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Showing posts from 2022

Recessions and Watches: Insulated, Not Immune

I've read a variety of reports and commentators suggesting that, unlike the majority of businesses, the watch industry may be immune to economic downturns. The analysis of economic cycles is a specialized field and it is very tricky to assess how particular industries are impacted by fluctuations. Most of the claims I've heard about the business cycle and the watch industry could benefit from more careful inspection, so I'll try to do that here. I decided to use methodology that represents a solid "starting point" when it comes to business cycle analysis. The impact of a recession on any industry is not easily or casually measured, for reasons I will describe below. The TLDR on this is that the modern watch industry is not immune from the business cycle when we use generally accepted notions of what a business cycle represents. However, there are things that do reduce the impact of economic fluctuations on the industry: watch brands have partial immunity. I

Pugh X Rolex - A Scientific Collaboration

It is fair to say that collaborations in the watch industry are, at present, less a novel strategy and more a mature tactic that a brand can use to generate excitement and interest in their products. The success of collaborations is driven by diversity. A brand has its unique heritage, design motifs, and comparative advantages. An outsider has their own philosophy of design, track record, and areas of strength. The two come together and the whole is, hopefully, greater than the sum of the parts. This post is about a very early collaboration in the watch industry. The brand in question is Rolex, a manufacturer that does not have a reputation for collaboration in product development (beyond the "collaborations" which were necessary in order to source parts in Rolex's earlier years). The outsider is Lewis Griffith Cresswell Evans Pugh, who went by Griffith Pugh. Their collaboration was unique in that Rolex did not explicitly market the lash up with Pugh. In fact, his role

Vapor Waitlist

This isn't a post I really wanted to write or share. The reason: it involves a brand I admire and respect. Some readers might decide that what I write here casts a negative light on that brand. At the end of the day, when I see information that just doesn't make sense, I feel obliged to comment on it regardless of whether it might ruffle a few feathers. I just feel a responsibility in that regard when it comes to readers and subscribers. It is important to me that the state of the watch market is truthfully known. As a side note: I'm going to soon post another story about the brand in question that highlights a neat achievement on their part, so please stay tuned. Ok, so here we go. Last week, a story in Bloomberg claimed that watch brand Zenith now has wait lists that are similar to those seen at Rolex and Patek Philippe. To set the stage: buyers have recently waited months or years for certain models from Rolex, Patek, and Audemars Piguet (among others). The Bloomber

Origin Story

This will be one of my more brief posts on the state of the watch market. The punchline is that, when you review charts anywhere, always make sure to check if the publisher has included the origin in the chart. The origin is the point where both variables presented in the chart take on the value zero (the really important thing is that the origin for the vertical value is included). Let me illustrate why this is important. In the first image presented below, I present data from a watch pricing analytics company. The data represents an "index" of Rolex asking prices on the preowned market. I think "index" is probably not a great way to describe this data, it really represents an average of some sort. In fact, I'm not really fond of this type of index for other reasons. A stock price index, for example, represents averaging of homogenous assets. It's true that stocks come from heterogeneous industries, but they are all subject to largely identical reporting

We Now Have Four Wrists

There is an insightful piece of advice I've heard from longtime watch collectors. It is this: you only have two wrists and they are extremely valuable property. Think carefully about what you buy and ask yourself if a watch brand has earned the right to reside on your wrist. Saraswati, the Indian goddess of wisdom, music, art and speech. It recently occured to me that wrist real estate has doubled for many people these days. No, I'm not referring to some kind of surgical grafting of additional limbs. I'm talking about the "metaverse." Before the advent of this buzzword, I generally refered to this space as virtual reality, so I'm going to stick with that for the purposes of this post. A bit of background: back in December I bought my family an Oculus Quest 2 from Facebook (now Meta). This is a wireless VR headset with accessible pricing. One of my kids had tried out a game call "Job Simulator" in the past and loved it. I thought I'd bri

Watch Market Finance Cosplay Part Deux: Price is not Ask

This post started as an investigation into whether the crypto "winter" does actually explain recent changes in luxury watch prices. I was motivated by a Bloomberg article containing this claim (as well as subsequent discussions of that article). As I started working on this post, though, I realized that the data referenced in the Bloomberg article is so bad, my plans had to change. Fam: we have a problem. People publishing numbers relating to the watch industry do not seem to understand some very fundamental concepts when it comes to markets (I'm going with this possibility rather than a rather more troubling conclusion: they understand and they're actively misleading people). Those same people are making statements and drawing conclusions based upon some very shaky foundations. So, this post is going to explore why a lot of the numbers we see when it comes to the watch market do not actually measure prices. Many claim to report prices, but that is not what t

Royal Oak Reference 5402 Sales Numbers

One premise of economics is that human behavior often follows certain predictable paths. It isn't always the case, but it often is. For example, every semester I poll my students with a certain question and every semester the results of the poll are perfectly predictable because there are two laws in economics which almost always hold. Of course, I would be hypocritical if I didn't also follow a predictable path and I'd venture to say that I follow a law of behavior that applies to almost all empirically-oriented economists. It is this: when we see a table of data we want the spreadsheet. Yesterday, I virtually attended a talk hosted by the Horological Society of New York entitled "The Royal Oak: from Iconoclast to Icon" delivered by Audemars Piguet's Heritage and Museum Director (Sebastian Vivas). A fairly rare red-dialed Audemars Piguet Royal Oak I photographed at a Phillips Auction preview. The Royal Oak is a horologically famous watch design celeb

Houston, We Have MoonSwatch Data

It is fair to say that Swatch's recent release of the Omega Speedmaster-inspired "MoonSwatch" is, thusfar, 2022's highwater mark for consumer interest in timepieces. A spreadsheet at ground control. When Swatch boutiques opened their stores on launch day, they were met by long lines that were reminiscent of the mobs who sought Cabbage Patch dolls during Christmas, 1983. There were even reports of scuffles. Everything sold out and we're still waiting for promised online sales to begin (if they every do). It is hard to find fault with any aspect of this particular product launch. It's said that the role of a central bank is to take away the punchbowl when the party starts to get good. So, in that great tradition, I will spend a bit of time discussing how the product release could have been better when it came to Swatch's bottom line. I really couldn't call myself a dismal scientist if I did otherwise. Swatch found itself in the enviable pos

I Dream of References

Here's how my thought process went when it came to developing this post: Thought : "Hey, how popular is the new Vacheron 222 really? Let me look at Google Trends." (Note: Google Trends is a service from the search engine that allows you to see the volume of searches for a particular term.) Result : Woah. That is a crazy hockey stick. A vintage Vacheron Constantin 222, up for auction this May in Geneva at Phillips. The first lesson we learn from the data is that Vacheron Constantin's Watches and Wonders release of the gold Historiques 222, reference 4200H/222J-B935, was an absolute monster in terms of gaining global attention. Basically, nobody was searching for this reference before the drop, and searches increased roughly 25 fold after the watch was released. You couldn't wish for more confirmation that, a) Jorg Haysek's design for this watch is beloved and timeless and b) Vacheron has much to celebrate when it comes to this release. Then

Beware Mistaken Spreadsheet Authors: the LuxeConsult / Morgan Stanley Report

In 2015, entrepeneur Elizabeth Holmes had an estimated net worth of $4.5 billion. On January 3, 2022, she was found guilty of fraud. In the interim, her net worth was reestimated as zero. One of the most important lessons from the Holmes saga is that falsified data can open the spigot to great riches. A whistleblower testified that Holmes' company manipulated data in order to pass certain tests. We can't lose track of the fact that a spreadsheet always begins empty, and the process whereby that spreadsheet is filled is just as important as the entries in the cells. This month, news broke of a LuxeConsult / Morgan Stanley (hereafter LM) report purporting to describe the state of the luxury watchmaking industry in 2021. It generated a lot of attention . I was a bit bothered by the published pie charts and tables, though. I could not find a copy of the report anywhere. Moreover, the authors assert very specific revenue figures for Rolex, whose secrecy is the stuf

Jean Clade Biver: the Van Gogh of Veritas?

I’ve sometimes wondered if my understanding regarding the watch industry would be any different if I spoke and read the “native tongue” of horology. Of course, defining that native tongue is, itself, very difficult. For me, the language that most comes to mind is French. I spent quite a few years studying Spanish and was somewhat decent at it earlier in my life, but I’m just not sure French is in the cards for me at this point, although I wish it were. A photo I took of a display at Phillips' auction house in NYC during a retrospective of M. Biver's career and collection. Fortunately, we live in an era populated by a wide array of translation tools. Periodically I use these to “peak behind the curtain” of French dialogue regarding the watch industry. In my most recent effort, I used some online services to translate a recording of an interview that Jean Claude Biver gave to a Swiss radio station. Biver doesn’t need an introduction, but I’ll just offer a few key poi