A note of caution on the current Rolex market

[Driver8]

I realise this will be something of "shout at the hurricane" post on my part, but I just thought I'd post this after seeing some prices on C24 that are absolute lunacy.

For example -
£40k for a NOS bog standard 116610LV
£60K for a NOS Omani-engraved 116610LV
£75K for new UAE-engraved 116500LN
£775k for a new 116595RBOW
etc.

I know many of you believe (or at least want to believe) that prices will carry on increasing forever unchecked, that this situation isn't a bubble, and that it's somehow a "new normal", etc, so I thought I'd just try to be a voice of caution once again.

Below is a graph of a typical economic bubble. This graph is pretty well known as a general economic/investment model, and has been around for years (so it's not been created to match the current Rolex situation to date).



Now, while this graph is not directly related to Rolex watches, you only need to take a cursory glance at it to recognise the parallels. Only a fool would try to claim we are currently in anything other than the Mania Phase at the moment. Notice how that section of the graph is also denoted as "Public" - again, exactly mirroring what's happening now - i.e. the public at large (many with zero previous interest in watches) have suddenly become aware of soaring prices and have blindly jumped on board thinking only of the dollar signs.

We have clearly been through the 'Media Attention' (i.e. social media) stage, we have seen 'Enthusiasm' whereby people took advantage of that attention and speculated a little with their asking prices. I think we've been in the 'Greed' stage for some time, especially in certain grey market quarters, and now I think we're plunging headlong into the 'Delusion' phase with some of the insane prices being asked at the moment. And then of course there are those who already talk about "the new normal".... which is just another way of saying the 'New Paradigm'. Take from that what you will....

Another thing to note is how many people like to say that prices have always gone up over time... and that's absolutely true as long as you take a long enough time horizon. Rolex prices have indeed tended to follow the dotted Mean line on the graph, in much the same way as the housing market - i.e. over a long enough period, the mean trajectory is always one of gradual growth.... but with various booms and busts along the way.

Of course I don't expect to change any hearts and minds with this post, and the timescales for each phase aren't remotely set in stone. However I think most people should be able see the parallels between this graph and the current Rolex situation. So my advice would be to just exercise a modicum of caution.... and don't say I didn't warn you!