Being reasonably new (last 5 years) to collecting watches, I would be interested to hear what forum members think about the current market. There are of course the usual suspects when it comes to price hype, but the trend of pricing over the last few years seems to have been generally upward (above inflation) especially at auction. There are those however who suggest that this a bubble and part of a historic cycle. Apart from the obvious "quartz" era which severely affected the mechanical world, have their been other periods of time when mechanical watches have gone massively out of favour? Are we seeing the shine go out of the the market currently?
Last edited by Rich; 25th October 2018 at 12:12.
If someone could genuinely answer that question, they would keep the information to themselves and make an absolute fortune either continuing to buy if the market keeps rising or selling it to a bunch of mugs before the crash.
No one really knows - simple as that.
agreed, but just interested in people's views, perhaps with some historical data - realising of course that as is always said "past performance is not guarantee of future performance".Originally Posted by Mick P
If you accept that no one really knows, then the topic becomes pure gossip.
Yes most bubbles burst but that is so easy to say and in all reality, meaningless.
You just go to accept that no one knows and leave it at that.
I concur with this.
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While it's true to say that no-one knows, what everyone does know is that a bubble can only be blown up so much before it pops. With that in mind, yes, at some point the prices will have to get more sensible. Maybe. Or maybe they won't. Because no-one knows.
The other thing that comes to my mind is that a lot of watches from the 1990s look absolutely awful. In fact, they look like watches from the 1990s, and that just isn't a good look. With fashions being cyclical, now might be a good time to stockpile ugly TAGs, Seikos and Citizens from the '90s.
Happy hunting.
Whoever calls the “top” is just lucky.
In trading there’s a concept of Relative Strength which indicates when something is “overbought” and “oversold”.
In my opinion, brands like Rolex with their sports stainless range is currently overbought and there are too many sitting locked away in safes waiting for them to appreciate.
There has been a clear short-term increase in value whilst demand surpasses supply, but these mass produced pieces are never going to be desirable enough to say, end up at an auction house selling for insane prices.
The reality is that once the buyers dry up or as supply continues, the desirability and price has to cool off (unless the model is discontinued, then all bets are off).
Some will only pay RRP, some up to +50%, other’s maybe +100% , these mental barriers could play a part in deciding how far the premium will go.
I believe in buying watches to wear them and never as an investment, but I would say that as I’m currently a buyer
Last edited by Chiefs; 25th October 2018 at 12:59. Reason: typo
This article is a bit long. But I agree with the conclusion
http://www.rolexmagazine.com/2018/06...ex-supply.html
An interesting question and slightly different to the usual broad ‘is there a bubble?’ question. I don’t know if mechanical watches have ever gone out of favour apart from in the quartz crisis era, but different types of mechanical watch eg pocket watches certainly have, and the design languages of different decades go out of fashion constantly, as well as being revived some time later.
I’d say that while our current era is something of a golden age for mechanical watches with some good designs, there are a great many more that are completely dreadful, and that the current era as a whole could very easily go sharply out of fashion in the same way as the 70s or the 80s did at the time. In particular anything along the Russian Oligarch / footballer / F1 driver lines. And while some designs from the 50s-70s seem like timeless design classics at the moment, that too could change. I’m not convinced the current faux vintage revivals of those watches will age well at all in the short term, even if the small supply of genuine vintage examples continues to hold up. It’s also possible that the whole market will be disrupted by ever improving smart watches, or technology that can perfectly replicate any historical watch. A vintage classic that’s hard to find looks the best bet overall, but it would have been best to buy it a few years back.
If it's a bubble it's being going on for the last thirty odd years!
Cheers,
Neil.
I don’t think it’s a bubble in so much that I think prices are far more likely to plateau than to pop and fall. The rises may stop but I don’t foresee a crash in my admittedly dusty crystal ball
Given the growth of the middle classes in Asia, plenty more demand to come. Rolex will struggle to meet the market.
Which, incidentally, will perhaps determine future design. What Asia likes, we'l all get. You can see the trend in car design. China first.
Yes it's a bubble, which started back in the 1980's when people started to rediscover the inherent beauty of mechanical timepieces after quartz decimated the market in the 1970's.
Prior to that point there was almost zero residual value which saw many beautiful mechanical watches broken up to melt down the cases if a precious metal - or simply scrapped if steel cased.
Since that time prices have moved relentlessly upwards despite significant market restructuring which saw the loss of many independent manufacturers to merely become sub-brands to major multinational manufacturers.
Will the value bubble burst?
Inevitably - you only have to look at history; or ask yourself who wants to wear a pocket watch today?
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Almost everyone in Shoreditch. Easier for them to read while piloting their penny farthings on the way to the cereal bar.
With a very sharp increase towards the end of it though... One question that I don’t know enough to answer is whether the Swiss Franc is ever likely to revert to historical levels, as before the financial crisis. From the little I’ve read it seems we are still very much living in the shadow of that.
There’s a nice animation here which includes an explanation of debt fuelled bubbles in asset prices, from a man who should know. You might ask where China is in this cycle, as a driving force in watch consumption. But with watches there are so many other factors overlaid on all this, such as changing tastes and technologies. At least sought after vintage watches have the advantage that you can’t increase supply, though anything could happen to demand.
I think people need to stop thinking of a rare valuable watches as just a time piece. Think of it more like an valuable asset, which
1) Men like and can be worn (most men only seem interested in Cars and Watches)
2) unlike cars, they are easy to store and easy to maintain
3) unlike cars they are not subject to road tax nor do they require petrol or annual servicing.
Finally, and perhaps more importantly they are not subject to capital gains taxs and can be moved between countries very easily (on your wrist).
If you are a criminal then it's also a great way to laundering money because a old Rolex (for example) bought in Brazil (for example) for £50k cash, can easily be smuggled in (on your wrist) and be sold for £50k (or more) in London.
Vintage watches are becoming a currency.
Whoever does not know how to hit the nail on the head should be asked not to hit it at all.
Friedrich Nietzsche
Must say I agree with this, with perhaps a gradual and small price drop at some point. When this will be is anyones guess.I don’t think it’s a bubble in so much that I think prices are far more likely to plateau than to pop and fall. The rises may stop but I don’t foresee a crash in my admittedly dusty crystal ball
If Rolex for example have not been limiting supply in the UK but its a case of usual supply / huge demand (as discussed over at TRF) then I guess things are not going to get better anytime soon.
The thought of them holding back supply gives hope that one day they will flood the market and prices will go back to normal i.e. grey prices will drop as one will be able to walk in and buy from a AD.
However the greys seem to have plentiful supply so maybe Rolex are indeed supplying all they can produce and we are screwed until they increase worldwide production
Going back to the OP (an excellent question).
I think we may be about to see one.
Enthusiasm for traditional watches (particularly mechanical ones of course) has surged massively in the past 10 years or so, and for countless reasons which i'm sure most of us on here are all in tune with and it doesn't need explaining. That has hopefully answered the 'current market' part of the question, and of course some manufacturers have excelled at this (Rolex of course).
Whether it's a historic cycle, i think it may well be, but also i fear it may be the last spin of the cycle as we know it.
I love the relative simplicity of my mechanical watches, and in a way that's just for me, as it's my own mini-protest against the accelerating progress of technology (and i'm in my 40's and have grown up with tech / computers / digital media all my life) but i've seen enough of it to conclude that it isn't necessarily the answer to all our problems and doesn't necessarily improve the quality of our lives as it was originally supposed to do. I just can't help thinking, with all the optimism and passion for this industry / hobby and all the amazing creations it presents, that smart watches with eventually take over and rule the roost. They're on millions of peoples wrists as we speak, and will be on millions more in the years to come (once they sort the battery life out!). I've never owned one and don't intend to, but i can kind of see the appeal and the more that tech grows (and it will) the more that this hobby / sector going forward will become increasingly condensed and niche. And as to what effect that has on values, well you tell me. Could go up or down depending on consumer sentiment and whether the next generation really care about the craftsmanship that's gone into the manufacturing of your Rolex OP, Omega SM300 or AP Royal Oak.
I don't think the shine has gone out of the market but i think the big boys (i.e. Rolex SA, Swatch, Richemont) are making the most of it these days, and although i'm sure they'll always be around these are their halcyon days and Apple / Google will likely overshadow them eventually.
Last edited by WillHarris2306; 25th October 2018 at 18:23.
New guys have been asking this same question for 20 years.
I've not seen any bubble bursting in that time, part from the very specialised Rolex Bubbleback one.
saw a 116500 advertisement at £20k+. An in production watch with more being made every day for at least a few decades.... if it's not a bubble then im just stupid i guess.
I think much of the price rise in luxury watches over the last 10 years in particular has been the huge rise in strength of the Swiss franc relative to many other developed economies, particularly those affected by the financial crisis in 08/9.
Sure, prices would no doubt have ticked up anyway, but probably no where near as much without the currency issue. It would be interesting to see how much a Rolex sub rrp has increased to a Swiss buyer over the last 10 yrs compared to a gbp, usd or euro purchaser. That could prove my theory wrong of course but I would think the inflation in Swiss francs could well be much lower.
If I’m right about that, I wouldn’t expect a reversion of exchange rates to longer term averages to reduce the £ rrp’s, rather a protracted price stagnation for a few years.
Does anyone have that sort of info they could share?
There have been a few 'spikes' over the years.
Vintage Rolex happened a few years ago, settled a little and then went sky high again.
Perceived 'limited edition' stuff seems to spike on release by people willing to pay over the odds 'cos they missed out.
The dynamic is really down to this:
For years watches were collected by watch collectors and mostly this went unnoticed to most. Lifestyle and social media and desirability for the 'accessories' that show success, good test and wealth has ultimately resulted in the people with big disposable income getting into the 'sport'. They can (and will) pay over the odds for anything deemed desirable - this in itself pushes the market - and will continue to do so for the foreseeable.
When you look long into an abyss, the abyss looks long into you.........
All depends on what the next generation desire ... many don’t even wear a watch.
I’d not buy a watch as an investment. As for stashing brand new watches in safes as an investment that seems pointless. Either wear them or invest in the markets.
Is it a bubble though?? Lots of things have increased in value over the last 10+ years, houses in my area have almost doubled, classic cars in general have increased a huge amount and watches likewise.
I didn’t get spending 4 figures on a watch back 10 years ago but how I wish I did, point is £6k for say a 16710 GMT is now seen as around the going rate and the only thing that will change all this I have mentioned above is if there is another global economy crash.
Agreed. A watch that makes a profit is the exception rather than the rule and I would class this as speculation.
An investment should make a return and have potential to increase in capital value (shares, property etc) over a long period.
The bubble in watch prices is more in the grey/ used market and this is driven by both speculation and limited supply of a few high demand watches. These aspects should calm down at some point imo, but the general upward march of rrp’s will continue as long as there is much wider global demand for luxury mechanical watches. Who knows when that might change??
It could easily change as younger generations potentially shun mechanical watches, but then again I never appreciated them until I got older...
The world economy has been a bit stagnant for 10 years and watch prices have sky rocketed. God knows what will happen if we have another economic boom - demand pull inflation. I can't foresee a burst for a very long time.
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World economic growth has actually motored along at decent levels over the last 10 years after the initial 08/9 shock to the system!
It’s just that the developed economies, such as the U.K. that have lagged (in particular) emerging markets such as China (hence huge increase in luxury goods consumption in China)
For me, it's all fueled by global low interest rates since the financial crisis. Easy money means the rich gets richer and inflate asset prices with luxury products, such as wrist watches, getting dragged along for the ride.
Property prices have been insane this last decade despite historically anaemic global growth. With interest rates now beginning to rise, it will be interesting to see what happens to asset prices but I think signs are showing global property prices have begun to taper.
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Many of the manufacturers are certainly operating in a bubble with there every increasing prices on stock which for many is just not shifting within the market place. With manufacturers having to destroy stock it pretty much tells you how the Watch market is operating in reality. Only this week I was reading about the difficulties Tag Heuer are having in the US, no one is interested in that brand and sales are off a cliff.
The bubble for Watch buyers is probably centred around a small number of manufacturers particular models but speculators have used this too push prices up for even the unpopular models from those manufacturers and creating a false impression of desirability.
The bubble bursts when economies burst, that has been shown on every luxury commodity from the Art world to classic cars etc. When people are trying to keep a roof over their head during hard economic periods the first thing to be sold off are the non essential high value expense pieces and watches come into that category. Most secondhand dealers and even manufacturers would hope to hold out with their high sale prices but if the economy tanks for a long period there would be an adjustment either in price or through operating cutbacks.
Asia economic strength has certainly propped up the luxury goods market for sometime now but when that slows down or bursts, then god help with watch market.
Yes, bubble, largely driven by QE. The very top end of super rare collectibles will be insulated but mid range mechanicals outwith Rolex will, in the main, turn out to be a very poor investment over the next 10-20 years. My view is that, in the West at least, we watch wearers are increasingly in a minority, but the factories keep cranking out millions of units a year, even in the mid price band. Just my guess, but I have 0% of my retirement fund in watches.
Nonetheless, you could reasonably argue that the increases of certain desirable and rare vintage models are perfectly reasonable, due to a very limited, and in fact gradually decreasing supply of good examples being exposed to an ever-increasing global audience by glossy online sites like Hodinkee, with their advertising quality retouched photography. Without doubt debt fuelled rises in asset prices and printed money can create bubbles, but the underlying trend is that they might be expected to rise anyway due to simple supply and demand.
Apart from the influence of economic cycles and online media, the other question is how long our culture can remain enthralled by luxury nostalgia. Here we are in the middle of the rise of the internet, AI, robots, and self-driving cars, fixated on mid-century design icons and yearning for a simpler time when ‘men were men’ and raced round Monaco in cars that were likely to self-destruct. Much like the Victorians, who in the middle of the industrial revolution collected painting of Arthurian knights of the round table and classical heroes being seduced by nymphs. Maybe we’re always looking both forward and back, but the current obsessions seem quite particular to our time and who can say how long they will last. Remember that before too long, there won’t be many left who were imprinted at an impressionable age by the image of Sean Connery wearing a submariner. Nostalgia ain’t what it used to be as they say...
Last edited by Itsguy; 26th October 2018 at 12:25.
Some good observations there.
If I was sitting on a pile of vintage Rolex I’d be taking some profit now.
I only have 8 watches which are all going up but I don’t view them as investments.
The service liabilities are not insignificant and skilled watchmakers are harde to find so that liability will get worse.
Right now I’d be happy to sell one that doesn’t get much wear.
I don’t think people in the majority buy watches for speculation or investment unlike other asset classes (if you were to call them an asset class in the first place) so my answer is definitely NO it’s not a bubble.
But
Peoples taste change within watch designs, brands, era or even digital vs mechanical. So yes there are watches under or overvalued, and watches that should hold and rise at least with watch inflation better than others.
My thought are that when people get to a certain age an income, they become interested in buying a good watch, hence if the argument is that youngsters are not in to nice watches now, it doesn’t mean they won’t be in the future.
Add to this, the rise of the middle class in the developing countries, let’s not forget only fraction of people live in OECD countries. As the middle class grows, interest and taste evolve, and nice watches is a universal timeless man jewellery that is accepted across cultures in my opinion.
Ramble over.
In a roundabout way No!
M
100%
To play devil’s advocate, the fact that something has been going the same way for 20 years isn’t any guarantee it will continue in that direction, that’s the classic ‘it can only go one way’ logic of all bubbles. After all, what’s so special about 20 years as a yardstick? I believe bowler hats had a pretty good run too. That’s not to say I disagree as things stand right now, particularly when it comes to sought after vintage watches by famous brands, given the finite supply. I’m not rushing to sell anything special, I think I’ll still like them in future and there are many of my generation who will too. Who knows about the next generation though. It’s a different picture for new watches, many of them will start to look horrendously out of date and then end up in a land fill I suspect, there are too many of them and too few that will turn out to be collectible future classics.
I linked this animation from Ray Dalio earlier, but it bears repeating, it’s excellent - as is his other more philosophical animation which recalls the time he was caught out by an economic cycle that was much longer than his living memory.
While Rolex prices have risen at a rate above RPI for as long as I can remember, the real bubble has appeared in the last 2 or 3 years. I've even seen people on eBay listing SS Datejusts at a premium to list price. I don't think that ever happened in the past.
If you see the prices listed on this thread:
https://forum.tz-uk.com/showthread.p...f-Sales-Corner
murkeywaters mentions "real sales from around 2003 - 2008. 16600 Seadweller for £1700 anyone? No.. okay how about £1650? Perhaps a 16610 Submariner full set mint for £1650? No... try me at £1599 " I bought a new SD in 2001 (possibly 2002). It cost £2,270 and I remember the Sub Date at the time was £2,170. Can't be exact on the sketchy details but it looks as if pre-owned pretty "core" SS Rolex models were selling some way below list as recently as 10 years ago.
David_D is spot on in regards the bubble currently affecting the marketplace, as I said previously only on certain watches from a couple of brands is price inflation in the sky but all other models from these brands are being caught up in the bubble, models which you would never pay RRP for never mind over RRP.
For 99% of watches the bubble does not exist, buyers are going to lose money and in a lot of cases a lot of money but if you hold on for long enough you just might break even. If anyone wants an example of perceived watch market bubble, have a look at Watchclub and there F.P. Journe Centigraph, a Watch once valued at £290k!
Very nice Video.
In my opinion this price hike in the last 5 years is somewhat similar to what we see in the real estate in some countries, with low interest rates on the banks, the rich (which are getting richer by the day) needed to find elsewhere to invest their money, real estate being the obvious place to do that, luxury commodities are being seen for some has not just a matter of status but also a place where to have money secured without paying taxes and with the possibility to flip in the future for a profit.
I think the market is extremely nuanced. There are some watches that are just plain rare. Most pre seventies Rolex simply are not that common. Military watches, especially issued ones and, for example, watches with an interesting historical background are always going to outstrip supply.
One of the side effects of the current 'bubble' has been the education of buyers. People have a clearer idea of what is good and what they want. So, for example, I suspect that a 1016 Explorer will always be a safe bet, they are not that common, people know what they are and why they want them. A brand new Explorer is far more of a risk. The fact is that Rolex are churning out some models and selling them as if they were rare. It would be much easier for supply to outstrip demand. Vintage is the best insurance in most cases.
I’d wager that once the Brexit debacle causes arsehole to fall out the economy, the bubble will if not burst, at very least start to shrink considerably...
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Conversely, the pound might drop for a while. In an international market this might make our watches worth many more GBP than they are now and very attractive to foreign buyers.
When there is change there will always be winners and losers, those who can respond better to new markets / situations / opportunities and make a good living.
I totally agree with this education idea. There was a different situation before watch collecting became a thing. And it is even more different with Internet. Look at the Rolex vintage market, the demand is crazy.
I think the education process is relatively new and there is still a far from efficient market. However, it is drawing in new blood and setting them up to support the market. We are a long way from a truly informed market and still in a situation where a little bit of real knowledge, even skill, goes a very long way. On here, for example, there are probably a hundred or so people who could double or treble their money pretty well at will on ebay simply by knowing exactly what they were looking for (in their particular area of expertise) and then selling it with good pictures and all the information attached. I'm sure there's more than a few have a tidy sideline doing just that. When this becomes more a matter of luck than skill then we'll be looking at an educated market.
I was thinking the exact same thing. Personally the monetising of what had always been a ‘fun hobby’ has caused me to totally lose interest in modern mechanical watches - I’ve bought and sold quite a few Rolex, Panerai etc and never thought any were ‘worth’ more than the couple of thousand pounds they cost new at the time. I just can’t imagine spending serious money on a mass produced trinket
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I would agree a drop in the pound is inevitable - and whilst as you say this may make UK watches more attractive for the international market. However the UK watch market is still predominantly made up of UK buyers, and as the also inevitable recession bites, their be a load less people spending money on luxuries like watches.....
There’ll winners and losers for sure, but I suspect the latter will outweigh the former by some margin!
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Will the bubble burst ?
I think most mid-range brands will follow the Rolex model and end up producing fewer watches to reduce discount and increase perceived exclusivity and luxury.
If you take the waiting list Rolex models as an example - there must be hundreds of steel Subs delivered per month in the U.K. yet there is still a premium and demand has never been higher!
The bubble seems to be steel sports Rolex, steel Patek along with their vintage siblings when it comes to value. There's a rose gold Breitling Transocean chrono with a 2-3k estimate at Bonham's vs a retail price of 24k. A potential £20,000 depreciation in a couple of years - far too much for many people to stomach on a luxury item I think.
Life is a bubble, we all go pop one day.
It's just a matter of time...
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