Watch market update 2022 Fall/Winter

INFLATION. We are living through the worst period of inflation in the living memory. I have spoken on it a couple of months ago when Rolex and Sports Patek and AP prices are plunging. Today I need to reiterate that inflation is very “sticky”, it is something that don’t come or go away easily. High interest rates will be here to stay. Most people still haven’t make the connection how badly this high interest rate is going to hurt the watch market. I do want to talk more about the Macro-economy situation ahead especially in 2023.

Previous review: we highlighted the risk of inflation and what are the consequences of Fed Reserve’s action will bring:…/watch-market-update-2022…/…

The inflation of today can be resulted from the Quantitative Easing (QE) policies from the central banks has been in place for past decade. Cheap borrowings flooded the markets with hot money ended up speculating almost on anything with value, from Crypto to Nike Sneakers, from watches to properties. Compounding this problem are Geopolitical problems like Ukraine war which created havoc to energy and food supply chain; OPEC cutting energy output amid European energy crisis, changing weather pattern, trade wars etc..

At the same time a very tight job market (favorable wage growth) means the purchasing power of individuals improve and runway asset price and unwanted inflationary pressure follows. When individuals are flush with cash, surely they will indulging or speculating/investing on luxury watches Rolex and Patek watches. These luxury watch is a symbol of wealth and they become a common goal for many.

Now as interest rates rise many of these individuals experienced increasing difficulty on the cash flow. Houses bought with low cost loans (low interest rates) previously now have to repay at a much higher SIBOR rates. Some may sell watches from their collection to free up some cash as their priority is to have adequate funds to refinance the loans, to lower the borrowed amount. Cash rich individuals who once lamenting on low interest rates were and decided to put money into watch investment instead for better yield, can now sell of their watches and go back to bonds or fix deposit.

– Sell off increase:

Rolex, Patek Philippe and Richard Mille enjoy a year long rally, until recently, as prices took a plunge. Last 6months can be bitter for both collectors and investors alike, the value of watches drop, despite of surging inflation, and this mostly attributed to the speculation during the few months before that. We believe prices will continue to show weakness till 2024. Even by then, there may not have a situation of a quick price rebound, as confidence had taken a hit; speculations on watches will not re-emerged so quickly.

What might happen?

The inflation is not as bad as that of 1970s but does have some similarities. For example: the geopolitical tension around the oil embargo vs the energy crisis started with Ukraine war and currently OPEC deciding on cutting down production despite the uproar from USA; collapsed of Bretton Wood agreement (USD was unpegged to Gold) vs the decade-long monetary easing since the Great Recession of 2008. More worrying right now is this situation is set to continue into 2023 and beyond. It is been more than 6 months since the Fed Reserve started the steep interest hike and the combat against inflation don’t seem to gain much ground since. Especially when other Central Bank such as BOJ, China Central Banks doesn’t share the same urgency. It is hard to cap-off the inflation when the second and 3rd largest economies still on loose monetary policies. Another observation is that market rally easily on any positive news, this goes to show the market is still flooded with excessive liquidity, this is excessive is something that has to go before the fight against inflation can take a turn.

– now is not the best time to keep non-yielding assets, such as gold, watches, crypto etc. Basically assets that rely on capital (value) gain for profits. (Even properties for that is not rent out also falls into this category, especially those properties that is funded by loans). These will be stagnant in prices, while investors holding them will be losing opportunities on interest generation in bond or fixed deposit (FD). For example: Rather than buying a Daytona 116500LN at S$40,000, putting this amount of money in the bonds and FD, the investor can instead gets 4-5% (S$1600-2000) return next year.

– the demands of luxury watches is expected to slow down next 2-3years, although the current stock situation in ADs remains visibly low.

– situation at AD waitlist may improves as premium of resale of hot models in grey market drop. These help watch buyer as AD will be asking for a potentially smaller bundles attached to some of the hot models too

– Strong currency hurting resale price. Although watches in countries with weakening currencies like for example, Japan somewhat hedged against it own currency weakness.

– Travel resume, will be buyers channeling funds for travels or choose to buy luxury when overseas, taking advantage of tax free shipping instead, hence a weaker demand on resale or grey market.

What we ought to do?

As always, we urged everyone not to put all the cash into watches. This more critical now as situation now is clearly not the most ideal time to invest into physical assets. While we can take comfort that watches are going to worth some money at the end of the day. In events of economic downturn, watches are the first thing people sell or pawn; most people need a roof, they need a mode of transport for delivery and continuation of the small businesses. Let’s continue the process of reviewing the watches held within our collection. Streamline our collection and at the same time free up capital to fund for new purchases or simply standby some cash for any possible opportunities that may come by. Some affluent individuals may still need material comfort even in lean times, so there is really nothing wrong hanging on to a watch collection. After all we do want to enjoy the finer things in life; we must understand as long there are speculation and profiteering, losing value (or gain) on watches is a byproduct that we all have to deal with.

Brands in prospective:


Rolex watches will still be the top luxury watch brand, although current hot models had been subjected to speculations. Demand for Daytona, Submariners, GMT etc. will still be there. Only question is availability and price. As usual I only recommend SS (steel) model should be kept as the core part of your collection. Historical, steel is the metal that Rolex collectors favor, there isn’t any metal that can match SS subtleness and practicality. The recent launched of the DeepSea Challenge 126067 in titanium and left hand GMT-master can be a sign that Rolex is moving towards a more diverse offerings. But they won’t go into AP style of confusing collectors with a offering of multiple color dials for single models.

Patek Philippe:

Patek Philippe proclaimed the brand itself bigger than Nautilus or Aquanaut, but somehow raised a few eyebrows when 5811/1G was launched. I haven’t not spoken too favorably for PP creations over the past few years. Unfortunately this is again another proof that riding on the Nautilus waves is hard to resist. However, we feel in future there will be more Nautilus of precious metals and less in steel. The appetite for Nautilus or Aquanaut is inexhaustible, even more expensive gold models sell well. This should make the SS Nautilus more collectible: 5711/1A, 5712/1A and 5980/1A. These contemporary designs remain the watches that I will continue to recommend. They will continue to worth more than their own weight in pure gold.

Audemars Piguet

Much anitpaction on AP Royal Oak’s 50th Anniversary didn’t become the talk of the town. If fact it become so clear that AP isn’t very interested to sell you a Royal Oak (RO). They want you to buy a bus load of them. This is absurd when you look at how many colors they are offering and all the rainbow dials they producing. If Offshore can’t sell, why not try sell more RO?!? Collectors will decide if enough is enough.

What have Les Precision been doing:

Over the past 6 months or so, we exited from most Rolex and most Patek Philippe Nautilus. Since Feb-March we have cash out as much as we can, despite of the surging prices at that time. It pays off somewhat as we manage to execute what we hope to sell. Rolex 116600, 16600 been our long term investment and we still feel it is worth holding to some. We held on to a 3712, although it since lost 30-40% from the peak of March 2022, 5712/1A might the next to be discontinued right after 5711/1A. Still might be good to have 1 or 2 5712/1A or 3712/1A in the collection.

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