Luxury Watch Market's Shifts

Don’t blindly follow someone, rather follow the market's whispers and try to hear what it is telling you. The more inexperienced individuals enter any market, the more it is exposed to overinflated prices.


The luxury watch market post-pandemic has seen a lot of self-proclaimed gurus that lack knowledge of the global market's economic state, which may be one of the many reasons for overinflated prices.


At the peak of the luxury watch market in early 2022, Rolex stainless steel models traded at 3x their listed prices; meanwhile, Patek Philippe Nautilus models traded at more than 5x their listed prices.


The luxury watch market, being an alternative asset class that gets influenced by traditional assets, has started to correct, but the secondary market hasn’t been looking great. Markets are usually affected by both external and internal forces.


Limited edition

Patek Philippe Tiffany & Co. Nautilus


External forces such as global stock markets that have shattered the confidence of any retail investor that has suffered declines of not less than 20% YTD conservatively, and can go up to 80% if it was a highly speculative portfolio. Another external force is the so-called transitory inflation that hasn’t yet shown any sign of abidance even after the FED's interest rate hikes, and that’s a massive concern to speculators that face a risk of the FED increasing interest rate hikes as a benchmark.




Internal forces, such as overleveraged investors that entered the market in its best times thinking it was a money-making heaven, now face the reality of the market's

drawbacks and may have to dump inventory to meet leverage obligations.


Economics 101

When interest rates are low, investors get the chance to speculate more on risky asset classes that generate abnormal returns. However, interest rates can’t stay low forever or else it will cause inflation, mispriced assets, and many other complications.


The luxury watch, like any other alternative asset class post-COVID-19 that has gone through abnormal, unjustified growths, must come back to its mean prices, if not lower, due to current economic and

political complications. In addition to the above, the gray market has shown signs of being very manipulative in terms of some charitable auctions, or maybe even call it the free publicly announced tax write-off.


The tax system's loopholes put some alternative asset classes in danger of inflated prices and may be one of the causes of a market's correction. The tax system is one of many that add fuel to the fire; however, it is not as impactful as the amount of wealth low interest rates and cryptocurrencies have caused.

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