Special Report: Only Watch Auction 2019

The Only Watch auction took place today in Geneva. In this auction manufacturers create unique pieces and auction them for a charity.

I streamed a live blog of the event as I watched it. I tried to give my impressions of how prices would land prior to bidding and I think I did OK with my predictions. There were some surprises and almost all of them were positive. 1

1. The Patek lot broke the world record for a wristwatch at $31 million. I think this surpassed even the wildest estimate of what would happen
2. Although the Patek will get all the attention the blacked out Tudor actually was a far bigger surprise. The Patek was 10x its estimated high. The Tudor was 63.6x at CHF 350k. This is really important to note.
3. Vacheron and JLC seriously underperformed. If these houses are able to build reputation in line with Patek then whoever won those lots can look forward to some impressive appreciation.

Overall it is fair to say that these were extremely impressive results. I believe that with the recent stock market rally and some calming of trade tensions we can expect to see strong auction results in the near future. Phillips Double Signed is also happening today and their "Game Changers" is coming up in December so stay tuned.

You can watch the full 2+ hour stream of my coverage below:

Comments

Scarcity as Strategy in Horology

Watch industry observers have spent a lot of time dissecting the unavailability of steel Rolex sports models this year (submariner, GMT, etc). These timepieces are presently impossible to buy at the manufacturer's suggested retail price (MSRP). You can acquire them outside official channels but only at a multiple of retail. For one summary of this topic check out episode 48 of Hodinkee radio below.

I've listened to a lot of explanations and, frankly, almost all of them miss the point. While I don't know everything I should about perlage I do know something about economics. And economics explains almost everything about this watch industry phenomenon.
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is inefficient.Creates profit for watch buyers.Builds …

The Luxury Watch Ban Hammer

Word is beginning to spread that buyers of certain luxury steel sports watches have unwittingly entered into a sacred pact with certain brands. The pact is this: if you are eventually selected off an unimaginably long wait list you may buy a watch that isn't supplied in great enough numbers. But you may not sell it. If you do, you will be prohibited from buying that brand again. The brand will drop the ban hammer.

In an article published Nov 24, 2019 in GQ an anonymous author states that after having quickly sold his Patek Philippe Aquanaut 5167 for a tidy profit, "Patek Philippe knows that it is not [his] anymore. They found out and [he is] not sure how. [His] name could be potentially circulated among other Patek ADs, [he is] told. The AD (who [he] had a great relationship with) will no longer offer [him] 'hard to buy watches'."

And from Watchpro we have: "people that do manage to buy an investment-grade watch and flip it for a profit are being hunted …

Haute Horology: Breaking the Law (of Demand)

In prior articles I have discussed the unorthodox role of prices in luxury watch markets. For example, since watches can serve as a highly convenient source of portable liquidity, when prices go up the liquidity benefit from a watch is greater because you can carry around more value on your wrist. This means that, at least along one dimension, buyers might be more inclined to buy a watch as prices go up.

The watch market, then, serves as an exception to the prevailing notion that as a product gets more expensive people buy less of it, otherwise known as the law of demand (a law which tends to hold for almost any product). In this article I will explore additional reasons why the law of demand doesn't apply to luxury watches and, further, show that many features of the luxury watch market can be explained by nontraditional consumer behavior. Fair warning: I have steered clear of the math which we economists use to investigate markets but that will have to end here. I will re…

Horolonomics

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