Understanding Rolex at 2021 Watches and Wonders

[BLNR Nairobi]

The YouTube link below by ‘Not So Obvious Watches’ makes a very good case on Rolex that myself and other posters have also brought up in there past. That Rolex’s focus is on survival, and that in the face of a major existential threat to mechanical watches over the next 5-10 years (as wearable tech continues to dominate mechanical watches) - a situation that will make the Quartz Crisis of the 70s and early 80s seem almost quaint - this is the proper strategy to pursue.

That Rolex seldom makes mistakes, and that it takes its long-term business survival very seriously. Even foregoing short term profit-taking if it would be detrimental to long-term survival. As I have said many times before, there will be many casualties over the next decade. To know which, just waltz over to your local AD chain and see which (nice, amazing) watches are sitting unsold collecting dust! Look at the recent sales report and see how certain brands are selling! See the major discounts given and yet no sale movement!

There will be a ‘great culling’ and Rolex plans to survive it.


Anyway, here is the video:

https://youtu.be/hX7IPfpj91g

Quite insightful.

[turkeysub93]

By and large, Rolex watches have timeless designs.

So long as big government doesn't force the wearing of tech watches for the sake of monitoring us 24/7...I will happily keep wearing a mechanical watch.

[vh2k]

I enjoyed that. I didn't agree with everything... but it was a thoughtful analysis.

[Master_Grogu]

I truly believe that Patek and AP futures are not looking good.

Only 1 recognizable watch for each company, and they decide to axe it because they want to avoid the difficult situation of being mono product. Well, they already are.

I really fail to see who is going to purchase round, complicated watches on leather. The new buyers cook for themselves, clean their own apartments and oftentime don’t even have watches.

[afmars]

Originally Posted by BLNR Nairobi

major existential threat to mechanical watches over the next 5-10 years (as wearable tech continues to dominate mechanical watches) - a situation that will make the Quartz Crisis of the 70s and early 80s seem almost quaint

This is a bit laughable.

[SS Oyster]

Originally Posted by afmars

This is a bit laughable.

Agreed - not gonna happen. Haven’t you seen Mad Max? In the end only mechanical things exist.


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[CastorKrieg]

Both terrible takes, but let's answer each in turn

Originally Posted by BLNR Nairobi

That Rolex’s focus is on survival, and that in the face of a major existential threat to mechanical watches over the next 5-10 years (as wearable tech continues to dominate mechanical watches) - a situation that will make the Quartz Crisis of the 70s and early 80s seem almost quaint - this is the proper strategy to pursue.

I propose you to read this article: https://www.hodinkee.com/articles/fo...is-threatening

If you also look at the Swiss watch export data you will see wearables are murdering sub-1000 USD watch segment, whereas it is the upper ones that are not only the most resistant to wearables, but also to Covid-19 in general.

Originally Posted by Master_Grogu

I truly believe that Patek and AP futures are not looking good.

Only 1 recognizable watch for each company, and they decide to axe it because they want to avoid the difficult situation of being mono product. Well, they already are.

I really fail to see who is going to purchase round, complicated watches on leather. The new buyers cook for themselves, clean their own apartments and oftentime don’t even have watches.

Patek's and AP are night/day - Patek never was a monobrand, Sterns were always very careful to highlight that what company does is making complicated watches in precious metals. Axing 5711 was the move you can expect only from Patek, I am sure AP announcement was a reaction to that.

Patek is also way stronger on the 'investment angle' - outside a few RO references everything that AP sells trades at a discount. They also do not benefit from historical data and auction results, which in turns drives collecting Patek even further.

Lastly - Stern was always very vocal about planning for the downturn, since his father lived through the quartz crisis. Here is one of this quotes from an interview with SJX: https://watchesbysjx.com/2016/12/int...patrimony.html

So you have to be very vigilant and have strong reserves. My family has 100% of the shares [of Patek Philippe], so we keep the dividends. Some of it we will spend, that’s normal. When I wasn’t married it was not that much, since I got married it’s a bit more expensive. [laughs] Some of the dividends have been used for the new Patek building, but the rest we are going to save.

But it’s important that we know we are going to keep them, because it’s the best investment for my family also. I know that if I have Patek Philippe well secured with good reserves, when bad times will come, I can save Patek. Most of the brands today they don’t have any reserves, and I don’t understand that.

The 'new buyers' are Silicon Valley wiz kids and (as always) investment banks' junior associates who start with six figure salary at the age of 23. Yeah, they are going to buy complicated watches to out-do their peers. If 5711 mania did something was to make luxury watches and watch industry much more prominent.