Is it time to load up on high demand Swiss watches like Rolex? I think so and here is why-

2021 is near its end with less than two months remaining.

It is time that you should have started managing your portfolio positioning for 2022.

In light of central banks pumping out money and governments flooding the economy with hand-out, I started investing heavily into real assets with money that was diversified out of stocks as of a month ago.

One of key real assets that I am focused on is acquiring luxury Swiss watches – like Rolex.

Watches are like real estate – they are real, they are scarce, but they don’t have much of carrying cost and are anonymous – two things of asset ownership that are becoming increasingly more valuable in the current economy where governments are looking at every different angle to extract more money out of its citizens.

So today, i would like to discuss why investing in high demand luxury watches became attractive areas to deploy capital for me.

ONE – THERE IS PENT UP DEMAND WITH WHICH SUPPLY WILL ALMOST NEVER CATCH UP

Bears are thinking – when the economy tanks, there wont’t be much demand for luxury watches. I would say no… because there will ALWAYS RICH PEOPLE THAT WANT HIGH DEMAND LUXURY WATCHES.

During any market crash, the wealth is TRANSFERRED NOT DESTROYED. Rich people themselves are different but there are always fixed number of rich people that always want sometime that many others want but cant afford.

Government / central banks will again print the money out of the recession – which could lead to even great wealth disparity: this should lead to greater demand for these high demand watches.

It is not all luxury watches – only the high demand watches. Like Rolex Explorer.

TWO – I THINK PRICE INCREASE IS IMMINENT

2020 was a tough year for Swiss watch industry and 2021 saw some recovery but it still remains below 2019 level according to Research from Vontobel – a Swiss investment bank.

Another thing that hurt Swiss watch industry? The foreign exchange rate. Swiss currency has gone up significantly against major currencies 1 which means that their revenue in terms of Swiss Francs faced headwind.

So.. what do you do when you had a bad year before and still not recovered to previous level and you have foreign exchange headwind and YOU KNOW THERE IS INSATIABLE DEMAND FOR YOUR PRODUCTS OUT IN THE MARKET?

YEP, YOU RAISE THE PRICE.

French luxury brands like Chanel have raised their price by 5-10% at a time multiple times in 2021- citing “rising cost of production.”

Swiss watch brands have not – like Rolex and they are long overdue- to a point where nobody would be surprised and they would not face big backlash.

Rise in original retail price gives upward pressure on the existing products in the second hand / grey market.

IN CONCLUSION

I am deploying my capital into real assets and particularly high demand watches – like Rolex- but only if I can get them MSRP. I see this as a high risk/reward trade.

*not investment advice.