After the 2016 Presidential Election in the United States, it is widely expected that there will be some economic uncertainty moving forward (at a minimum). This would affect the US, and by extension the world. Without going into a political rant, the reason for this is because proposed policies from the campaign trail point to an increase in interest rates, which basically means cost of living for the majority of people will go up. If this happens, luxuries are the first to get axed. Back in 2008 when the most recent financial crisis hit, the market was flooded with luxury cars, boats, and jewelry. It was only once the recovery really started to take hold the past couple years did we see, for example, an increase in watch prices to the point where records are being set all over the world.
Add to that the fact that the watch industry as a whole lost about 45% of its market in the past year (which is massive!), and we could be about to enter a period of declining watch prices and value. In fact, if you’re looking for a sign of things to come, consider the fact that Rolex has reportedly begun to authorize discounts on new watches, something that was extremely rare during the past decade.
One detail to consider, however, is the fact that the 45% decrease was not only already a reality before the election happened, but was related to new watch sales, not vintage ones. Some have speculated that watch collectors are have shifted more and more to the vintage world because they’re looking for really unique watches due to the aging process. New watches are manufactured in such durable ways that it is far less likely to find new watches develop “tropical dials”, or the kind of “patina” that would make a watch one of a kind.
It will be interesting to see if in fact, that is the case, but looking at new watches, I do think there is an opportunity to take advantage of. Unfortunately, this opportunity may be at the expense of others, but it’s an opportunity nonetheless. This is because if the watch market in general, were to reduce, increasing supply over demand (vintage or new), prices will most definitely drop.
This means many watches, even watches that are not brand new but say 2-5 years old, which would not be considered “vintage” at all, could become much more attainable. One watch I’ve had my eye on is the fairly new Rolex Oyster with their new 32xx series movement. Brand new at a Rolex boutique we’re taking close to $7,000 US. But they’ve been found on the pre-owned market hovering around $5,000 for months, and most recently I’ve seen may closer to $4,000.
Another watch I always have my eye on is the pre-owned IWC Big Pilot and IWC 7-day Portuguese. Both watches sell at well over $10,000 new, but its only recently that I’ve seen many examples drop in price to under $8,000 pre-owned. My honest opinion is that within a year one can grab a wonderful Big Pilot for around $6,000.
This is not a science by any means, at best this is an educated hunch. A hunch that takes current world events into account and compares them to the past. And if the past is any indication, exceptions aside (for example, vintage Speedmasters are still going through the roof!), a major correction is quickly approaching and those of us who resisted the insanity that has taken place the past 2-3 years should be ready to take advantage.