Rolex availability to improve this year?

lindo · Feb 28, 2020

The impact of the coronavirus on economies around the world is just getting started. Sharemarkets this week have jumped into a downturn that has a way to run yet, given that the virus has not yet impacted on the US or much of Europe. Businesses sourcing goods from China or selling resources there are already feeling the pain. Tourism is in massive reverse (cruise ship, anyone?) in many countries.

Watching the TV coverage of big cities in China with no people on the streets nor in the shopping centres was initially shocking but somehow distant from us. Now those lockdowns are spreading. You can argue that they will be lifted after a relatively short time, but nothing about this situation is certain.

And in the meantime many businesses must be suffering very low turnover. If all that is aggregated into a bigger economic picture, the buying power of thousands - if not millions - of people will be dramatically reduced this year.

So what does that mean for Rolex, which has had a dream run selling to Chinese businessmen for years? My expectation is that the apparently insatiable demand for Rolexes in China must diminish. Will it be enough however to allow the rest of us to actually see local Rolex ADs with displays of sports watches in their windows?

I have a hankering for adding a particular Rolex to my collection, and I would like to be able to walk into a Rolex dealer, try it on, and buy it at recommended retail (or even if there is a heaven, to negotiate a better price). So I am putting aside my funds for about six month's time, when I think the Rolex factory output will have caught up with the reduced worldwide demand.

Am I dreaming, or is this a cool plan?

lillatroll · Feb 28, 2020

It doesn't hurt to have the funds ready should the opportunity arise but I think there might be quite a big queue waiting to buy those watches should they become available.
In October last year I went into two watch shops on a quiet Tuesday morning at around 11am. I was the 7th person to enquire about the Rolex GMT that day and the other shop said they don t even bother adding names now because it would be a very long list. If that is indicative of demand from a small city in Wales imagine how many are on lists in the major cities of the world? It must surely be in the 10s of thousands for many models.

omegastar · Feb 28, 2020

Yes, of course !

Impgreene · Feb 28, 2020

Quoting from Bloomberg (the news service, not the guy!): "We Just Witnessed The Fastest Stock Market Correction on Record".

If this continues we're going to have serious issues with downgrades to GDP, company earnings, and eventually jobs.

In terms of timing, don't forget the transition mechanism is a long time - people only really started to take note of the issues this month and financial markets only about a week ago - if global trade is hit it will take months for a downturn to be reflected in the real economy in the form of layoffs and reduced demand.

If it does get that far then it's likely pretty binary, i.e. demand for anything 'discretionary' will fall off a cliff ……………. this thread sort of implies that itself, in that people either don't buy the thing they don't need or they wait to see if the prices are likely to fall (which then become self reinforcing), the discussion here is about doing the latter (and I have to admit that I am in the same position).

I don't know much about the secondary market in watches, but it does feel like the vintage market has dried up somewhat, apart from a few bellwether brands …………..

lindo · Feb 28, 2020

lillatroll
It doesn't hurt to have the funds ready should the opportunity arise but I think there might be quite a big queue waiting to buy those watches should they become available.
In October last year I went into two watch shops on a quiet Tuesday morning at around 11am. I was the 7th person to enquire about the Rolex GMT that day and the other shop said they don t even bother adding names now because it would be a very long list. If that is indicative of demand from a small city in Wales imagine how many are on lists in the major cities of the world? It must surely be in the 10s of thousands for many models.

7 enquiries about a GMT on a sleepy Tuesday? OMG. There goes my cool plan out the window....

Impgreene · Feb 29, 2020

vicsdca
The day Rolex Sports models will become easily available is when nobody will want them, even you probably.

As for what happened in the stock market this week, smart money started selling stocks last week and the week prior at the end of earnings season. What's more, they've been shorting stocks like crazy on Monday because they knew computer selling would trigger big time due to the news in Europe. Many people became much richer this week, including the experts you see on TV that tell you not to buy stocks because we have not seen the bottom yet. It's in their best interest to create panic since they've been shorting stocks all week. Same trick every time. Next week the same experts will tell you stocks entered oversold territory and the Dow will rebound and they'll make even more money along with their clients, i.e. the ones who purchase Rolex watches as investment pieces, who can afford to buy a few PM pieces, and who ultimately get the Daytonas and GMTs when they become available.

Sadly (or not), it does not take long for an AD to know if you have deep pockets or if you are the type of person who must actually save money to purchase a Rolex. Rolex is just too popular these days and they will be even more so if they release a new Submariner this year, but no one can predict the future.

We havent seen the bottom yet, it's just that there will likely be a relief rally as people close out profitable shorts and positive noises and actions are taken to support markets - the losses on stock values thus far dont represent the hits to GDP this will cause - it's still anyone's call if this turns into a full scale collapse.

SpeedyPhill · Feb 29, 2020

May we hope, that with export to China coming to a temporary minimum, more watches will stay in Switzerland & Europe... ☕

cvalue13 · Feb 29, 2020

Asia represents >50% of luxury Swiss watch exports.

Exports into HK and China (and a few other Asian markets) over the past several months are likely now stranded inventory within HK and China: so I’d expect those find their way into e-commerce and grey markets.

In the coming months, Swiss exporters will have additional inventory coming out, and possibly diverting it away from Asia toward other markets: so some increase in inventory may occur outside Asia.

Meanwhile, Asian tourists account for >40% of all luxury watch purchases in global tourist destinations: some freeing of inventory will occur in those tourist destinations.

All that said, the >50% of Swiss watch market in Asia is only partially Rolex (Omega the largest luxury brand in China), and for Rolex is loaded toward datejust-type models, not SS sports. So, unclear how much any of the above inventory prognostications move the needle on Rolex SS sports availability in your home town. But the e-commerce/grey market may fill up.

Impgreene · Feb 29, 2020

cvalue13
Asia represents >50% of luxury Swiss watch exports.

Exports into HK and China (and a few other Asian markets) over the past several months are likely now stranded inventory within HK and China: so I’d expect those find their way into e-commerce and grey markets.

In the coming months, Swiss exporters will have additional inventory coming out, and possibly diverting it away from Asia toward other markets: so some increase in inventory may occur outside Asia.

Meanwhile, Asian tourists account for >40% of all luxury watch purchases in global tourist destinations: some freeing of inventory will occur in those tourist destinations.

All that said, the >50% of Swiss watch market in Asia is only partially Rolex (Omega the largest luxury brand in China), and for Rolex is loaded toward datejust-type models, not SS sports. So, unclear how much any of the above inventory prognostications move the needle on Rolex SS sports availability in your home town. But the e-commerce/grey market may fill up.

Great summary.

Fatcat · Mar 1, 2020

What I have see on 3 Rolex shops ( Geneva, Zurich, Frankfurt) there is nearly 100% less Chinese visitors again plenty of 3 hands watch available that was unusual since 1 year, for the most willed watches still no change as I suppose flippers are in line directly, I saw in Frankfurt that the Batman was presented at 16K .

Also rumors saying wait until April to see what Rolex will dot will explain also the shortage, as Baselworld is cancelled now will see what Rolex will do.

Impgreene · Mar 1, 2020

I don't know as much as you guys about Rolex - but I had been looking at a buying a Sub / Deepsea / Deep Blue so have been watching these comments and reading other forums.

To me there are clear parallels to other markets that go through bubbles (and that I can claim at least a passing knowledge of) i.e. if there is quite extraordinary price action you can't explain with confidence then it's best not to get involved until you can explain what is occurring.

I could easily construct one of the two following as being the most probable scenario from the wider comments I read:

1. something has been going on with Rolex constraining supply and they intend to make an announcement soon (or did, before Corona led to the cancellation of Baselworld); or

2. Rolex had been producing to meet Asian demand, that demand has just dried up due to Corona and people travelling less, with the reduction in GDP likely leading to demand being lowered more structurally for a while - in the meantime the 'flippers' will continue to buy, hence are supporting prices, but if demand doesn't come through there will be a mini-crash.

3. a bit of #1 and #2 together.

To be honest, bubbles look and act similarly in most asset classes, it's just that the speed is different (i.e. financial assets are liquid, so it happens in a week, whereas watches are illiquid by comparison so it takes longer).

2008 was a breakdown in inter-bank lending that led to a liquidity squeeze globally, 2020 could easily be a breakdown in global trade and see a similar reduction in global liquidity (and therefore demand for everything). 2020 could be bad, if you consider economies are still 'high' on the liquidity from 2008, so there isn't must more governments can actually do (they've already used up their firepower).

There is an old adage 'Know what you know, but more importantly know what you don't know' - it's always best to have patience when you can't explain what is driving the price as likely there is some material piece of information you don't know that others do, a scenario that rarely ends well for the people that don't have that information ……………...

Rolex availability to improve this year?

lindo

lillatroll

omegastar

Impgreene

lindo

Impgreene

SpeedyPhill

cvalue13

Impgreene

Fatcat

Impgreene

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