﻿Prices from the most recognized watch brands in the world, particularly Rolex and Patek Philippe,
have finally fallen. So, should you buy the dip? Keep watching until the end to find out!
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The Rolex Daytona is the first luxury product to fall victim to the cryptocurrency meltdown.
Prices for the most sought-after timepieces on the secondary market, such as the prized Rolex,
have suddenly dropped after reaching all-time highs prior to this year.
Gains from cryptocurrencies and stocks, stimulus cash,
and speculation all contributed to the second hand watch bubble, which is now crumbling.
New watches and other luxuries are still in high demand at this time. This craze, especially
in the US, may not persist, as can be seen by what's unfolding in the secondary watch market.
A combination of booming stock markets and cryptocurrencies in 2021 increased wealth
and sparked a greater interest to invest in other assets such as non-fungible timepieces or tokens.
A Rolex was one of the investment portfolios that some investors were keen to make when the markets
started to decline earlier this year due to growing inflation and geopolitical strains. A wave
of young watch merchants thus joined the devoted collectors. A decrease in Russian buyers as well
as Chinese lockdowns may have boosted supply. All buyers, whether novices or seasoned pros,
were after the same models. The Rolex Daytona, the Patek Philippe Nautilus, and the Audemars Piguet
Royal Oak, the holy trinity of the most anticipated watches, were trading for
way more than their retail value. Richard Mille's skeleton-themed pieces were likewise very popular.
That demand is now diminishing as the S&P 500 hovers on a bear market and Bitcoin has lost
around 70% of its value from November. More buyers are being reluctant. Runaway inflation,
higher interest rates, and the absence of stimulus payments are all contributing
factors. The Daytona, Nautilus, and Royal Oak models, which experienced the most spectacular
advances, had the greatest reversals. Prices are expected to be down about
25% from their high. This does, however, include private transactions, which might not be captured
in the readily available market data. Some companies are doing better,
such as Vacheron Constantin and Richemont, while some collectors have ventured outside the more
well-known brands or have run out of money. Some less expensive models, including Tudor,
a sister company of Rolex, did not experience the same surges as more premium ones. Additionally,
there is still a demand for pieces that are truly rare rather than just scarce.
It's not hard to see that the watch market has been, to put it lightly, volatile. Watch prices
have been greatly inflated and are currently falling even more quickly than they were rising.
Although purchasing a Rolex may become slightly more affordable as a result of the secondary
market correction, it may not become any easier. Since not all gains in the aftermarket have been
eliminated, there remain waiting lists for a lot of new models that are at least two years long.
Certainly feels like a good deal to purchase a Rolex through a retailer. The supply of certain
Cartier, Omega, and Tudor models is exceeding the demand for watches from Switzerland Group Plc,
which has shops in the UK and the US. The same factors that inflated watch
prices can also affect the secondary market for other luxury items like handbags. For instance,
there has been a surge in new, younger customers. It has, however,
held up to this point, maybe because despite price increases, there hasn't been the same bubble.
But, what is taking place in the watch industry can be an indication
of what is to follow for both high-end retail and luxury second hand stores.
The desire for shoes, handbags, and fine jewelry in the primary market was driven
by those very same variables that fueled the demand for watches. According to analysts,
the surge in US high-end sales last year was primarily driven by cryptocurrency wealth,
which they peg at 25–30%. The stock markets and demand are strongly intertwined.
The year's second half will be compared to a time in 2021 when sales increased,
but the upcoming figures from large luxury residences are likely to indicate high US revenue.
This summer, a lot of Americans will visit Europe to take advantage of the strong dollar and spend
lavishly in Paris and London boutiques. However, they may end up pulling strings from their wallet
once they come home this fall, potentially having used some of their money already.
The vital holiday spending season appears even more unpredictable
when you include the prospect of a recession. Naturally, China's comeback might take over. After
the nation loosened quarantine regulations for incoming travelers, luxury stock prices briefly
increased this week. The clock is ticking for the big giants, especially those in the watch market.
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When spending bigger chunks of money, a person's general financial confidence is crucial. Making
the choice to purchase a watch worth thousands and thousands of dollars, seems very obvious
when portfolio values are dramatically decreasing for the majority of people throughout the world.
When deciding between needs and desires, a person's purchasing
power is important. Our currencies lose value as inflation keeps spinning out of control.
This makes the distinction between needs and desires more apparent, and the state of the
watch market is proof of that. Inflation-related price increases have reached such high levels that
the free market is beginning to push back by decreasing demand for the watch market.
One can contend that the factors responsible for the bubble will suffer the greatest losses
and be driven out of the market. The typical watch collector who remained patient over the past three
to four years is now in the best possible position since they can now wisely purchase watches,
such as a Rolex, from authorized dealers or purchase second hand watches at decent costs.
As they say, history often repeats itself. The watch market has been growing and has kept rising,
much like the 2008 housing crisis, with many market players assuming as though
this is how the market will always function. As usual, a correction will come at some point,
and if it does so in a volatile market, crashes are sure to follow.
There have been obvious indicators that sellers have been squeezing the supply of many popular
watches, whether it is from external investors, historical jewelry retailers, or private watch
dealers. You may well be curious as to why anyone would do such a thing. Because of this, demand
and prices will increase if the supply is reduced, with the intention of making the restricted model
into an investment watch. When this is carried out on a large scale, the outcome is that stainless
steel watches sell for three times MSRP and that there are no watches from certain brands,
such as Rolex, in any of its authorized dealers. Dealers are increasing supply now that prices
have begun to decline, which inevitably drives up prices since everyone has inventory that
needs to be sold before prices go too low. But, it seems that consumers are beginning
to become more knowledgeable and stop playing into the hands of the second hand market or authorized
dealers. Once buyers have had enough of paying too much, prices will inevitably fall. Let us just
wait and see how much consumers can reduce prices by choosing not to purchase specific timepieces.
If you intend on purchasing a timepiece, we recommend choosing the rare models. These are
unlikely to be offered in large quantities even during sell-offs under any circumstances. The
exclusivity or rareness of timepieces indicates that there will be fewer and fewer of them on the
market as time goes on, giving you a greater chance to sustain value over the long term,
even if not as well as in the short term. In conclusion, one of my recommendations is that
if you're planning to buy the dip, go for a more distinctive, hard-to-find watch and
bargain for a greater discount while doing so. So, in another perspective, is it a good time to
sell a watch right now? Whether you purchased it as an investment or for personal enjoyment
will depend. We think the prices on hot models are just going to go down, therefore now would
be a good time to sell if someone acquired it as an investment. On the other hand, only the person
who purchased the watch for their own desires or satisfaction will know when it's time to sell.
Do you think the price drop is a good investment opportunity or is it just a phase?
Please let us know in the comments section below, and if you liked this video,
don’t forget to give it a thumbs up. Thanks for watching! See you next time in Above First Class!