Bubble or new normal?

[bonovox]

I've been a collector for some time now. I've never seen anything like what's going on now. Pepsi and Daytona prices on the secondary market to name a few (Patek 5711? Snoopy Silver Award?). What's your opinion? Are watch prices in general in a bubble?

[lamnyc]

Yes. Specially vintage watches. New record set at every auctions practically.

[Hollie_Rollie]

I hope so


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[Vaxe]

Bubble

[exador]

[tjbender]

Originally Posted by exador

That. Lol.

The good news though is this do seem to be cooling off somewhat. A few zenith Daytona’s below $20k (and not moving) and new Pepsi GMTs loosing steam. The premium a Pepsi goes for over a blnr is crazy and makes no sense. This will cool down

[schoolboy]

I am new to the term “bubble,” and have read it on here more than a couple of times.

I want to ask, what happens when the bubble bursts?

Do you guys expect prices to drop overnight or what?

And what would cause the bubble to burst?


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[bigrustypig]

Originally Posted by schoolboy

I am new to the term “bubble,” and have read it on here more than a couple of times.

I want to ask, what happens when the bubble bursts?

Do you guys expect prices to drop overnight or what?

And what would cause the bubble to burst?


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I guess the answer is: The return of some supply, not flooded, but just some re-supply will cause the bubble to burst. Grey Prices are no longer defensible and should soften.


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[peterpl]

Huge bubble. It will burst soon.

[tyler1980]

bubble, when it will end though is anyones guess. Could be a very long time barring a global financial collapse. As long as the top few % globally are making money they outnumber supply.

[hambone1983]

Originally Posted by tyler1980

bubble, when it will end though is anyones guess. Could be a very long time barring a global financial collapse. As long as the top few % globally are making money they outnumber supply.

the top few percent will always be doing well, by definition. Otherwise, they wouldn't be in the top few percent.

[tyler1980]

Originally Posted by hambone1983

the top few percent will always be doing well, by definition. Otherwise, they wouldn't be in the top few percent.

I think they always do well relative to others, but when the market crashes they absolutely take a hit. They still have more money though. The more money you have, the less likely you are a wage earner and your money is making more money in investments until it doesnt... they don't lose everything and losing 30% of a billion dollars is a lot left over.

Plenty are trying to unload yachts, jets, etc, when their portfolio tanks and probably just buy more investments as its a great buying opportunity.

[hambone1983]

Originally Posted by tyler1980

I think they always do well relative to others, but when the market crashes they absolutely take a hit. They still have more money though. The more money you have, the less likely you are a wage earner and your money is making more money in investments until it doesnt... they don't lose everything and losing 30% of a billion dollars is a lot left over.

Plenty are trying to unload yachts, jets, etc, when their portfolio tanks and probably just buy more investments as its a great buying opportunity.

I meant those in the top 1% of income is not a fixed group. 50% of it turns over every year, and someone else takes their place.

[TonyYu]

This bubble will end together with the stock market raise for the last 10years.

[XZACM102]

Rolex is limiting supply for the same reason. The worst thing is to have inventory out there when the bubble bursts.

[bigrustypig]

Originally Posted by XZACM1001

Rolex is limiting supply for the same reason. The worst thing is to have inventory out there when the bubble bursts.

Hmmmm....given the high level of unmet demand for Rolex sports pieces, if it supplies more when the low tide comes, there will be a flight to quality. They will still be snapped up. But yes, the bubble will burst.


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[HK Islandboy]

Originally Posted by XZACM1001

Rolex is limiting supply for the same reason. The worst thing is to have inventory out there when the bubble bursts.

Absolutely agree. They are playing the long game and foregoing a few sales these years is a small price to pay to maintain the value of the brand when the decline in demand comes

[penguinrolex]

New normal. Prices on some models will dip down, but the 'hot' models will continue to be 30-100% markup. Limited editions (Harrods Tudor, Omega ultraman) and hot models (pepsi, daytona C, the next care bear watch) will be snapped up before you or I can touch them.
Because they can.

No matter how many Rolex/PP/Omega cranks out, the demand for something cool will always be more than what the local AD can supply. There are so many small speculators that they can afford to snap up ALL the hot inventory, to resell.

Grey market is primarily people with jewelry resale experience. They understand "buy low, sell high, don't undercut the competitor or they will undercut you." These people are comfortable holding valuable inventory months to years to get a better annualized return on their inventory.
The ADs goal is to sell their inventory asap, to increase their revenue and their inventory turn. The salesperson is incented to do this and so is the manager, especially at chain locations. Rolex sales lead goal is to get the AD to take as much product as possible on the shortest credit terms ever. You as a consumer have no reliable information about the actual demand or actual supply that anyone is holding, you (I?) only see that the AD never has inventory and the grey market vendors only offer one at a time. These incentives all line up to - if you want a Rolex, go to your local jeweler because his grey market display is the only full case in town.

Until a watch manufacture changes their channel and the incentives and the information disparity, the market is going to move watches towards grey. Even if there is a bubble, the supply will continue to APPEAR to be inadequate and those who can afford will still pay too much.
Remember car shopping, before the internet? You paid MSRP or MSRP plus a few grand. Now, you pay 3% over invoice. Unless it's a hot new model and then you pay MSRP plus 5k.

[Mr.WorldTimer]

Just like with vintage cars. Bubbles come and go. The market of watches (if we indexed it based on watches that have increased in value above rrp, vintage and modern) has naturally been hit with certain financial crises quite badly. They recover and perform fairly in line with vintage sports cars as far as they go as an asset class. This bubble will burst, on its own or ushered in by a financial meltdown. Prices will drop. Buyers market. So long as world govts recover and the stock market rebalances, they'll rise again and we'll go through another sellers market period at even higher prices than now. Just my pennies on the matter.

[emkwan]

Originally Posted by Mr.WorldTimer

Just like with vintage cars. Bubbles come and go. The market of watches (if we indexed it based on watches that have increased in value above rrp, vintage and modern) has naturally been hit with certain financial crises quite badly. They recover and perform fairly in line with vintage sports cars as far as they go as an asset class. This bubble will burst, on its own or ushered in by a financial meltdown. Prices will drop. Buyers market. So long as world govts recover and the stock market rebalances, they'll rise again and we'll go through another sellers market period at even higher prices than now. Just my pennies on the matter.

Wonder when the next crash is scheduled...

[Mr.WorldTimer]

Originally Posted by emkwan

Wonder when the next crash is scheduled...

Apparently according to many financial analysts, we are overdue!

[emkwan]

Originally Posted by Mr.WorldTimer

Apparently according to many financial analysts, we are overdue!

Do share any links if you have any

[Sarosh]

Originally Posted by Mr.WorldTimer

Apparently according to many financial analysts, we are overdue!

Been thinking the same. A few small minor dips here and there recently but nothing at the moment to suggest a catastrophe just yet. Totally agree we are overdue.

[emkwan]

Originally Posted by Mr.WorldTimer

Just like with vintage cars. Bubbles come and go. The market of watches (if we indexed it based on watches that have increased in value above rrp, vintage and modern) has naturally been hit with certain financial crises quite badly. They recover and perform fairly in line with vintage sports cars as far as they go as an asset class. This bubble will burst, on its own or ushered in by a financial meltdown. Prices will drop. Buyers market. So long as world govts recover and the stock market rebalances, they'll rise again and we'll go through another sellers market period at even higher prices than now. Just my pennies on the matter.

Wonder when the next crash is scheduled...

[shaunylw]

Bubble! I still laugh when I see the "12-month wait for a sub" threads. It's laughable where we are at right now. Good for Rolex, bad for people that want to buy watches.

[Rolexatlast]

I think once asking prices become detached from the asset, then we're in a bubble

At the moment, prices seem to be going up because they are going up and people hope the price will be higher tomorrow than they pay today. Sooner or later we will run out of people willing to believe that and then the speculators will exit and prices fall. When and to what level, who knows. But some watches are going for almost double MRSP, which is crazy

[exador]

This was from 2014...

[1William]

I believe we are in a bubble and at some point the supply and demand situation will correct itself. What the new normal will look like after that will be interesting as I believe a lot of people who have bought models for speculation will try to move out of them and will take a bath or not be able to sell based on the fact that the market will be flooded.

[AK797]

Originally Posted by 1William

I believe we are in a bubble and at some point the supply and demand situation will correct itself. What the new normal will look like after that will be interesting as I believe a lot of people who have bought models for speculation will try to move out of them and will take a bath or not be able to sell based on the fact that the market will be flooded.

My growing feeling is that the new normal will see prices calm down but more models will behave like the D500, possibly due to Rolex manipulation, with most SS selling at premiums as opposed to discounts in the past.

[T.Mas]

A double bubble.