Recently, this question was asked on TimeZone, one of the most popular watch portals on the internet. “The popularity of watches — and their prices — are at very high levels right now. It doesn’t seem like the prices can go up forever, since they really only act as status symbols or collectibles, and don’t create value. What do you guys think, is this the heyday of mechanical watches, or will a lady or a gentleman in 100 years still be wearing a Rolex?”
The poster of the question held a poll and – although only few responded – the outcome was that most visitors of TimeZone didn’t think of watch as a bubble. Of course! However, I wonder what people would have answered who aren’t involved or interested in watches.
Well, to answer a part of the question, it seems that price can go up forever. Rolex announced a price increase of 7% (as of February 1st 2011) and it seems that you will be paying 8,800.- Euro for a ref.16622 Yacht-Master, 6,170.- Euro for a ref. 116710LN GMT-Master II and 6,250.- Euro for the new ref. 116610 Submariner Date. It must be said that Rolex did not increase their prices during a longer periode. Audemars Piguet for example, announced their annual 5% increase of their prices.
When you just bought a watch before these price increases, or before a price increase in general, it is of course nice to know that you saved yourself a buck :). However, some watches are becoming far out of reach for people who would be able to buy the exact same watch a few years ago (but didn’t). If you did though, and you bought the right watch, it might have created some value of course.
Personally, I don’t think watches are a bubble per se (unless you are buying a Corum Bubble). They represent a certain value, partly because of the craftsmanship, partly historical value another part is the demand for it. Will this demand last forever? I don’t know, but if you pick your watch wisely, it doesn’t have to be a bubble.