Fine Swiss Watches - Biggest Bubble I've ever seen

[iam4liberty]

Please reconsider if you are thinking to pay double MSRP.  Rolex and others are changing distribution model.  This will likely not hold as speculators dump.  And there are many fine options in non-speculator driven brands.

https://robbreport.com/style/watch-collector/the-most-coveted-new-watches-of-2018-2836398/amp/

The 6 Most Coveted Watches of 2018 (Including a Rolex That Has Already Doubled in Price)

Talk about a return on investment. Some of the most coveted watches of the year have already doubled in value on the second-hand market after they were swiped up within hours of their release to the public. The Rolex Pepsi GMT-Master II, original sold for $9,250 (if you could get your hands on the tightly controlled supply), now sells for up to $22,000 at auction and at trusted pre-owned retailers like Bob’s Watches. A Rolex Rainbow Daytona Cosmograph Ref. 116595 in Everose originally retailed for $96,900, but Phillips already sold one at auction this November for 243,750 CHF (or $246,013 at current exchange) more than doubling its price. Not surprisingly, the most popular new watch debuts mimic what’s hot on the auction market—which has seen record booms in hammer prices with a Rolex selling for $5.9 million at Phillips this year. Alongside Rolex, Patek Philippe retains its status as king and its Nautilus Ref. 5740 Nautilus Perpetual Calendar was one of its most talked about (and hard to get) timepieces of the year, with its Ref. 5270P perpetual calendar chronograph with a salmon dial following closely behind. Getting on a waitlist to buy these timepieces is not even an option unless you are a proven collector.

[Mr. Bill]

That is totally crazy.

Getting on a waitlist to buy these timepieces is not even an option unless you are a proven collector.

Hmm.  Certain favored people are making a lot of money off of this.

[David in MN]

The subgenre in fashion of men's watches is amazing. My father in law literally puts $30k on his wrist to go pick up milk. He bought my nephew a pocket watch for Christmas. These guys are nuts over the topic. My dad's boss gave him a $10k watch for retirement that sits on his home desk. It's big and heavy. Should he wear it for gardening or pickleball?

I suspect the price spike follows a high stock market where guys are getting into status symbols. But I'd be nervous calling it a bubble because it is such a small niche market. The vast majority of us look at a $500 watch and laugh and walk on. These aren't functional machines. They're baseball cards to be traded and collected.

I quit wearing a watch when I got a phone. But hey, I think I have north of 20 guns. ANd my wife has a rubbermaid container of purses by Kate Spade, Michael Kors, Coach, and the like. Pre-kid I would research the best designer purses and that was my gift. [As an aside, guys, not bad advice if you have the cash. Your wife will love a custom purse and I've even had store managers call me the 'best husband ever' when I knew the current hot handbag.]

So where I sit is that the prices are nuts but not nuts when compared to other fashion items. Guys geek out over limited release Air Jordans and there's a weird denim trend where jeans are limited release and do funky things like weave stainless steel into them. I used to wheel and deal in vintage Port wine and it's the same thing. Men are just stupid and want the Honus Wagner or the Lambo or whatevere the goofy thing is. When we hosted the NRA convention I met a guy who specifically collected engraved Nazi pistols and had several.

I guess I'm saying not to underestimate the male ability to fetishize just about anything. We joke about women and shoes but guys can get into cars, guns, skis, tennis, boat, 4 wheelers, wine, neckties (oh I have spent on those in Milan), or darn near anything.

[iam4liberty]

It is a funny situation.  Rolex has reportedly been trying to destroy the grey market for its watches by drastically reducing the number authorized dealers receive.  They even sent out Rolex trays with fewer watch spots on it.  Then when demand outstripped supply, dealers started selling at premiums over MSRP higher than Rolex wanted and Rolex cracked down on the practice.  Speculators/flippers then starting going shop-by-shop clearing out all inventory of the most desirable items and then selling them at huge markups via online sites.  So the authorized dealers yanked them from shelves to hold them in reserve for the most exclusive and longest customers.

Many of the other swiss watch makers facing the same issue are ending the multi-brand authorized dealer relationships setting up their own mono-brand physical stores and online shops.  Thus they can eliminate grey market, increase margins, and enforce MSRP.   Rolex has been making moves suggesting something similar.  If that happens, premiums are expected to collapse like it has for these other brands.

https://mobile.reuters.com/article/amp/idUSKCN1LM2MI

Swiss watchmaker Audemars Piguet to boost revenue by taking sales inhouse

Swiss watch brand Audemars Piguet wants to totally control the distribution of its luxury watches, cutting out third-party multibrand retailers, within three to five years, its head told Reuters, adding the integration would boost sales.

"We'll accelerate the consolidation process to arrive at a totally integrated retail network," Chief Executive Francois-Henry Bennahmias said in reply to emailed questions. "That should happen within three to five years.

"Since the beginning of the year, we've seen double-digit sales growth. We were already close to one billion Swiss francs in sales last year, we'll easily exceed it," he said, adding this was also a consequence of the retail integration.

Swiss watch brands from independent Audemars Piguet to listed Swatch Group and Richemont are trying to get a firmer grip on their distribution by increasing sales via monobrand stores -- proprietary or run by franchise partners -- and their late but determined push into e-commerce is also accelerating the development.

Bennahmias said Audemars Piguet, which competes with Swatch Group's Omega and Richemont's Cartier brands, would launch its online store in 2019 at the latest, but others have moved faster.

[iam4liberty]

Prices unwinding now.  (OK, worse pun ever...but throw me a bone).

https://usa.watchpro.com/prices-hottest-rolex-models-falling-fast-says-secondary-market-specialist/
Prices for hottest Rolex models are falling fast says secondary market specialist

The boom in prices for the hottest steel sports watches from Rolex, Patek Philippe is starting to unwind, according to Philipp Man, co-founder of secondary market specialist Chronext.
...
“If I look at the Pepsi, which I sell every day on Chronext, and I can tell you that the premium above retail, the delta, is decreasing pretty fast. It is still quite significantly above retail, but you can see that is going to change pretty quickly. You can see a number of watches that were going for crazy prices, but are now dropping back towards normal retail. One of those is the 5524G, the blue [Calatrava] Travel Time Pilot from Patek Philippe. When that watch first came out, it was selling for €65,000 on the secondary market. Now it is selling for €40,000; that is a 30% drop in market value and back at around retail value. There has been craziness in the market, and you can see the peaks in prices, but they are decreasing more and more,” Mr Man describes.