Skip to main content

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 and regulatory requirements. Stocks also all operate the same way in terms of dividends, etc. Watches are very heterogeneous, so averaging those is a bit more like averaging an apple and an orange. It just doesn't make sense.

Anyway, I used a helpful tool to recreate the data that the analytics organization publishes in graphs on Instagram. As as far as I know, they don't provide the raw data. I'll note that my data is an approximation of the original data because the tool I used to recreate the data isn't perfect.

A graph of average Rolex asking prices that omits the origin.
The graph published by the analytics company is designed with a vertical axis starting at a value of $12,000. In other words, the analytics company omits the origin from their graph. The resulting line reminds me of that mountain Richard Dreyfuss' character was obsessed with in the movie Close Encounters of the Third Kind.
Devils Tower in Wyoming, USA.
I've included a picture here for reference, the actual formation is called Devils Tower and it is in Wyoming. The end impression is that Rolex prices skyrocketed quickly, mostly during the pandemic, and now they are collapsing.

But what happens when we include the origin in the graph? Visually, we get a very different impression and it isn't nearly as dramatic. I present that image here.
Average Rolex asking price, origin included.
This graph is also more accurate. We see a slow increase in asking prices and then an almost equally slow decrease. If we use a ruler to measure the distances traced by the line, the first graph makes it appear that the Rolex index increased by over 600% in less than a year. This is absolutely not what happened to the index. In reality, the index increased by 29%.

Average Tudor Black Bay GMT asking price, no origin.
This is not an isolated distortion from the watch industry analytics company in question. I also recovered the data from a graph they published showing the asking price for the Tudor Black Bay GMT. Their published figure, which I recreate here, leaves out the origin and seems to suggest that the Black Bay has recently shown a fairly precipitous drop in its value.
Average Tudor Black Bay GMT asking price, origin included.
When you include the origin, the decrease looks far more modest, which is the true result when it comes to the reported asking price. If we believe the analytics company, the Black Bay GMT asking price decreased by roughly 10%. This is still a noteworthy decrease in value, but dollarwise it amounts to about $475. It is good to know this is happening, but it isn't really precipitous.

According to Mark Twain, British prime minister Benjamin Disraeli once said, "There are three kinds of lies: lies, damned lies, and statistics." This sentiment has, unfortunately, resonated with many. Really, though, it is not statistics that lie. Instead, when proper practice is not followed in data analysis and inference, the result is often misleading. The good news is that I've also seen signs that watch data analytics companies are responsive to feedback and trying to do better. Let's hope that trend continues.


My book on the history of Rolex marketing is now available on Amazon! It debuted as the #1 New Release in its category. You can find it here.

Comments

Popular posts from this blog

Argon Trademark Dispute Goes to Court

What it might look like if Aragon and Argon watches actually went to court over the trademark dispute. My prior post described a disappointing development for those collectors hoping to acquire an Argon Spaceone watch via the brand's Kickstarter campaign. The campaign had reached over $1 million in funding when Kickstarter's management stepped in and froze the whole thing over an "intellectual property dispute." When I posted about this development on Instagram , Hodinkee editor Tony Traina noted in the comments that another brand, Aragon watches, had filed a complaint with the US Patent and Trade Office (USPTO) back in April (thanks Tony!). Argon's account replied and indicated that they had already filed a registration for their brand name and they were retaining counsel in New York City. On Tuesday, June 27 of this week, more details were offered via a lawsuit filed in the US District Court for the Southern District of Florida. The case is filed on behalf

Update: Criminal Charges in the Case of the $3M+ Omega Franken Broad Arrow

The Franken Broad Arrow in question. I'm an economist, not a graphic designer. Exactly seven days ago, I received a DM from a friend who works full-time in the watch space. They sent me a link to an article in a German language publication called NZZ. I'm not completely familiar with this publication and I had to rely upon a Google translation of the article, so I was properly skeptical of what I read. The piece buried the lede a bit. It started with allegations that a Omega Speedmaster Ref. 2915-1, nicknamed the "Tropical Broad Arrow," likely had conditions which were undisclosed when the watch sold at auction. The Tropical Broad Arrow achieved a hammer price of approximately $3.25 million in November of 2021 in Geneva. The result generated all kinds of excitement. This price was a new record for an Omega Speedmaster. When I started reading the NZZ article, I initially thought it was a rehashing of an article by Jose Perez . That article had earlier raised imp

In Brief: Wherefore Art Thou Timex?

Last week, news broke in a local newspaper that Timex Group USA conditionally sold their headquarters in Middlebury, Connecticut for $7.5 million. An older Timex that belonged to a family member. The buyer plans to build a "food distribution center" on the property, but the sale will only go through if certain wetlands permits are approved. Moreover, "On May 10, the Middlebury Conservation Commission approved the permit for a food distribution center consisting of a 540,000-square-foot building and a smaller 180,000-square-foot building on a 111-acre site consisting of the 93-acre campus of the Timex property and a neighboring 18-acre property on Southford Road belonging to another Drubner family partnership." Further complicating the matter is the fact that a politician elected to state government managed to slip a clause into a two year budget bill making it even harder for the potential buyer to build the food distribution center. Said politician lives acros