The Minsky Moment

[JR16]

Originally Posted by bearxj86

Earlier this June on the way back from Shanghai, my flight in HongKong was delayed. Cathay Pacific put me up in the Mandarine Oriental. You can actually see the Patek store from my hotel room.

Needless to say, in the 10 hours I was there, the doorman had a rolex, the bellhop had a rolex, the front desk clerk had a rolex. When I went for breakfast the next morning, pretty much everyone had a swiss luxury watch on. I saw around 75 luxury timepieces at the hotel and was awake for only 4 hours of the 10.

Asia man...

In Shanghai, Rolex seemed less popular than Panerais among the white collar men I worked with.

I work for a Fortune 200 Company in Finance at the HQ. My CFO (german) has a Deep Sea Dweller, a Omega Dark side of the moon and a Patek calatrava. My CAO has a rolex president and my GC has a few Panerais. Attended several legal/compliance functions and many of the men had Rolexes. These guys are all in their 40s and 50s.

Beverly Hills and Newport beach - everyone has a luxury watch. Went to corepower yoga and the gentleman in the changing room had a Rolex Yellow gold submariner. My classmates at UCLA anderson had rolexes. One had a 16610 and the other a batman. Saw a few speedmasters among the ex-military folks.

Business/first class lounge at airports- probably 40% of the males there have a nice swiss watch. More Batmen.

I think those that have Rolexes may want Pateks, and those with Pateks appreciate Rolexes. I don't see a lot of vintage though...

Have not seen a Nautilus or Aquanaut or grand complication yet in the wild- except on my wrist.

This may be more Rolex/pp than I’ve seen in the wild in my entire lifetime!


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[danestaff]

Originally Posted by Token74

It’s a fair point, and it depends on an individuals personal financial situation. There may be people that have a high LTV on their house, a job they are dependant on, and have bought a Patek on finance - in this scenario, a global financial crisis could put them in a hole for sure.

I can only justify spending this kind of cash on watches because of the value retention - BUT, critically, if the bottom fell out the market then I’d be fine. There is a difference between needing value retention to be a factor in justifying a purchase (in my head), versus needing value retention to be an absolute reality.

I would also say that history suggests buying certain things such as houses, high end classic cars, or high end luxury watches, is almost certainly going to be safe as a long term investment, but there may be some storms to ride out along the way!

And...I really do think that the likes of Rolex and Patek will ably keep prices high for the top models regardless of financial climate (within reason obviously). The ones most likely to take a value hit, are the less popular models that are currently maintaining their values due to overall demand across the range (I.e. I think a 5167 would be a risky buy, or a Rolex Explorer 2 for instance).

But then again...I’m still pretty new to this so this is more logical reasoning than intelligence-based argument.


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lol, no chance is the 5167a a risky buy , in fact given its price point,its probably safer than an awful lot of other pateks

[s.m.b.]

Originally Posted by Token74

It’s a fair point, and it depends on an individuals personal financial situation. There may be people that have a high LTV on their house, a job they are dependant on, and have bought a Patek on finance - in this scenario, a global financial crisis could put them in a hole for sure.

I can only justify spending this kind of cash on watches because of the value retention - BUT, critically, if the bottom fell out the market then I’d be fine. There is a difference between needing value retention to be a factor in justifying a purchase (in my head), versus needing value retention to be an absolute reality.

I would also say that history suggests buying certain things such as houses, high end classic cars, or high end luxury watches, is almost certainly going to be safe as a long term investment, but there may be some storms to ride out along the way!

And...I really do think that the likes of Rolex and Patek will ably keep prices high for the top models regardless of financial climate (within reason obviously). The ones most likely to take a value hit, are the less popular models that are currently maintaining their values due to overall demand across the range (I.e. I think a 5167 would be a risky buy, or a Rolex Explorer 2 for instance).

But then again...I’m still pretty new to this so this is more logical reasoning than intelligence-based argument.

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The 5167 is pretty far from the Explorer II of Pateks.

Originally Posted by danestaff

lol, no chance is the 5167a a risky buy , in fact given its price point,its probably safer than an awful lot of other pateks

Totally agree with this.

[Fat_ninja]

People using the minsky moment too loosely. Many more factors than just prices going higher...

To be the devils advocate...one ccould argue supply has not kept up with demand and the MSRP is mispriced relative to that demand level. If i was Patek, id raise prices every year until the backlog comes down to normal.

[tyler1980]

Originally Posted by Fat_ninja

People using the minsky moment too loosely. Many more factors than just prices going higher...

To be the devils advocate...one ccould argue supply has not kept up with demand and the MSRP is mispriced relative to that demand level. If i was Patek, id raise prices every year until the backlog comes down to normal.

its dangerous as when they had a price reduction that didn't go over well. Cant think of a worse thing to do to your existing clients.

Getting to aggressive with retail prices within a demand cycle can go sideways real quick.

[s.m.b.]

Originally Posted by Fat_ninja

People using the minsky moment too loosely. Many more factors than just prices going higher...

To be the devils advocate...one ccould argue supply has not kept up with demand and the MSRP is mispriced relative to that demand level. If i was Patek, id raise prices every year until the backlog comes down to normal.

Glad you're not Patek! I still have a couple references I'd like to purchase over the next few years.

[Token74]

Originally Posted by danestaff

lol, no chance is the 5167a a risky buy , in fact given its price point,its probably safer than an awful lot of other pateks

You could well be right of course. My logic is simply that historically, entry level models of luxury ranges tend to perform worse in a slump than the upper end models in the range. Some people will love the 5164 and the Explorer 2 (I very much like them both) but many people will be stretching to get onto the Patek or Rolex sports range, and these are the people that tend to suffer most in a recession. If you remove any bias around what you like and don’t like, and look at it purely on the basis of logic and the history of high end goods/brands, you may see things differently. But you may not and I may be well off the mark.


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[s.m.b.]

Originally Posted by tyler1980

its dangerous as when they had a price reduction that didn't go over well. Cant think of a worse thing to do to your existing clients.

Getting to aggressive with retail prices within a demand cycle can go sideways real quick.

Exactly.

[danestaff]

Originally Posted by Token74

You could well be right of course. My logic is simply that historically, entry level models of luxury ranges tend to perform worse in a slump than the upper end models in the range. Some people will love the 5164 and the Explorer 2 (I very much like them both) but many people will be stretching to get onto the Patek or Rolex sports range, and these are the people that tend to suffer most in a recession. If you remove any bias around what you like and don’t like, and look at it purely on the basis of logic and the history of high end goods/brands, you may see things differently. But you may not and I may be well off the mark.


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well without being rude i do hope i am

but the 5167 is only entry model sports watch for patek, which if you read hodinkee interview with t stern, you would have read production isnt going up, unlike rolex who have so many sports models , and explorers aint exactly hard to purchase, but try and get a 5167

its all matter of opinions

[Token74]

Originally Posted by danestaff

well without being rude i do hope i am



but the 5167 is only entry model sports watch for patek, which if you read hodinkee interview with t stern, you would have read production isnt going up, unlike rolex who have so many sports models , and explorers aint exactly hard to purchase, but try and get a 5167



its all matter of opinions

Try reading what I wrote again, and please feel free to explain how anything you have just said has corrected anything I’ve said?!




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[s.m.b.]

Originally Posted by Token74

You could well be right of course. My logic is simply that historically, entry level models of luxury ranges tend to perform worse in a slump than the upper end models in the range. Some people will love the 5164 and the Explorer 2 (I very much like them both) but many people will be stretching to get onto the Patek or Rolex sports range, and these are the people that tend to suffer most in a recession. If you remove any bias around what you like and don’t like, and look at it purely on the basis of logic and the history of high end goods/brands, you may see things differently. But you may not and I may be well off the mark.

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Many 5167 and 5711 (Patek SS entry level) lists are closed to new customers. To get on other lists, a new customer might have to purchase a rapidly depreciative Calatrava/annual calendar. So comparing a 5167 to an Explorer II makes little sense. Don't let the $19,000 price tag on the 5167 fool you into thinking it's a traditional starting point.

Originally Posted by Token74

But then again...I’m still pretty new to this so this is more logical reasoning than intelligence-based argument.

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[Wcdhtwn]

Originally Posted by tyler1980

i think Patek has an established client base that isnt necessarily after the next hot watch. Their production volume is in a sweet spot too where its not huge, but its big enough that there are a lot of buyers.

Compare that to RM for example. They make me nervous even though their watches are outstanding. I always see them in a position where if 50 people decide its not cool any more the whole thing falls apart. Im exaggerating a bit, but it its not many people that can turn the whole thing upside down.

Well, I’m only passing along what I heard from DeBoulle, the only PP AD in Houston and one of, if not the only, in Dallas. Given the number of professional sports teams and entertainers who make their homes in these two cities I’ll give him some benefit for market insight.

I’m not saying these people turning their attention to a different watch brand will hurt PP, not at all. I’m saying the crazy inflated prices are due to this increased demand. If/when this demand, that is more transient in their tastes and follow the fads, move on pricing and availability will return to normal.


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[s.m.b.]

Originally Posted by Wcdhtwn

Well, I’m only passing along what I heard from DeBoulle, the only PP AD in Houston and one of, if not the only, in Dallas. Given the number of professional sports teams and entertainers who make their homes in these two cities I’ll give him some benefit for market insight.

I’m not saying these people turning their attention to a different watch brand will hurt PP, not at all. I’m saying the crazy inflated prices are due to this increased demand. If/when this demand, that is more transient in their tastes and follow the fads, move on pricing and availability will return to normal.

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For sure.

[Fat_ninja]

Originally Posted by tyler1980

its dangerous as when they had a price reduction that didn't go over well. Cant think of a worse thing to do to your existing clients.

Getting to aggressive with retail prices within a demand cycle can go sideways real quick.

Originally Posted by s.m.b.

Glad you're not Patek! I still have a couple references I'd like to purchase over the next few years.

Lets all be happy im not Patek.

Ive always pushed the companies i deal with to Find the edge :). I dont think they are doing their job right unless a customer leaves... it means they are leaving too much money on the table.


But as TS says, He doesnt have shareholders :)

[Wcdhtwn]

Originally Posted by Wahlberg

The influx of (new) money has been crazy and it has been going around.

Look at the tech market the past decade, look at the bigger youtube/IG vloggers/bloggers/influencers who are making 10-25-50-100k per month the past 5 years, the salaries in the NBA went up and if you are an average player you can make 10 million easily. Kobe Bryant made 25 million in his last season and now you've got people (Crabbe, Turner, Tyler Johnson,...) averaging 10 ppg making close to that. Big artists the same, the money is pouring in.

And it doesn't seem to stop.

My biggest dislike nowadays are social media platforms such as Twitter and IG. I don't mind sharing information or reading about it, but there is an angle nowadays and people try to push their agenda's onto you (be it political or anything else) which has influenced A LOT of people and not for the good. I find it I am very balanced and not easily influenced by certain thoughts or ideas, but a lot of (younger) people can't and jump the gun. Which is a shame.




There isn't much after Patek and they are already sporting both (a blinged out Nautilus, Richard Mille and the Rolex DD). So where do they go from there?

They’ll go wherever the next trendsetter takes them. We aren’t talking WIS’s here for the most part, they likely couldn’t care less about the movement or history of the brand. They want the latest, coolest thing. It’s how a brand like Gucci, for example, can be in favor, fall out of favor, and make a glorious return. It all depends on who is seen wearing it. Many other examples, Puma, Adidas, etc.


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[s.m.b.]

Originally Posted by Fat_ninja

Lets all be happy im not Patek.

Ive always pushed the companies i deal with to Find the edge :). I dont think they are doing their job right unless a customer leaves... it means they are leaving too much money on the table.


But as TS says, He doesnt have shareholders :)

How cool...

Originally Posted by Wcdhtwn

They’ll go wherever the next trendsetter takes them. We aren’t talking WIS’s here for the most part, they likely couldn’t care less about the movement or history of the brand. They want the latest, coolest thing. It’s how a brand like Gucci, for example, can be in favor, fall out of favor, and make a glorious return. It all depends on who is seen wearing it. Many other examples, Puma, Adidas, etc.


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Exactly.

[wisguy]

Funny thread, everybody has a different take.

People that want the watch want higher availability and lower prices, people that own the watch want the opposite.

Bystanders just think the prices are crazy! I still think people are too worried about who owns what, what motivated them to buy it and what they should have done with the money instead.

This doesn't happen just in watches, people collect all sorts of things and all kinds of things are sold for "crazy" money that is way higher than their intrinsic value (coins, pens, stamps, paintings, cars, antiques, etc).

Unless anybody think it costs more than a couple grand to produce a SS watch... MSRPs are out of whack as well and nobody seems to mind.

[The Argonaut]

Originally Posted by wisguy

Funny thread, everybody has a different take.

People that want the watch want higher availability and lower prices, people that own the watch want the opposite.

Bystanders just think the prices are crazy! I still think people are too worried about who owns what, what motivated them to buy it and what they should have done with the money instead.

This doesn't happen just in watches, people collect all sorts of things and all kinds of things are sold for "crazy" money that is way higher than their intrinsic value (coins, pens, stamps, paintings, cars, antiques, etc).

Unless anybody think it costs more than a couple grand to produce a SS watch... MSRPs are out of whack as well and nobody seems to mind.

Indeed, a funny old world.

[Calatrava r]

The 5711 was probably a 23K watch maybe. It was close. When they went to pins in the bracelet from screws the feel became flimsy. Screws are heavier than pins. At 29K the price is crazy too high for what the watch is. On the other hand I think the 5167 is really a good value. The case and clasp are finished beautifully and 19K for the watch with a Patek movement is fair.

Who knows about the secondary market. People buying in now are very apt to get hurt. Contrived markets are like that.

[wisguy]

Originally Posted by Calatrava r

The 5711 was probably a 23K watch maybe. It was close. When they went to pins in the bracelet from screws the feel became flimsy. Screws are heavier than pins. At 29K the price is crazy too high for what the watch is. On the other hand I think the 5167 is really a good value. The case and clasp are finished beautifully and 19K for the watch with a Patek movement is fair.

Who knows about the secondary market. People buying in now are very apt to get hurt. Contrived markets are like that.

I hate the pins, agree. Never noticed the screw bracelet felt less flimsy though. An what about the impossible to open clasp, everytime I take mine off I'm afraid I'm going to break it...

I used to own a 5167 and I wouldn't rate the clasp much higher either.

[enjoythemusic]

Originally Posted by danestaff

well without being rude i do hope i am

but the 5167 is only entry model sports watch for patek....

its all matter of opinions

It is a SPORTY watch. My experience is it can't handle moderate sports, let alone extreme stuff where a Rolex resides. Please gentleman, use the word SPORTY as it more accurately reflects the true nature of a Patek 5167.

A sports watch is one you wear while actively being on the field participating. A SPORTY watch like the 5167 is one you wear while being in the skybox watchng true athletes play sports. That's why i switched to Rolex over Patek.

BTW 5167 was around $17k with plastic strap for me years ago and that's about right, don't see much more into it. Sold it due to needing durability.

[danestaff]

Originally Posted by enjoythemusic

It is a SPORTY watch. My experience is it can't handle moderate sports, let alone extreme stuff where a Rolex resides. Please gentleman, use the word SPORTY as it more accurately reflects the true nature of a Patek 5167.

A sports watch is one you wear while actively being on the field participating. A SPORTY watch like the 5167 is one you wear while being in the skybox watchng true athletes play sports. That's why i switched to Rolex over Patek.

BTW 5167 was aroundd $17k with plastic strap and that's about right, don't see much more into it.

Mmm I can only speak for myself, and I might not be the brownlee brothers, but for the last 4 years Its been with me, water skiing, snow skiing, obvioulsy not running as I hate that, but gym work etc, and it's lighter than the rolex which you wear to show what u have IMO

And as I've said in a previous thread it was my beater watch, and it's never failed me

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[tyler1980]

Originally Posted by enjoythemusic

It is a SPORTY watch. My experience is it can't handle moderate sports, let alone extreme stuff where a Rolex resides. Please gentleman, use the word SPORTY as it more accurately reflects the true nature of a Patek 5167.

A sports watch is one you wear while actively being on the field participating. A SPORTY watch like the 5167 is one you wear while being in the skybox watchng true athletes play sports. That's why i switched to Rolex over Patek.

BTW 5167 was around $17k with plastic strap for me years ago and that's about right, don't see much more into it. Sold it due to needing durability.

enjoy playing tennis/football/basketball in your SPORTS jacket

sports=less formal ... casual, not an athletic accessory IMO
Probably derived from the more casual jacket men wore doing gentlemanly activities like shooting or riding at their country estates before dressing into evening wear for a more formal dinner. Tux/dinner jacket etc. Sports watch goes with that more casual look where as a dress watch goes with the more formal option.

professional sports watch, OK thats acceptable expectation IE a sub
sports watch... nautilus, DD, DJ, etc
dress watch... calatrava

[vlps]

Originally Posted by enjoythemusic

It is a SPORTY watch. My experience is it can't handle moderate sports, let alone extreme stuff where a Rolex resides. Please gentleman, use the word SPORTY as it more accurately reflects the true nature of a Patek 5167.

A sports watch is one you wear while actively being on the field participating. A SPORTY watch like the 5167 is one you wear while being in the skybox watchng true athletes play sports. That's why i switched to Rolex over Patek.

BTW 5167 was around $17k with plastic strap for me years ago and that's about right, don't see much more into it. Sold it due to needing durability.

rolexes are too heavy to play sports with. at least the 5167a is like ~80 grams and not noticeable on the wrist.

For a high end watch you can intensely/comfortably play sports with you probably have to go richard mille

[The Argonaut]

Originally Posted by vlps

rolexes are too heavy to play sports with. at least the 5167a is like ~80 grams and not noticeable on the wrist.



For a high end watch you can intensely/comfortably play sports with you probably have to go richard mille

Seriously? How heavy is your watch? I used to play a range of sports with my JLC. Never had any issues. The only reason I wouldn’t play sports with my 1675 is I don’t want to bash it up. However, the watch can take it. Easily. It’s designed to be rugged.


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[GB-man]

I wore my 5164 to the gym today does that count? Lol

[vlps]

Originally Posted by The Argonaut

Seriously? How heavy is your watch? I used to play a range of sports with my JLC. Never had any issues. The only reason I wouldn’t play sports with my 1675 is I don’t want to bash it up. However, the watch can take it. Easily. It’s designed to be rugged.


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rolexes are all over 125 grams, i would say thats enough to be noticeable when playing high activity sports, but maybe thats dependent on the person

[The Argonaut]

Originally Posted by Calatrava r

The 5711 was probably a 23K watch maybe. It was close. When they went to pins in the bracelet from screws the feel became flimsy. Screws are heavier than pins. At 29K the price is crazy too high for what the watch is. On the other hand I think the 5167 is really a good value. The case and clasp are finished beautifully and 19K for the watch with a Patek movement is fair.

Who knows about the secondary market. People buying in now are very apt to get hurt. Contrived markets are like that.

Interesting perspectives on the 5711 and 5167.

[odeon]

In my humble opinion it is not about some macroeconomic theories. The issues is that having an experience than a solid asset makes more sense in our age. The same trend might be seen in hospitality industry. Brands, companies, and influential people are adapted themselves to be shown off on Instagram. From this point of view, Patek 5711, or 5712 is used to trading at unbelievable prices. On the contrary, there have been tons of undervalued watch in market. For example, Patek 5146R is about to be sold at $35k. Or, you say, Patek 5196P at $30k. If you would like to be heard more, the JLC Master Control Date has the $4,500 price tag.
Value will be remain the same as price will be fluctuating.

[rolexpatek363]

Originally Posted by Calatrava r

The 5711 was probably a 23K watch maybe. It was close. When they went to pins in the bracelet from screws the feel became flimsy. Screws are heavier than pins. At 29K the price is crazy too high for what the watch is. On the other hand I think the 5167 is really a good value. The case and clasp are finished beautifully and 19K for the watch with a Patek movement is fair.

Who knows about the secondary market. People buying in now are very apt to get hurt. Contrived markets are like that.

People were saying this a year ago, when s/h values were way less than today. When do you let go of a rising balloon?