) are in a bubble, but not the entire tech industry?

It's interesting because situations like those would be generally referred to as "overvalued" based on how we feel/think about it. So how can we say that a few individual models are in a "bubble" when we can't even include them in a definite category?

https://www.instagram.com/p/B7yFQGCglAr/

https://www.instagram.com/p/B7pAPE_AOax/

https://www.instagram.com/p/B7MroVRgh8g/

https://www.instagram.com/p/B7ItdCqgcRN/

https://www.instagram.com/p/B6wW64Vg5Md/

https://www.instagram.com/p/B8ODYwtAoIT/

[GreenLantern]

Originally Posted by The Argonaut

Perhaps I'm mistaken here but I've not seen anyone refer to a "bubble" over the entire watch industry. As others have said above, a handful of PP and AP SS models and most Rolex SS pieces are in a bubble--most definitely. As to the rest, there is no bubble.

[superstarmar]

it's the new norm...

[yoast]

Here is an interesting article on the subject:
https://thewatchbaron.com/2020/02/16...february-2020/

[RHIII]

Originally Posted by yoast

Here is an interesting article on the subject:
https://thewatchbaron.com/2020/02/16...february-2020/

Very interesting article — really made me start thinking about the calculus of the watch world.

One thing that I think is missing - is some basic qualification of demand — since the correlation is on a global scale (stocks) - what is the global representation of the watch market - to give a sense of market demand - it could make one think that 700 Daytonas and 500 Hulks on the market is a lot - but what’s the luxury watch representative market population, if you will. Just as an illustration.

If we just speculated that the enthusiast community was 1m strong (that’s reasonable) the world population in 2019 was what, nearly 8b? We’ve got what 300k TRF members....let’s say that’s close.

And let’s say half of them wanted hard to get watches - and half of the half already had them - and half of that are tired of waiting....and lets base on the two references above. 1200 watches to 125k people..... (heck say 10000 are available). I think you could also paint the picture that - while the availability perception is there — even at the right price point would the demand even be close to being met? Probably not. Probably not even in the ballpark....

Just some thoughts....




Sent from my iPhone using Tapatalk

[The Argonaut]

Originally Posted by yoast

Here is an interesting article on the subject:
https://thewatchbaron.com/2020/02/16...february-2020/

Very interesting article. Thanks for the link. Definitely made me think, and that my 2020 Post was not that far off. Also, I have to say, the discourse on the PP pages really is excellent. It's like comparing the FT comments section to those on the Washington Post.

[cascavel]

Originally Posted by yoast

Here is an interesting article on the subject:
https://thewatchbaron.com/2020/02/16...february-2020/

So, this writer says that the bubble is bursting and that evidence of this is that it is "easy to find a 5711A for under $55K" and that it is "easy to find a 116500 for under $20,000". Really, where?
Anyone can predict the past but if you're having trouble evaluating the present what kind of luck are you going to have with the future?

[Russell996]

Originally Posted by cascavel

So, this writer says that the bubble is bursting and that evidence of this is that it is "easy to find a 5711A for under $55K" and that it is "easy to find a 116500 for under $20,000". Really, where?

He indicates to the reader where he went in the article - but to be more precise I would suggest Watchfinder and the Burlington arcade and surrounding streets.

[The Argonaut]

Originally Posted by Russell996

He indicates to the reader where he went in the article - but to be more precise I would suggest Watchfinder and the Burlington arcade and surrounding streets.

Also, I think the author of the article was implying that whilst there are numerous 116500s on C24 for a smidge over $20k, you could likely negotiate them sub $20k.

[Nauti]

yep ..its a classic Supply / Demand thing and that has driven prices upwards and until the HK Riots it was still holding firm with global demand outstripping supply, however the HK market which is the biggest in the world for Swiss watches and luxury goods has seen a big downturn of 25% in sales and 45% in visitor numbers......to put into context HK is 2/3 the size of London and has 30 AD's to Londons 15 and that's before you add the mass of HK Used dealers......

And all this before the tragic 'Corona' outbreak which has no doubt slowed the Chinese / HK market even further which I am pretty sure means that dealers in that part of the world have more stock (supply) than current 'demand'....and many must now be trading for cash flow rather than profit, also knowing they can re-buy cheaper than current inventory, the manufacturers will no doubt be diverting stock that was destined for HK / China to US and Europe...

there seems to be quite a few more 'incoming' threads and wait times seem reduced also it looks as if a few buyers are undecided when they get the call given higher new list prices and lower resale values...has chased off some speculators.

add that to people who are trying to panic sell to cash out perceiving further softening and well its a self fulfilling prophecy....

Don't panic it's not crypto or tulips.....we have lovely physical assets to enjoy and for the majority of us that's why we bought them to 'enjoy' them...

and for those that bought to enjoy and invest.....Hong Kong will eventually get resolved for the benefit of the HK population and Corona virus will be yesterdays news.......and we will be onto a new crisis somewhere else....

no bubble burst ....just a bit of air let out the baloon !

[cascavel]

Originally Posted by Russell996

He indicates to the reader where he went in the article - but to be more precise I would suggest Watchfinder and the Burlington arcade and surrounding streets.

So, do you think he meant British Pounds and not U.S. Dollars when he said that it was easy to find a 5711A for 55K or a 116500 for 20K? Those prices would make sense.