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 they're doing. This is becoming a bit of a theme on Horolonomics: the fact that someone has a number does not mean that number measures something you are interested in. I have a whole lot of sympathy towards those who are pushing us towards the use of data in order to understand the watch market. But poorly measured data is really no different than visiting the oracle at Delphi and having her roll the chicken bones or read the tea leaves or whatever it is she did. In fact, mismeasured data may be way worse than no data at all because it could lead you to inappropriately suspend your skepticism.
A price taking market. Not how much of watch trade works.Let's get into it. There are a lot of ways a market can be structured. One is what we might think of as "price taking." This is like the supermarket: they post a price for an item on their shelf. Then, you go in and buy it at that price. So, there is no difference between what the supermarket asks for an item and what you pay.
The important thing to note is that very few online platforms for luxury watches operate in this way. Instead, we see a whole lot of asking prices for watches. What we don't observe is the closing price: that is, the price actually paid for a watch (for that matter, nor do we observe the "bid," which is the price buyers are willing to pay). When people say "price" for an item in this type of market, what they're really thinking about is the closing price. This is the amount of money that changes hands. The closing price is an agreement between buyer and seller about the object's value.
Let me give an example of why this is a problem for so-called watch market data providers. Subdial defines their "market index" for watches as follows: "Our data model is proprietary, it is updated daily with listings from around the world." So, they basically scrape a whole bunch of numbers off of a whole bunch of watch platforms. Here's the thing: these are asks. They are what the seller wants you to pay. They are not closing prices. Closing prices are much, much harder to obtain.
Here's why this is a problem: suppose I post a vintage Omega pie pan Constellation on a watch forum scraped by Subdial. I list it for $3,000 but I know it doesn't warrant that amount. But I think, "hey, someone out there might actually go for it." Into Subdial's database goes an entry that says a Constellation price is $3,000.
Now, let's say I get a DM from someone and they say, "look, that thing is not worth $3k but I'll give you $1k for it." I give up the ruse, agree to sell at a closing price of $1k and we carry out the transaction on Venmo or whatever. I mark the listing sold in the forum. So, Subdial has the wrong number in their database. The price is the actual closing price of $1k but they record it as $3k.
No amount of handwaving is OK in this situation. The price simply is not $3k. Please know that I'm only mentioning Subdial here as an example. There are many many people now publishing mismeasured "price" data. These publications are kind of like the National Enquirer (tabloid) of economics: they get a whole lot of attention but John Travolta did not actually marry an alien (the price of a Constellation is not actually $3k).
Bid ask spreads before and after the Great Recession.I know some of what I bring up here might risk seeming pedantic. But particularly now, when liquidity is lower and there is a whole lot of uncertainty due to the high risk of recession, asks are probably really really far off from closing. We know this from the US Treasury bond market, where bid ask spreads (the difference between what a seller will accept and a buyer will pay) spiked during the Great Recession of c. 2008 - 9 (see the included graph). So it's quite likely that the asks masquerading as watch prices right now are more inaccurate than ever.
I do believe that, in general, more information is better. However, it is very important that anyone publishing or discussing numbers honestly reports the limitations of those numbers. Right now, that seems far from the case when it comes to secondary market watch prices.
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.
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
Rolex's relationship with automotive racing is, at this point, very well-established. A Tudor sponsored car taking the checkered flag in Japan. A clearer photo is later in the post. Formula 1 and Rolex marked a decade of official partnership this year. One of the brand's most successful designs is named after a famous race: the Daytona (500). And, the record-setting Paul Newman Rolex Daytona which sold at auction in 2017 was worn by Newman during his illustrious career on the race track. In this post I will detail a lesser-known relationship between Rolex and automotive racing. In the 1960's through the 1970's, Tudor and Rolex sponsored at least one race car in Japan. I initially learned about this sponsorship through my conversation with Elias, which was also the basis for my prior post on Tudor. While I am not the first to write on the subject of Rolex/Tudor auto racing in Japan (for example, see the posts here and here ), I believe this post will be one of th
Among many avid watch collectors, the term "in house movement" seems to elicit eyerolling disdain. Pieces of an assortment, including balance spring, from a non-Swiss movement. There is a sizeable perception that "in house" is, in fact, nothing more than an unnecessary marketing ploy designed to tease more money out of the wallet of buyers (by way of definition, an "in house" movement means that the mechanism inside a watch was predominently manufactured by a brand itself, kind of like "we make our own bread" at a restaurant). I'll confess that I'd begun to think similarly, that is, until I read a 66 page report posted by the Swiss Competition Commision on May 10, 2023. Yes, this is the kind of thing an economist finds interesting on a weekend, or at least this economist. Before we get into the details of this report, in the interest of full disclosure I should say that the original document was in a different language: lawyerese.
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