Calling top of the bubble

[Horationelson]

It just doesn't make sense anymore.

I was passing through a well known department store today and stopped by the Rolex boutique in there, where I have bought a few watches over the years. It wasn't just busy, it was buzzing. Husbands and wives, groups of friends, lone international buyers were all looking around to see what was in stock and get a glimpse of whatever exhibition models were on display. How it's been for at least the last 2-3 years.

But today really felt that bit more detached from the economic reality than it has done previously. Inflation is going to squeeze a lot of household finances, other than the 0.1%. It is going to dampen consumer spending. Not in watches immediately, because people still see them as an investment/safe haven but across several types of goods and service providers. And that downturn in business will have a further cyclical effect on household wealth and disposable income. I'm not forecasting an outright economic crash, but I think that a sufficient dose of reality will set in soon, which will certainly reverse some of the supply/pricing craziness that we have seen.

The bigger issue is that all of these grey dealers are holding hidden stock. Watchfinder UK has two Milgauss in stock (none blue). Watchfinder USA apparently doesn't have a single Milgauss in stock and only has two Daytonas. Really? Many have heard anecdotally that these and other dealers are sitting on double digits of these models, trying to restrict supply and distort demand even more. There is only so long that this can last in current market conditions. What's more, it's unprecedented for retailers to be sitting on such high levels of invisible stock. Yes stock is an asset on the balance sheet, but when it is being marked to a market value which your business's own practices are helping to keep artificially high, there is a real danger that when things go south, your business' asset value plummets and - guess what - not only do you have to sell more watches to bring cash through the door, but you have to lower the price.

I love my watches and Rolexes as much as everyone else on here, but I think 2022 is going to be the year that reality bites. For those who have one or several watches that they see as quasi-cash based on current market levels, I would exercise some caution. That is all.

[RDT-G23]

I'm blown away by the grey market price increases in the past three weeks alone, since Christmas. I have the money, but I'm sure as heck not paying $74K for a rose gold Daytona on Oysterflex. Doggone things were $52K 2-3 weeks ago; I was actually considering that. I'm not playing in this market...

[SaddleSC]

Originally Posted by RDT-G23

I'm blown away by the grey market price increases in the past three weeks alone, since Christmas. I have the money, but I'm sure as heck not paying $74K for a rose gold Daytona on Oysterflex. Doggone things were $52K 2-3 weeks ago; I was actually considering that. I'm not playing in this market...

Agree 100%...126710 BLNR were under $20K on New Year's Eve and three weeks later they are being listed at $24K to $25K...it is really unprecedented. It sure is fun to watch from the sidelines:)

[Laszlo]

I was downtown today and stopped by tourneau and it was packed, lots of husbands and wives also. Omega store same… Rolex was not so buzzing, dead actually.

Although inflation is up - wages are up also and a lot and professionals are job hopping for bigger salaries.

The economy is humming and only doomsayers are getting too caught up in the wrong reality.

[DRS Enabled]

The show is going to keep going. Part of the reason for the price move the last 3 weeks was because that's when year-end bonuses for all the big banks are paid.

Compensation is going up on massively Wall Street, and it is straight in the cross hairs of Rolex's target market.

This past week Goldman reported compensation expenses increasing 33% year-over-year. JPMorgan reported an 11% increase. Most banks had comp increasing in the double digits.

In addition, all the banks have all increased junior compensation over the past year. Citi and JPMorgan both announced a 2nd increase this past week. First year analysts are now making $110k base (up from $80-85k two years ago) rising to $175k to your third year (up from $125k two years ago), and this isn't including 50-100% of base in year-end bonuses.

When a 25 year old's comp just went up by $50k, well, a $50k Daytona just isn't that crazy.

https://www.wallstreetoasis.com/foru...-materialistic

[Glenmorangie77]

Prices are up because there still isn't much stock, if any, in A.D. cases. The hype is louder than ever and what people can't have they want that much more. Don't forget certain models' MSRP were just increased by 10-11%, so for anyone who had been holding stock they just changed their numbers by the same figure on the secondary market.

[Bayarea7]

Insanity. I was happy to nab my very first rolex right before christmas. Its not a popular model but still paid a few k over msrp. Been wanting it for awhile. I've also been wanting to get an AP brick for years now as my first solid gold watch. Watching the prices go from 60k to 130k is a huge turn off. Go ahead super rich people, have your fun.

The bubble has to burst some time right? I can wait

[illiguy]

The last entry point was before Jan 1. At this point, who knows.

[ronricks]

Originally Posted by Glenmorangie77

Prices are up because there still isn't much stock, if any, in A.D. cases. The hype is louder than ever and what people can't have they want that much more. Don't forget certain models' MSRP were just increased by 10-11%, so for anyone who had been holding stock they just changed their numbers by the same figure on the secondary market.

This. Was at the AD today and no less than 10 people came in asking about various models and SA basically told them if they had not purchased a Rolex from them that they aren’t likely to get one. He said they have massive backlogs for existing customers even for TT models. I honestly felt bad for these people they just want a watch but there simply is not enough to go around at msrp.

[HMHM]

I feel the days of getting a watch at discount from the AD with wide availability have long gone. Increased awareness of watches has gotten many people into this hobby and even if the market takes a hit, the demand will still exceed supply overall. Instead of 100 people waiting for a Daytona, there will still be 50. Maybe grey market prices will make a small correction, but strong grey dealers who can afford to hold stock will probably just put the stock away and bring it out again when things get better.

[dpt.calvin]

lol did it ever make sense?

[EEpro]

Originally Posted by DRS Enabled

The show is going to keep going. Part of the reason for the price move the last 3 weeks was because that's when year-end bonuses for all the big banks are paid.

Compensation is going up on massively Wall Street, and it is straight in the cross hairs of Rolex's target market.

This past week Goldman reported compensation expenses increasing 33% year-over-year. JPMorgan reported an 11% increase. Most banks had comp increasing in the double digits.

In addition, all the banks have all increased junior compensation over the past year. Citi and JPMorgan both announced a 2nd increase this past week. First year analysts are now making $110k base (up from $80-85k two years ago) rising to $175k to your third year (up from $125k two years ago), and this isn't including 50-100% of base in year-end bonuses.

When a 25 year old's comp just went up by $50k, well, a $50k Daytona just isn't that crazy.

https://www.wallstreetoasis.com/foru...-materialistic

Our small engineering firm has had to bump 4 year bachelors degree engineer newbies from $80k to $125k just to stop the bleeding of them jumping to work-from-home jobs. I've seen one wearing a white Daytona

[GST15]

I know many don't agree, but I have not and will not pay over MSRP for any watch. Lots of other great brands out there to try and enjoy.

[huncho]

Originally Posted by DRS Enabled

The show is going to keep going. Part of the reason for the price move the last 3 weeks was because that's when year-end bonuses for all the big banks are paid.

Compensation is going up on massively Wall Street, and it is straight in the cross hairs of Rolex's target market.

This past week Goldman reported compensation expenses increasing 33% year-over-year. JPMorgan reported an 11% increase. Most banks had comp increasing in the double digits.

In addition, all the banks have all increased junior compensation over the past year. Citi and JPMorgan both announced a 2nd increase this past week. First year analysts are now making $110k base (up from $80-85k two years ago) rising to $175k to your third year (up from $125k two years ago), and this isn't including 50-100% of base in year-end bonuses.

When a 25 year old's comp just went up by $50k, well, a $50k Daytona just isn't that crazy.

https://www.wallstreetoasis.com/foru...-materialistic

while all that you said is true, 25 year old bankers are not paying 50k for a rolex lol. you have to factor in the cost of living here and a majority of them live within close commutes because they work like 15 hours a day, 6 days a week, so rent isn't cheap even if you have roommates. add to that the cost of going out (which is big in that culture) and you'd be surprised how little money they actually end up saving, and the bonus is just at the end of the year so it wouldn't show much of an impact on prices til then. they're probably just buying subs and datejusts to treat themselves but def nothing in the range of daytonas or APs. there are a few youtube videos of out of college kids breaking down their entire budget at these jobs and it wasn't anything impressive. entire take home was spent on expenses with a bit left to save or invest and then you essentially have your bonus left at the end of the year

the young "normal" people paying these crazy prices are the ones who are slaving their lives away in the crypto and stock markets and getting ridiculous returns

[Oystersteel92]

Popping the bubble will probably only happen if something else becomes cooler than Rolex (yeah right!) or people get really scared.

I scored my SS Daytona in March 2020 because the markets were down 35% and people were really scared of Covid. To quote Warren Buffet, be greedy when others are fearful.

I'm well positioned for a popping bubble, and both my wife and I are on the verge of being promoted as other people job hopping has opened up opportunities.

[MrGoat]

Only thing I’ve ever seen the price drop on once it’s risen is gas. Every other thing hits that mark and stays. We are in this for the long haul unfortunately.


Sent from my Apple privacy invasion product

[espanol]

Originally Posted by Horationelson

It just doesn't make sense anymore.

I was passing through a well known department store today and stopped by the Rolex boutique in there, where I have bought a few watches over the years. It wasn't just busy, it was buzzing. Husbands and wives, groups of friends, lone international buyers were all looking around to see what was in stock and get a glimpse of whatever exhibition models were on display. How it's been for at least the last 2-3 years.

But today really felt that bit more detached from the economic reality than it has done previously. Inflation is going to squeeze a lot of household finances, other than the 0.1%. It is going to dampen consumer spending. Not in watches immediately, because people still see them as an investment/safe haven but across several types of goods and service providers. And that downturn in business will have a further cyclical effect on household wealth and disposable income. I'm not forecasting an outright economic crash, but I think that a sufficient dose of reality will set in soon, which will certainly reverse some of the supply/pricing craziness that we have seen.

The bigger issue is that all of these grey dealers are holding hidden stock. Watchfinder UK has two Milgauss in stock (none blue). Watchfinder USA apparently doesn't have a single Milgauss in stock and only has two Daytonas. Really? Many have heard anecdotally that these and other dealers are sitting on double digits of these models, trying to restrict supply and distort demand even more. There is only so long that this can last in current market conditions. What's more, it's unprecedented for retailers to be sitting on such high levels of invisible stock. Yes stock is an asset on the balance sheet, but when it is being marked to a market value which your business's own practices are helping to keep artificially high, there is a real danger that when things go south, your business' asset value plummets and - guess what - not only do you have to sell more watches to bring cash through the door, but you have to lower the price.

I love my watches and Rolexes as much as everyone else on here, but I think 2022 is going to be the year that reality bites. For those who have one or several watches that they see as quasi-cash based on current market levels, I would exercise some caution. That is all.

I think your point about inflation is important.

Unlike the economic crisis at the onset of the pandemic, inflation will impact Rolex’s target market. Pure purchasing power will decrease, as will the desire for irrational purchases. It won’t impact everyone, but will hit into those of average means, which seems to be a large subset of Rolex’s target market given all of the “investment” threads.

[DRS Enabled]

Originally Posted by huncho

while all that you said is true, 25 year old bankers are not paying 50k for a rolex lol. you have to factor in the cost of living here and a majority of them live within close commutes because they work like 15 hours a day, 6 days a week, so rent isn't cheap even if you have roommates. add to that the cost of going out (which is big in that culture) and you'd be surprised how little money they actually end up saving, and the bonus is just at the end of the year so it wouldn't show much of an impact on prices til then. they're probably just buying subs and datejusts to treat themselves but def nothing in the range of daytonas or APs. there are a few youtube videos of out of college kids breaking down their entire budget at these jobs and it wasn't anything impressive. entire take home was spent on expenses with a bit left to save or invest and then you essentially have your bonus left at the end of the year

the young "normal" people paying these crazy prices are the ones who are slaving their lives away in the crypto and stock markets and getting ridiculous returns

Not all of them are. It's a minority for sure. But if you were in the market for a Daytona @ $35k, and now it's @ $50k, but your comp has increased by $50k, you won't blink an eye to buy grey today. Can say the same for Pepsis @ $20k vs. $30k, Batmans from $15k to $24k, etc.

[JohnGingerwood]

Originally Posted by GST15

I know many don't agree, but I have not and will not pay over MSRP for any watch. Lots of other great brands out there to try and enjoy.

I 100% agree. I got omega and Breitling to keep me busy.

[Anton911]

Say what you like but we have had a major shock to the world with Covid and stock market crash of 2020.Common sense suggests that it would take a massive event for Rolex prices etc and the like to plummet as they sure haven’t as of yet and are showing no signs of doing so any time soon.Just a common sense no frills explanation…..

[Hollie_Rollie]

Originally Posted by Anton911

Say what you like but we have had a major shock to the world with Covid and stock market crash of 2020.Common sense suggests that it would take a massive event for Rolex prices etc and the like to plummet as they sure haven’t as of yet and are showing no signs of doing so any time soon.Just a common sense no frills explanation…..

Did not affect the class of individuals in the market for a rolex to begin with. Had the pandemic occurred in an era where we didn’t have the technological advancements that we have today I’m sure the impact would’ve been way more severe.

Stocks crash for like a week, came back stronger. White collar individuals were hardly affected


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[outdoors_guy]

Originally Posted by MrGoat

Only thing I’ve ever seen the price drop on once it’s risen is gas. Every other thing hits that mark and stays. We are in this for the long haul unfortunately.


Sent from my Apple privacy invasion product

Houses circa 2009? Nikkei 225 (for about 20 years)? Beanie babies? Fine art? Baseball cards? I think you are thinking of a watch as a consumer good, but clearly lots of Rolex buyers see watches as investments and collectibles.

[malba2366]

Originally Posted by MrGoat

Only thing I’ve ever seen the price drop on once it’s risen is gas. Every other thing hits that mark and stays. We are in this for the long haul unfortunately.


Sent from my Apple privacy invasion product

Once something becomes traded as a speculative device the prices are subject to market volatility. Grey market prices can and will drop at some point, Prices at ADs will stay stable or rise over time.

[nosignalbmwdriver]

Prices are gonna rip even higher this year ��������

[ce027772]

Originally Posted by Bayarea7

The bubble has to burst some time right? I can wait

Most people, including myself, thought that prices would go down when the pandemic started. It hasn't happened. So, nobody knows and the majority is usually wrong.

[ce027772]

Originally Posted by Anton911

Common sense suggests that it would take a massive event for Rolex prices etc and the like to plummet as they sure haven’t as of yet and are showing no signs of doing so any time soon.Just a common sense no frills explanation…..

Common sense? Really? Where have you seen it?

[Nairn1980]

Originally Posted by Bayarea7

Insanity. I was happy to nab my very first rolex right before christmas. Its not a popular model but still paid a few k over msrp. Been wanting it for awhile. I've also been wanting to get an AP brick for years now as my first solid gold watch. Watching the prices go from 60k to 130k is a huge turn off. Go ahead super rich people, have your fun.

The bubble has to burst some time right? I can wait

You could be very old and grey and still waiting.
There will be lots like you sitting waiting for a crash that won’t happen.

Life is short, and there are no pockets in a shroud. If you want that particular watch, go and buy it. I’ve seen (especially recently) the fragility of life.

However some of these new prices are just out of reach for many which is frustrating.

(Sorry for getting a bit sentimental)

[aceofangel]

Doubt we are at the top. Lots of people with record salaries yet nowhere to invest their money with how badly the stock market is doing. It will take another 2008 with widespread white-collar layoffs to trigger some sort of crash.

And this is just looking at the U.S. You have China where neither their stocks nor property market is doing well. Rolex is pretty much wearable gold at this point.

[teck21]

Originally Posted by Bayarea7

Insanity. I was happy to nab my very first rolex right before christmas. Its not a popular model but still paid a few k over msrp. Been wanting it for awhile. I've also been wanting to get an AP brick for years now as my first solid gold watch. Watching the prices go from 60k to 130k is a huge turn off. Go ahead super rich people, have your fun.

The bubble has to burst some time right? I can wait

Anyone and everyone can wait. That’s the easy part.


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[robertengel]

Some models seem to be increasing by 4 figures daily. It is frightening behaviour, fed by insanity, vanity and FOMO in the case of Nautilus models. I find it disturbing, naturally I am happy to see huge growth on models already owned, but it is also concerning for the future. With everything becoming unavailable and us being a small jump away from boutiques asking for our first borns...maybe Tudor BB58 will come back into the limelight. I also keep going into Omega stores and not buying the Speedy they have in stock. Same goes for IWC Portugieser, all great watches but missing something special...maybe just the hype? That being said this is a frenzy scenario and most probably the watch market is going to cool a little but we have been saying that for years. 25k was too much for a Daytona, right...right?!?!