Random Blog Post 2 - Watches
Since I was a kid, I always had an interest in watches. I would actively follow the watch market to see if watches were going up or down. As I have saved up money and bought a couple of watches myself, I now look at the watch market for potential deals that I could capitalize on. I’ve always seen watches not only as an item that I could wear out, but also as an investment. Luxury watches usually retail for a certain price, but in many cases, they sell for more than the retail price in the secondary market. However, in the past couple of years, the watch market has gone off the rails. Most luxury watches have seen an increase in price anywhere from 30-50% with some watches doubling and some even tripling. This is very uncharacteristic of the market and can be attributed to one underlying cause: the pandemic.
The pandemic led to two things that were the catalyst of this boom: low supply and high demand. When the first lockdowns due to the pandemic first came about in March of 2020, there was fear that it would greatly hamper our economy. And for a time, it definitely did. Before I continue I must note that there were many people negatively affected by the pandemic and people that are still struggling due to this fact. But in general, once the initial fear blew over, the economy started booming back up with the stock market hitting an all-time high. Not only was the economy doing good, but also people had a newfound appreciation for enjoying life and spending money on things to treat themselves. This led people to spend their money on goods like jewelry, nice clothes, and watches. And at the same time, they were saving money as the pandemic restricted activities such as traveling and entertainment venues which kept people home. So this increase in savings and shift in consumer trends led to a surge in the demand for watches.
Furthermore, as most people know the pandemic has caused a variety of constraints on the supply chain of many industries. One of those industries being watches. Watches are composed of thousands of parts and if even one of those parts is missing, then the watch cannot be completed. Because of this, not as many watches were being put out during the beginning of the pandemic which has caused issues to this day. Also, luxury watch brands like Rolex, Patek Philippe, and Audemars Piguet like to maintain a certain amount of exclusivity. So, they try to restrict the number of watches that they put out. If you couple this fact with the supply chain issues, then you get a decrease in supply. Ultimately, this decrease in supply along with the recent boom in demand has led to the watch market reaching levels people never thought were possible, and only time will tell when this growth will die down.
Hi Elan,
ReplyDeleteI never thought about watches before reading your post. It is strange to imagine that watches become valuable over time, but I guess the same can be said for shoes. Watch collecting seems like a cool and niche hobby, one that pays back pretty well. As an avid watch-wearer, I see the appeal, and might think about using watches as an investment. Thank you for letting me know about this industry.
- Ellie
Hi Elan,
ReplyDeleteI've been reading back-to-back interesting posts, and yours is another one on that list! I've always liked looking at luxury watches, and I can definitely respect someone that rocks one. However, I never really knew much about the watch market until now. After reading your explanation, it makes complete sense as to why more people are buying them lately. Do you have a favorite watch brand? I wonder which watch out there is the most popular.
Angelica
Thanks for sharing Elan. I had no idea that the luxury watch market fluctuated like that. After I read your post it makes sense how it reacts to the economy like a lot of other industries but it's crazy to think that some watches tripled in price. I'm curious how the secondary watch market works. Do you sell your watches on Craigslist or something or is there like a watch dealer that you go too? Overall, your post really interested me and I enjoyed learning about the luxury watch market.
ReplyDeleteHey Elan!
ReplyDeleteI really liked reading your post. I find it really interesting that the market for watches has been so crazy for the past years because of COVID. I feel like the pandemic really has caused markets for a lot of things to shift drastically. Things such as the PS5 which is still sold out, even though they're starting plans for the next generation, or GPUs, which have only recently become more available, are just some of the things that I would never have imagined would be affected so much.
Bryan