My job, for most of my professional life, was being a stock and bond trader: predicting price trends was a big part of my daily activity. The thing is, the moment you think you’ve nailed it, the market kicks you in the nuts and goes the other way. No matter what market gurus will tell you there is no way of predicting what a stock’s price is going to be a year, a month, a day or even a second in the future.
Watches, Rolex in particular, have become the topic of heated discussion as to whether they should be regarded as investment level assets where investment level defines something that will appreciate given a reasonable amount of time. I won’t delve deeply into thIs subject as many articles have been written on these pages. Suffice to say that I believe they should be considered as assets; if they are investment level or not is a matter of sheer luck. Just think about all the Star Wars merchandise from the 70s. An unopened mint condition first edition Jawa with a vinyl cape from 1977 will run you the sum of 18.000 US Dollars. This is an item that was sold in toy shops for a few dollars. Obviously nobody thought this would become an investment level asset…and just chucked it into the waste bin together with the day’s left-overs. But the few lucky ones who did hang on made a killing. This is not only due to the rarity of the toy, but the hype associated with the franchise. Rarity and desirability maketh the treasure. Case closed.
It is common knowledge that, in a free market, the dynamics of demand and supply will set a price for a given commodity. The imbalance between the two will create a rising or a falling price. The grey market prices on stainless steel professional Rolex timepieces seem to defy this rule. While it is close to impossible for an average Joe Bloggs to get one of these sought after watches at list price from an AD, the grey market is flooded with the likes of Batmans, Pepsis, Daytonas and Submariners, some of which are selling at double (or more) list price. As such this artificially created oligopoly is anything but a “free” market that responds to the laws of demand and supply otherwise there would be fewer batmans selling on Watchfinder or the prices would be lower and closer to list. The recent Watchfinder “sale” has been hailed by many as a buck in this trend of “the only way is up” for the price of said Rolexes. While I think it’s an important signal, a blip on the radar so to speak, I think we are still a long way away from crash in the Rolex SS Sports unfree-market. That is unless Rolex itself steps into the arena and does something about it. And something it did though not what you would think.
Come 1/1/2020 at 00:00 hours Rolex updated i.e. raised the prices on basically their entire catalogue especially the sought after steel sports but also steel OPs and Datejusts. The average raise was around 7% depending on model and market. Unsurprisingly the Milgauss was spared the price rise, a funky watch nobody gives a toss about that can be easily found below list on Chrono24. I actually like it because of its underdog status. Many are asking how this fits in with the premise of the market cooling down. The rumours of this price hike had been circulating the watch community for days and there was no firm consensus as to why this was going to happen. To me it looked like good ol’ Rolex was trying to cash in on the grey market madness. Wouldn’t you be pissed if something you are selling at list at 8k is being flipped by your “VIP clients” at 12k the moment they exit the AD? Or maybe it’s something else?
After mulling the news for a few days I have come to the conclusion that R. may be trying to elevate its prices to “entry level” HH brand levels: Jaeger-LeCoultre comes to mind. A way to cure the brand’s perceived “inferiority complex” by watch connoisseurs. A submariner date is now priced at JLC Polaris date L.E. levels. But Rolex IS NOT JLC, not by a long shot. I’m not disputing the brand’s prestige, but anybody who has even a passing interest in watch history knows that Rolex owes its popularity to the modern tool watch category, and only in its recent history has it been considered a luxury item.
Antoine LeCoultre was tinkering in his workshop making innovative high-quality timepieces for the Swiss bourgeoise as early as 1830 when Hans Wilsdorf, founder of Rolex, wasn’t even a glint in his daddy’s eye. Also, no other brand is as divisive in the watch enthusiast world as Rolex: it’s either loved or loathed. Hated mostly because it’s the aspirational watch brand on the wrists of people who couldn’t care less about watches.
The question remains: how is this going to affect grey market prices? Will all the vendors immediately change their offerings to reflect the new list prices? My idea is no, well mostly no. The super inflated prices on Watchfinder and the major grey market dealers who have stockpiled hundreds if not thousands of these watches will probably remain the same. Rolex is actually playing into their hand because their eye-popping prices will seem more “afforadable” to the average upstart who has more money than brains. The people who will be asking more for their watches will be the private collectors and enthusiasts, especially for the less hyped models such as the steel Submariners whose price premium was much lower to begin with, despite their popularity. The list price hike will shift up the bottom and mid-end prices by a notch mostly leaving the upper-end price offerings from the likes of Watchfinder and Bob’s Watches untouched. This will ultimately have the effect of making one these pieces less affordable for the seasoned watch nerd, who will shop around eBay and the forums but will change little for the bloke with piles of cash and no love for watches, who wants to be seen donning a Daytona, despite the ridiculous outlay.
Will all this come to pass? Who knows? Nobody can predict the future (wink wink).
The name’s Luigi but his friends call him Gigi. Italian lifelong watch enthusiast, born in southern Italy, but grew up in London, with an English (dare we say Scottish) dry sense of humor. Started the hobby in early childhood with a Timex Mickey Mouse watch, and has been going through the ages with all manner of timepieces (quartz, digital, Swatches etc. etc.)
Has been living in Milan since 1981 and works as a financial controller in a bank. Loves films and often uses obscure quotes. Only took “the red pill” in June 2019 and shot all the way down the watch collector’s rabbit hole at supersonic speed spending most of his disposable income in useless things you strap around your left wrist. Is a big fan of Tudor and currently owns 4 of their watches.
Is considering selling a kidney or mortgaging the family home to fund the purchase of a Ressence Type 5 oil filled diver’s watch.
Is an avid amateur photographer and has recently taken to watch photography and watch review videos on YouTube.
Instagram: @timetotalk_watches, YouTube: Time to talk watches