In this first column, I would like to examine the price trends of luxury watches during major economic fluctuations and consider future buying and selling based on Rolex in an easy-to-understand manner.
It is a well-known fact that the wristwatch market has only recently matured and seen an increase in high-value transactions since about 10 years ago. The majority of Rolex owners today have likely purchased their watches within the last 10 years. Over the past 10 years, it is expected that there has been a shift in the perception and position of watches, from those that were previously considered a "hobby" to those that are "part of a real asset."
As mentioned above, luxury watches have been transformed into "part of real assets." This is why it is important to be careful about the timing of economic fluctuations (global situations, stock prices, exchange rates, etc.).
The new coronavirus is currently posing a threat to the entire world. There is an immeasurable difference between the temperature at the end of last year and now. It is no exaggeration to say that there is a "global depression." There is no doubt that the turmoil caused by this virus will have a major impact on the watch industry.
With such an uncertain future, what should you believe in when buying and selling watches?
In this column, we will try to resolve at least one of your concerns or questions.
[Past economic upheaval = Lehman Shock = Event that occurred just before the market reached maturity]
Let's take another look at the price movements of luxury watches, using Rolex as an example.
2008 Lehman Shock
In September 2008, the collapse of the American investment bank Lehman Brothers triggered a chain reaction that led to a global financial crisis.
Most people would probably say that the biggest recent economic upheaval was the Lehman Shock. In response to this shock, the United States took the measure of weakening the dollar to rebuild its economy. Naturally, the yen appreciated, the prices of parallel goods fell, and the supply and demand balance was disrupted.
*Price list of major ROLEX models at the time
As you can see from the chart above, most of Rolex's major sports models are declining in price.
*The figures shown are for prices as of December, so there may be some discrepancies, but the figures below are rough estimates.
[DAYTONA Ref.116520]
Before the Lehman Shock: approx. 1.4 million
After the Lehman Shock: Approx. 1.05 million yen * Purchase price: 730,000 yen (black) 630,000 yen (white)
[SUBMARINER DATE Ref.16610]
Before the Lehman Shock: About 500,000
After the Lehman Shock: Approx. 400,000 yen * Purchase price 290,000 yen
[GMT MASTER II Ref.16710]
Before the Lehman Shock: Approximately 600,000
After the Lehman Shock: Approximately 520,000 yen * purchased
[ EXPLORER II (Explorer 2) Ref. 16570 ]
Before the Lehman Shock: approx. 480,000
After the Lehman Shock: Approx. 410,000 yen * Purchase price 230,000 yen (both black and white)
Nowadays, both the list price and the premium price (premium price like the current Daytona) have risen sharply, and although it is an unfamiliar figure, the movement is still clearly readable. Also, I have listed the purchase price to the extent that I can understand it, but the amount is so high that I can't help but be silent. It is a price that is unthinkable nowadays.
Although it is not shown in the figure, even the "Ex1" which has an image of being very unlikely to fall in price
[ EXPLORER I (Explorer 1) Ref. 114270 ]
Before the Lehman Shock: approx. 380,000
After the Lehman Shock: approx. 320,000
Furthermore, the DEEP SEA Ref. 116660 saw a dramatic price drop, dropping from 1.2 million to 790,000 , a drop of about 400,000, or 33%, and was bought for 460,000 at the time , which made quite an impact.
From here, the price gradually increased to the present. This is the general price trend.
Future predictions...
So, what will happen in the end as I write this?
My guess is
Tracing price trends following the Lehman Shock
The price drop that occurred during the Lehman Shock was due to the stock market crash and the demand for liquidation, which led to the sale of many real assets. Real estate, high-value art, and other assets all "tentatively" plummeted in value.
In fact, this "just in case" is the key.
This is because the watch market is now at a higher price range than it was during the Lehman Shock, and buyers have more financial leeway and understand the situation. In other words, it is unclear whether there will be any “fire sales” due to the crisis.
What I want to say is,
Items where demand exceeds supply = vintage items or rare items
This means that the owner is unlikely to let go at this point.
On the other hand, it is better not to let go of such models.
Furthermore, such models are always available.
As a saying in the investment field
"Investing will not work unless you trade in the opposite direction to what others do."
It is also said that...
Everyone says lightly, "I bought it cheaply when the market crashed and made a profit," but Now is the time when prices are likely to fall rapidly and you may feel like selling quickly and wanting to get rid of your assets. On the other hand, successful people use this time to buy good things. As I have said many times before, now is the time when prices are likely to fall rapidly.
In fact, it is a very difficult decision to make in that situation.
You should consult a professional appraiser.
That is what they are here for.
seeing is believing
Seeing is not worth a thousand words
A hundred actions are worth one purchase ...
I also bought a hand-wound Daytona in this adverse situation.
I'm not sure what will actually happen though.