What you might be thinking right now:
“Oh shoot. My stock portfolio is not looking all that great now? I guess it is time to sell that beautiful watch that I saved for years for and was on this ridiculously long waiting list at my AD!!!”
Our answer to that would be:
“Heck no. Just because one asset may be lower value today doesn’t mean that everything you own is. Especially your Rolex!”
Let’s take a look at a few pieces of information that might give you some guidance in a world with COVID-19 on the rise. To start with, Rolex isn’t open (we covered this a few days back - you can read it HERE). Since the supply of Rolex watches has completely stopped, then until they open back up, new supply is halted. For that matter, every watch brand is the same way. So, your Patek waiting list just got longer because they are closed for production. The same with Audemars Piguet, MONTA, Vacheron, OMEGA, etc. With this happening in the world, the supply of high-end watches has ceased.
Let’s compare some market data to understand values. The price of a Rolex Daytona Ceramic (black dial) was about $20,000.00 as of March 1, 2020 on the second-hand market (using watchrecon.com as our data model). This is the marketplace for second hand watches and might as well be a tracking of the Dow Jones Industry (which is at 20,723 as of the release date of this article - down almost 5,000 points in nineteen days.) Checking now, we see that the same Rolex Daytona is exactly the same with the current price still being around $20,000.00 for the same watch. What does this tell us about the watch market compared to the stock market? The watch market is stronger than the stock market at holding its value.
Third, the waiting list for a Daytona was between three to ten years at an Authorized Dealer before this all happened. Not all Rolex dealers are open. Many have closed because of being considered non-essential businesses. That being said, even if you somehow got jumped to the top of the list, you cannot buy it with the stores closed. Again, supply and demand curves kick in. If the supply stops, then the price will, most likely, increase or at least stay the same.
Will there be a drop? Of course. At first, some will need to sell their watches to pay their bills; however, most people who have bought these watches will most likely have other savings before they start selling something that was a lifelong goal to achieve. There may be a price correction of 5-10% on most models on the second hand market. However, almost all steel sports models are between 15%-100% more expensive than retail pricing.
So, we encourage you: don’t sell. Your safest asset may be your Rolex. Actually, if you get a call from your AD that your name came up for that Daytona or particularly a Submariner, BUY, BUY, BUY!!! (You can see our article on the Submariner being possibly discontinued HERE, so that model may be extra special).