Current watch market w/ current conditions

[superdog]

I know the last few watch/coronavirus threads have been looked poorly upon.

However, there are quite a few threads right now pertaining to any number of things, including investments and world markets in regard to the virus.

It seems only reasonable that we can discuss the current watch market in regard to the current conditions. It is a watch forum, after all.

I think we can all agree that everyone here would prefer a healthy world and robust markets. Considering that is not currently the reality, I do not see any harm in discussing how this is effecting the watch market.

Hopefully most of you will agree.

My personal experience: I was in communication with a local gray dealer about a Patek 5968a. We hadn't spoken about it in a while though, and I wasn't paying that type of premium anyway. He actually just reached out to see if we could close a deal.

Maybe it was just good customer service. Or maybe he is fearful of getting caught with a lot of stock of very overpriced watches.

Personally, I feel bad for some of the grays. Especially the ones that have become my friends. Maybe they are just fine. I know they are for certain smart as all heck.

However, they had to buy high and have to sell high. Sure, maybe some of them helped create the market. That is possible. But my guess is that the demand, which was already waning, is going to go way down.

I am personally thinking that there will be a lot of deals soon.

That said, I am not so sure that too many people are going to be looking to be spending on luxury goods for the near future. Certainly not at a premium. And I can't imagine grays will hold them for the long term hoping the world rebounds. It looks for certain that things will just progress for a while before they settle.

Very uncertain times for any market. I imagine that luxury goods will feel this. Sure, there will always be buyers. But certainly not nearly as many which create less of a demand and therefore drive down prices.

What do you folks think?

[beshannon]

There is no doubt that those with thin margins and thinner reserves will be hurt.

Will any of this unleash a flood of product? IMHO, no.

There are always opportunities and just like the discussions in the markets, those with resources will use weakness to buy up inventory.

Any individual looking for a single piece at or below MSRP is going to be disappointed

[avidflyer]

Couldn't agree more...I wouldn't want to be setting with a lot of inventory. Who knows how long this will take to play out, and how it ends up. In my business people tend to spend money on how they feel. Market up, business is good, lets take a private plane. Market down, business is slow, doom and gloom back on the crowd killer. I dont think this week has really settled in for some. Give it a week or two and the end of month statements get mailed out. Reality will hit.

[superdog]

Originally Posted by avidflyer

Couldn't agree more...I wouldn't want to be setting with a lot of inventory. Who knows how long this will take to play out, and how it ends up. In my business people tend to spend money on how they feel. Market up, business is good, lets take a private plane. Market down, business is slow, doom and gloom back on the crowd killer. I dont think this week has really settled in for some. Give it a week or two and the end of month statements get mailed out. Reality will hit.

based IG, there are people with dozens each of hulks, Pepsi's and Daytonas.

IMHO, those guys will soon be looking to generate come cash flow.

will some watches still be hard to get? yes, I do think so. some will likely still have premiums. However, not nearly as many people will buy just to flip. it won't be worth it. I think the acceptance of large premiums was already waning.

AD's will likely normalize a little bit.

and I think grays with a ton of stock are going to hurt.

[Fleetlord]

My first thought is historically a down market will stop watch sales like hitting a brick wall.

The last recession saw SS Daytonas selling well under retail. It happened very quickly too.

But that was 12yrs ago and the economy has changed in that there are more diverse incomes from sources that didn’t really exist back then...social media influencing, limitless military spending through defense contractors...etc...just more money out there than ever.

So it will be interesting to see how this goes down. I wouldn’t want to be overly invested in weaker brands with poor resale history as they will be completely ignored on the secondary market. As much as we hate that discussion ask secondary dealers what their clients fret over the most and the answer is resale.

[Old Geezer]

I'll dip my toe in the discussion....I think that it's one thing to hold back on spending say $50K or more for a luxury item when markets are crazy heading down and quite another to spend $10K or maybe $15K on a watch provided you are still able to comfortably afford it. A precipitous drop in luxury goods sales in say the $20K and below price range might be indicative of a segment of buyers stretched beyond their means to realistically acquire such things in the first place. Perhaps even borrowing money to acquire them. What do you think ?

[superdog]

Originally Posted by Old Geezer

I'll dip my toe in the discussion....I think that it's one thing to hold back on spending say $50K or more for a luxury item when markets are crazy heading down and quite another to spend $10K or maybe $15K on a watch provided you are still able to comfortably afford it. A precipitous drop in luxury goods sales in say the $20K and below price range might be indicative of a segment of buyers stretched beyond their means to realistically acquire such things in the first place. Perhaps even borrowing money to acquire them. What do you think ?

I think that is a super point.

There are a lot of different segments out there with a few different types of buyers in each.

And each will play their own part in this scenario.

[superdog]

Originally Posted by Fleetlord

My first thought is historically a down market will stop watch sales like hitting a brick wall.

The last recession saw SS Daytonas selling well under retail. It happened very quickly too.

But that was 12yrs ago and the economy has changed in that there are more diverse incomes from sources that didn’t really exist back then...social media influencing, limitless military spending through defense contractors...etc...just more money out there than ever.

So it will be interesting to see how this goes down. I wouldn’t want to be overly invested in weaker brands with poor resale history as they will be completely ignored on the secondary market. As much as we hate that discussion ask secondary dealers what their clients fret over the most and the answer is resale.

Agree with all that. Especially that it will be interesting to see how it all plays out.

The past few years along with the next few will certainly have the potential for a business school case study.

[Old Geezer]

Originally Posted by superdog

I think that is a super point.
There are a lot of different segments out there with a few different types of buyers in each.
And each will play their own part in this scenario.

Makes sense Seth and when these different types of buyers start piling up on each other, there becomes a bit of a snowball effect. Perhaps those on the cusp of affordability are the first to back away and if financial conditions continue to deteriorate, the hesitation moves up the wealth spectrum. I think this may be why greys feel the pain rather quickly as less and less buyers are willing or able to pay the market price.
For the sake of humanity, here's hoping the virus spread is contained and treatment options improve for those afflicted.

[mrricks]

Fear is more dangerous than Coronavirus.
In three months it will all be settled down.
Market will return.
I sold some gold (bought decades ago) this week and now putting the money into the market at some attractive prices.
Now planning a trip to Europe to take advantage of empty planes and uncrowned museums etc.

“What, me worry “.

[GB-man]

The watch market was stalling before this hit Seth, at least in my opinion. I expect across the board price correction if the global economy continues to be uncertain.

To me the question is how much longer will grey dealers buy the slow movers in order to get the hot pieces.

[Fostang]

The plus side is the super clones coming out of China are drying up.

[CashGap]

Originally Posted by superdog

That said, I am not so sure that too many people are going to be looking to be spending on luxury goods for the near future. Certainly not at a premium.

So many angles.

- Some may defer or skip a purchase because these circumstances limit their resources.

- Some because they fear their resources MAY be limited.

- Some because they see other, superior opportunities... an individual may have been teed up to spend $50k plus on a watch... but now they are trying to get all free cash into the market during this buying opportunity... knowing that their gains can buy the watch for them this fall.

Etc.

[SBR]

It look like even stainless Daytona prices are softening a bit. In the grand scheme this is meaningless, hope this virus is a short term event.

[The Libertine]

With the current market conditions, my liquid cash is staying put. Deal or no deal.

[singe89]

Originally Posted by The Libertine

With the current market conditions, my liquid cash is staying put. Deal or no deal.

Think this is true for most people. With watch prices already softening from the highs I'm thinking this pullback will further bring down prices. To what degree we don't know but can grey's continue to hold large amounts of stock and demand premium prices?

[beshannon]

Originally Posted by mrricks

Now planning a trip to Europe to take advantage of empty planes and uncrowned museums etc.

I am doing the same thing, watches are very low on my list of concerns

[The Libertine]

Originally Posted by singe89

Think this is true for most people. With watch prices already softening from the highs I'm thinking this pullback will further bring down prices. To what degree we don't know but can grey's continue to hold large amounts of stock and demand premium prices?

I agree. But how much of a drop in grey prices could be expected? They’ve demonstrated greed that would even make Caligula blush.

[The Libertine]

Originally Posted by beshannon

watches are very low on my list of concerns

Amen to that.

[beshannon]

Originally Posted by The Libertine

I agree. But how much of a drop in grey prices could be expected? They’ve demonstrated greed that would even make Caligula blush.

I would guess this depends on the margin they have. Again if they do not have a need for cash there would be no reason to cut prices to move inventory.

[Blansky]

Personally I think we overthink or get tunnel vision on this stuff a bit.

To me if something isn't available or overpriced you just don't get involved or you buy something else in the meantime and sit back until the madness subsides.

Maybe that comes with age but none of this affects me much.

I've had personal "recessions" and business recessions and the fact that I can't buy a certain watch seems kind of a non event in comparison.

It just gives me time to appreciate and reflect upon what I already have.

[beshannon]

Originally Posted by Blansky

Personally I think we overthink or get tunnel vision on this stuff a bit.

To me if something isn't available or overpriced you just don't get involved or you buy something else in the meantime and sit back until the madness subsides.

Maybe that comes with age but none of this affects me much.

I've had personal "recessions" and business recessions and the fact that I can't buy a certain watch seems kind of a non event in comparison.

Too much common sense for most, entitlement is a very debilitating disease.

[Blansky]

Originally Posted by beshannon

Too much common sense for most, entitlement is a very debilitating disease.

I probably wouldn't call it entitlement because its sort of a derogatory term, but just rather the fact that a lot of people and some on this forum have made a lot of money and are used to buying what they want when they want and have perhaps lost the ability to "sit back".

When you are a hard charging person it's often hard to do, but I think it's good for the psyche to sometimes pull yourself out of the game and just observe.

[Art 1]

Originally Posted by superdog

I know the last few watch/coronavirus threads have been looked poorly upon.

However, there are quite a few threads right now pertaining to any number of things, including investments and world markets in regard to the virus.

It seems only reasonable that we can discuss the current watch market in regard to the current conditions. It is a watch forum, after all.

I think we can all agree that everyone here would prefer a healthy world and robust markets. Considering that is not currently the reality, I do not see any harm in discussing how this is effecting the watch market.

Hopefully most of you will agree.

My personal experience: I was in communication with a local gray dealer about a Patek 5968a. We hadn't spoken about it in a while though, and I wasn't paying that type of premium anyway. He actually just reached out to see if we could close a deal.

Maybe it was just good customer service. Or maybe he is fearful of getting caught with a lot of stock of very overpriced watches.

Personally, I feel bad for some of the grays. Especially the ones that have become my friends. Maybe they are just fine. I know they are for certain smart as all heck.

However, they had to buy high and have to sell high. Sure, maybe some of them helped create the market. That is possible. But my guess is that the demand, which was already waning, is going to go way down.

I am personally thinking that there will be a lot of deals soon.

That said, I am not so sure that too many people are going to be looking to be spending on luxury goods for the near future. Certainly not at a premium. And I can't imagine grays will hold them for the long term hoping the world rebounds. It looks for certain that things will just progress for a while before they settle.

Very uncertain times for any market. I imagine that luxury goods will feel this. Sure, there will always be buyers. But certainly not nearly as many which create less of a demand and therefore drive down prices.

What do you folks think?

Quite possible your guy would be delighted to sell at his cost or even a little below.

[4vCoupe]

Originally Posted by beshannon

I would guess this depends on the margin they have. Again if they do not have a need for cash there would be no reason to cut prices to move inventory.

If they are a full time business I would imagine they will need cash coming in at some point right?


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[Hollie_Rollie]

Originally Posted by 4vCoupe

If they are a full time business I would imagine they will need cash coming in at some point right?


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With all the money they’ve probably been bringing in with the hype for the past 2 years hopefully they prepared for a downturn.

[mykii]

Originally Posted by Hollie_Rollie

With all the money they’ve probably been bringing in with the hype for the past 2 years hopefully they prepared for a downturn.

It will be the solo guys acquiring and trading on the small scale that might get caught out, the rest will probably weather the storm even if it means liquidating.

[superstarmar]

Originally Posted by mykii

It will be the solo guys acquiring and trading on the small scale that might get caught out, the rest will probably weather the storm even if it means liquidating.

Exactly !

[beshannon]

Originally Posted by 4vCoupe

If they are a full time business I would imagine they will need cash coming in at some point right?


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Maybe, maybe not. Lines of credit, selling other things, deep reserves to buy new inventory . . .

Not everyone is strapped for cash