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Of Rolex Shortages And Beating The Dow February 08, 2022 (0 comments)


London, UK—Yes, we know there’s a shortage of Rolex watches. And we know that the company claims it’s not deliberate. And that people claim a Rolex is a better investment than the stock market.

But as Rob Corder, editor of WatchPro, explains, looks can be deceiving and there’s a lot to unpack here. First, he writes, the purported shortage of luxury Swiss watches in general is largely overblown. With a few notable exceptions like Patek Philippe’s Nautilus and Audemars Piguet’s Royal Oak, and Rolex, he says 99% of Swiss luxury watches have no significant supply shortage. What happened during the pandemic is that booming demand helped clear out a lot of excess inventory—but scarcity is a selling point so brands create the illusion with limited editions only available in their own boutiques.

Rolexes, on the other hand, really are hard to find. But Corder believes that’s because dealers are moving the less-popular models—like ladies’ watches—by some fancy arm-twisting, such as only selling the sought-after models to people who are willing to also buy an unpopular style or a nice big piece of jewelry at the same time. Kind of like the days of not being able to exhibit at the summer JA Show unless you also took a booth at winter show, except that customers can turn around and flip the extra watch on the secondhand market and recoup their cost, if not even profit a little.

What about claims that a Rolex will outperform classic investment vehicles like stocks and real estate over a 10-year period? In his column titled “Lies, damn lies and Rolex statistics,” Corder says the devil is in the details. On one hand, yes, the average price of a used Rolex has risen almost threefold in 10 years, from $5,000 in 2011 to $13,000 at the end of 2021. But so has the Dow. And, as Corder observes, there are unicorn Rolex models that distort the brand average, and there are plenty of stocks in the Dow Jones Industrial Average that have outperformed the Rolex trajectory, not least of which is Tesla, up 15,000%. Yes, that’s a percent sign, not a dollar sign. A good stock picker, he says, would have done a lot better in 10 years than a good Rolex picker.

Related: Diamonds Or Mutual Funds? How To Have The Investment Conversation With Your Customers

Rob Corder, managing editor, WatchPro and managing director of Promedia. (Photo by Ausra Osipaviciute/ITP Images)

In short, Corder’s advice sounds remarkably familiar: invest in a watch because you love it and want to wear it, and trade it if you want to get something else in its place, but don’t use it as a retirement plan.

Read more here and here.

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