Amid all the rage around inflation and bubbles popping in asset prices, I decided to take a stroll around watch deals in San Francisco during Memorial weekend – hoping that I would be able to fish out some great deals (read: buying Rolex watches at retail prices)!
“Stock market is so weak… there must be fewer people lining up to buy luxury watches..” – that was my logic / rationale.
Long story short – there is massive shortage of high end watches and shortage is only getting WORSE – YES, MEANING THAT POPULAR, HARD TO GET WATCHES ARE EVEN HARDER TO GET DESPITE WHAT WE SEE IN STOCK PRICES.
It is true that secondary market has softened a bit as shown in Daytona price below, but primary market remains very very robust.
To me, this signals potential worsening shortage of high demand watches down the road, and I am debating internally if I should buy high demand watches now in anticipation of pick up in demand perhaps 1-2 years from now on.
Regardless, below are key findings –
HIGH DEMAND MODELS ARE BECOMING SO HARD TO GET THAT DEMAND IS MOVING TO NON-CORE COLLECTION OF HIGH DEMAND BRANDS
Overseas from Vacheron Constantin is an amazing watch (shown below). However, they have become so popular that they are now allocating watches at corporate level – asking authorized dealers about who will be receiving the watches. THIS IS A BRAND NEW PRACTICE BY VACHERON.
Now people that can’t get their hands on Overseas are creating demand for watches in other collection in the same brand. For Vacheron Constantin, the demand is spilling over to their Fifty-Six collection. It is a collection that sits between Overseas (sports watch) and Traditionnelle or Patrimoney (dress watch)
However, now they have run out of those collections in high demand watches too…
HIGH DEMAND BRANDS (ROLEX, AP, PATEK) ARE REALLY HARD TO GET AND NOW PEOPLE ARE REACHING OUT TO BRANDS THAT MAKE SIMILAR WATCHES AS THOSE (I.E WATCHES THAT MANY ENTHUSIASTS CALL HOMAGE).
I was really surprised to see that even Girard-Perregaux was so hard to get. I thought I could just walk in and try on 38mm and 40mm Laureato – the watch that looks amazing but had been shunned by enthusiasts because many consider it to be an homage of AP’s Royal Oak.
I went to a large authorized dealer – they did not have the watches – I asked if I can place an order, and they said they can’t guarantee when I would be able to receive it! it could be more than 6 months!
It is an amazing watch, but I never considered it worthy of waiting that much. I am stepping away, but clearly people are clamoring to other brands.
What is my conclusion?
I think this signifies divergence of financial assets (stocks/bonds) and real assets (watches / real estate).
Real assets in general with exception of home are not as levered and in the case of home, they are financed with long-term financing vehicle (you can hold through downturn because the chance of getting margin call is very low as collateral value is largely fixed – at least on the books).
I continue to look out for potential real asset acquisition opportunities. Maybe I will buy Rolex from gray market for the first time!
