Peak Vintage
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  1. #1
    Member James A's Avatar
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    Peak Vintage

    Its no secret that vintage watch prices have enjoyed massive price growth over the last few years.



    An incredibly rare Patek Philippe watch just shattered records at Phillips auction house in Geneva, selling for an astounding $11,022,778, lightyears ahead of its anticipated $3 million price.
    The Patek Philippe Reference 1518 had long been among the world's most coveted timepieces. Made in 1943, it boasts a perpetual calendar chronograph with moon phases, Arabic numerals and a stainless steel strap, a true rarity on the yellow gold and silver-favoring watch market.


    https://www.businessoffashion.com/ar...patek-philippe



    Seems every second day there is a new sales record or another Blog dissecting the market. Sure the mega brands have always enjoyed high prices but as has been discussed before much of that mania has moved down into brands that a mere few years ago could have been picked up for a song.

    But I wonder how long this phenomenon can be maintained. Is it a blip or will it have legs that will go on for decades?

    There is a case for it just being a passing thing. Here's my thinking...

    Most watch lovers are generally older and remember wearing a watch a kid or teenager. Now if someone was born in 1990 chances are they have never worn a watch. They are 27 today and may have an apple watch but most of them have no physical memory of watch being a part of their lives. My guess is many of us and other collectors are a decade or two ahead of the 1990 cohort.

    For us, wearing a watch on our wrist has been a very real experience. The vintage craze has been cited as starting in Italy during the 80's and at the height of the Swatch boom. Perhaps these Italian collectors had a reaction to mass quartz or newly discovered the quality of the handmade. What ever the source it was imbued with a sense of history and nostalgia. I think that nostalgia plays an important part in our hobby. If you are born in 1970 you are 47 years old today and probably at your best earning capacity, so you can afford to enjoy your hobby but in 30 years time you probably wont have the same purchasing power you enjoy now. If it is peak vintage now, with nostalgic collectors buying at the height of their purchasing power are we living in a bubble?


    Can the price of vintage continue. I guess it can if younger people buy in to it. They may come at it from an angle not imbued with nostalgia.

    Those guys at Hodinkee all seem to be 30 something to my eye and they recently posted a story about students at the London school of economics that have a watch club. The club is made up of 20 somethings.

    https://www.hodinkee.com/articles/wa...l-of-economics


    The Smartwatch has certainly introduced a lot of young people to the idea of wearing something on your wrist. There are reports of people transitioning from a smartwatch to a regular watch once they are use to the idea. And kids are being marketed to for wrist devices. Will these kids one day switch to a mechanical or quartz watch?




    http://smartwatches.org/learn/the-to...ches-for-kids/




    I'm kinda thinking out loud, and ask, once the collectors that remember wearing a watch when young are gone, will the market continue to climb?

    Regards,



    Last edited by James A; February 26th, 2017 at 09:38.

  2. #2
    Member Dan S's Avatar
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    Re: Peak Vintage

    Vintage wristwatches are collectible as (1) historical timepieces and also (2) as wearable jewelry. One could argue that if people were no longer interested in wearing them, their value would decrease to a level similar to that of pocket watches. However, I'm not sure how likely that is to happen, since people generally like to wear jewelry.

    Also, recent history suggests that there is something intrinsically interesting about mechanical watches, since they have soared in value, despite the fact that an entire generation was almost completely unaware of them. In fact, one could argue that the "quartz crisis" is a major factor driving the current explosion of interest in vintage mechanical wristwatches.

    I tend to think that we are currently in a period of particularly fast price growth, and that we may see some slowing down and possibly even some price corrections for watches that are really not so rare, original, or in good condition. However, while I sometimes wish it were otherwise, I am not of the opinion that this is a bubble and that we will see a return to low prices for really desirable vintage wristwatches. As someone who looks at thousands of watches each week, I would say that it's already quite difficult to find good examples, and it will only get more difficult over time.

    Edit: As the latest sign of the apocalypse, someone is asking $21,500 for an overpolished Zenith EP A486 with service replacement hands.

    http://www.ebay.com/itm/Zenith-El-Pr...8AAOSw4A5YsS~7
    Last edited by badbackdan; February 26th, 2017 at 05:12.
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  3. #3
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    Re: Peak Vintage

    Collectors tend to accumulate. I bet most people here have more watches in the drawer than their father did. That has some effect on supply.
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  5. #4
    Member Tony C.'s Avatar
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    Re: Peak Vintage

    Quote Originally Posted by badbackdan View Post
    I tend to think that we are currently in a period of particularly fast price growth, and that we may see some slowing down and possibly even some price corrections for watches that are really not so rare, original, or in good condition. However, while I sometimes wish it were otherwise, I am not of the opinion that this is a bubble and that we will see a return to low prices for really desirable vintage wristwatches. As someone who looks at thousands of watches each week, I would say that it's already quite difficult to find good examples, and it will only get more difficult over time.
    You make some excellent points in your post, but I disagree with some of the above quote.

    First, as I have mentioned previously, the market has been bifurcating for some time, and that bifurcation is accelerating. So, watches "that are really not so rare, original, or in good condition" have been declining in value for some time now, and, as the real economy continues to deteriorate (which it will), that downward pressure will continue, providing quite good opportunities for those willing to look beyond the obvious, and/or accept some condition flaws.

    On the other hand, I don't think that there is any question that certain strands of the market are well into bubble territory. While the very best and most important watches are likely hold their values better than most, they certainly won't be immune to severe economic shocks. And those lesser watches (e.g. most "pretty" chronographs, more common and/or less well-preserved Heuer, UG, etc.) with values that have risen sharply over recent years will see similarly sharp declines as the impending crisis unfolds in earnest.

    And while it is true that really good examples of the most fashionable models have become scarce, I am delighted to say that there are still plenty of opportunities to find and acquire superb examples of fine vintage watches that are not in the current spotlight. I recently acquired a rare IWC for 35-40% of its true market value, and in an online auction! Yes, finding somewhat hidden gems requires time, patience, and persistence. But, thanks largely (and sadly) to the ongoing economic crisis, fresh watches continue to appear in the market, and at good pace.

    Finally, and without giving away any trade secrets, bear in mind that searching for vintage watches online is often done superficially, by which I mean with an eye only to eBay and well-known sales forums. There are also watches being sold on different venues that slip through the cracks because most hunters are focussed on the best known sites, and it is possible to find the occasional gem, or bargain, as a result.

    Cheers,

    Tony C.
    Last edited by Tony C.; February 26th, 2017 at 13:45.

  6. #5
    Member Border-Reiver's Avatar
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    Re: Peak Vintage

    When we talk about prices, we must also take in consideration the inflation and also – for those who have to live with a rotten and filthy currency like the Euro – the real value of money as such.

    I tend to think, that the market for mechanical watches is generally much overheated, but I see no signs of weakening at the moment. The mechanical watch is something special, although technically totally outdated and the most expensive mechanical watch has no chance against a cheap quartz watch for $3.99 including shipment. A mechanical watch has a regulating frequency of 2,5 hertz (18,000 A/h) to 5 hertz (36.000 A/h). A quartz watch runs at 32.768 hertz, which means a 6.500 to 13.107 times higher vibrational frequency, whereby the quartz watch is less vulnerable to external influences, not to speak of radio controlled watches, which are regularly updated from an atomic clock, which works on a vibrational frequency in the billions, with a deviation of +/-1 second in 1 to 40 million years . A new battery every 2 years or even solar powered, versus hand winding or all the fiddling with an automatic watch.

    The mechanical watch, leaving aside gold cases for investment, is a toy, a piece of jewelry a man can wear, a fascinating little machine, but an archaic thing when it comes to precision, especially in a period, where telling the time has become commercially worthless, you get it for free in the smartphone, the microwave oven, in the PC and wherever. Moreover, if you wear all your watches or not, you must calculate the cost for a periodical service.

    I think that collectors are moving on thin ice when it comes to getting their money back some day (as a serious investment they are absolutely out anyway) and the new generations of heirs are more interested in other things. Buying one watch after another is easy, you can get 100 of them in a week, but selling lots of them with the intention to get at least half of the money back what you paid for, is an endless process. Typically, they come back to the market one day in piles ‘from estate’ or as the 2-Dollar-bargain from a garage sale. For me, every watch I buy is like a good dinner, a sightseeing flight in a helicopter, a nice day on the beach or in the opera, for which I don’t get any money back, it’s spend and gone and I had (or still have) my fun with it.

    Oh yes, there are those examples where people got rich with their watches, like people got rich in the lottery or one within five million girls who have made it on the catwalk.

    It is very important that you control your addiction to watches. I have them all, from the verge fusee made when Mozart was still alive and composing, up to the latest radio controlled watch. There is just one missing in the line of technical development and it would be easy to get one of them with one click, but I have set my strict limits what concerns technical and optical quality of vintage watches and a certain price limit and I will not be tempted to make any compromises.

    What I totally shy away from are those ‘limited-to-99-pieces’ editions of mechanical watches at ridiculous prices or similar excesses. Except for special complications or gold cases, no new and technically unspectacular mechanical watch is worth more than 500 Dollars, at that is already a very, very friendly estimate. But the value is what someone pays for, and that does not always follow common sense.

    There is also a change in the marketing of the industry. I recently heard the chairman of a luxury brand openly say, that they are selling watches no one needs at prices no one should pay. The message behind that statement was, that the owners of such a watch are in a different league when it comes to allocating private money, most likely as a stimulus for potential high-end customers. He said, that people spending 2,000 Dollars for a watch are buying one every three years, whereas people spending 20,000 Dollars for a timepiece, are buying three or more each year.
    Last edited by Border-Reiver; February 26th, 2017 at 16:15.

  7. #6
    Member Tony C.'s Avatar
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    Re: Peak Vintage

    Quote Originally Posted by Border-Reiver View Post
    When we talk about prices, we must also take in consideration the inflation and also – for those who have to live with a rotten and filthy currency like the Euro – the real value of money as such.
    All fiat currencies are rotten. The USD has lost over 90% of its value since the Fed began to create "money" out of thin air 100 years ago, and especially since the link to gold was broken in 1971. So, in a long-term context, exchanging paper (or now electronic) currency for high-quality vintage watches is actually a smart strategy, as vintage watches, paintings and automobiles, etc., cannot be conjured out of thin air, and their supply will always be limited.

    I tend to think, that the market for mechanical watches is generally much overheated, but I see no signs of weakening at the moment.
    I agree only for certain segments of the market, for reasons alluded to above.

    The mechanical watch is something special, although technically totally outdated and the most expensive mechanical watch has no chance against a cheap quartz watch for $3.99 including shipment. A mechanical watch has a regulating frequency of 2,5 hertz (18,000 A/h) to 5 hertz (36.000 A/h). A quartz watch runs at 32.768 hertz, which means a 6.500 to 13.107 times higher vibrational frequency, whereby the quartz watch is less vulnerable to external influences, not to speak of radio controlled watches, which are regularly updated from an atomic clock, which works on a vibrational frequency in the billions, with a deviation of +/-1 second in 1 to 40 million years . A new battery every 2 years or even solar powered, versus hand winding or all the fiddling with an automatic watch.

    The mechanical watch, leaving aside gold cases for investment, is a toy, a piece of jewelry a man can wear, a fascinating little machine, but an archaic thing when it comes to precision, especially in a period, where telling the time has become commercially worthless, you get it for free in the smartphone, the microwave oven, in the PC and wherever. Moreover, if you wear all your watches or not, you must calculate the cost for a periodical service.
    In terms of precision, I think that you are being too pedantic. How many people care whether their watches are accurate to with five, or 0.5 seconds a day? Exceedingly few, I would argue. For most practical purposes, a well-maintained mechanical watch will keep time more than well enough to serve most people's everyday needs.

    Furthermore, the more accurate watches all require external power sources, and they are not always available, or convenient.

    I think that collectors are moving on thin ice when it comes to getting their money back some day (as a serious investment they are absolutely out anyway) and the new generations of heirs are more interested in other things.
    While I agree that "investing" in watches is tricky business, I'm not sure why you would believe that the best examples of good (or better) watches won't appreciate over time. Do you feel the same way about Fine Art, vintage automobiles, or other collectibles? It should be clear that, especially at the high end, fine vintage machines that also have an artistic (design) component will remain in demand as long as people can afford to collect.

    There is also a change in the marketing of the industry. I recently heard the chairman of a luxury brand openly say, that they are selling watches no one needs at prices no one should pay. The message behind that statement was, that the owners of such a watch are in a different league when it comes to allocating private money, most likely as a stimulus for potential high-end customers. He said, that people spending 2,000 Dollars for a watch are buying one every three years, whereas people spending 20,000 Dollars for a timepiece, are buying three or more each year.
    This is a good illustration of why there has been a bifurcation in the vintage market. Those with money have largely gotten richer since the last crisis, as their stocks and properties have benefitted from grotesque Central Bank policies. This, in turn, has catalyzed bubbles in collectibles, including watches. But the average person, who has continued to suffer economically, has less money available for non-essential purchases, putting downward pressure on the less fashionable segments of the market.

  8. #7
    Member James A's Avatar
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    Re: Peak Vintage

    Thanks for the response guys.

    I guess I was trying to tease out a theory based on the buyers and our effect on the market rather than just purely the market itself. By that I mean, we the collectors are the market. We appreciate history and fine movement making but we are also the last generation to grow up wearing a watch. Will the vintage market boom fade as we fade away? Perhaps my perameters are wrong. Afterall you dont need to paint or have grown up with a great work of art in your house to appreciate art.


    Regards,

  9. #8
    Member mkws's Avatar
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    Re: Peak Vintage

    IMO, yes, it is a bubble. I don't think the prices will stay as they are now, the hype is too badly founded to endure for more than a few years. Sooner or later, the "maybes" and "ifs" that it's founded on will be noticed, and while some cases (Patek...) are most likely hopeless, the efforts of certain entities to hype what's common beyond measure must fail. There isn't a shortage of those, who believe the hype, which often consists of some of the most thinly disguised lies I've ever seen (Phillips is probably the most "creative" in inventing claims of rarity). Sadly. But every folie a deux​ must end, sooner or later.

    When I've seen this thread, I've been almost sure it won't go without a Hodinkee link. Phony journalists (PR guys in disguise - no, they're not real journalists) preaching to the posh. Aaaarghhh. On top of that, fake journalists, who are largely responsible for what's happening to the vintage market, who made the madness that rules auction houses infest the previously unaffected part of the market. I'm only glad they're sticking to selling the already hopelessly overhyped Rolexes now, I didn't have to write another Bring a Brain for quite a while. Let me just end that with a quick "down with the Donkeys!"

    End of communique.
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  10. #9
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    Re: Peak Vintage

    As always, Tony makes good points, in particular this line copied below. I have to say that eBay has changed as a marketplace to find vintage. True, the range there is incredible and the format is convenient. But I feel that the flea market economy it used to represent has matured into what is essentially a well-established retail market.

    If you are looking for good vintage watches at good prices, you have to do a lot more homework now. If you're reading this and wonder where else to look, I can only suggest that you spend some time on the internet hunting for alternatives to supplement your eBay habit.

    Quote Originally Posted by Tony C. View Post
    >snip

    Finally, and without giving away any trade secrets, bear in mind that searching for vintage watches online is often done superficially, by which I mean with an eye only to eBay and well-known sales forums. There are also watches being sold on different venues that slip through the cracks because most hunters are focussed on the best known sites, and it is possible to find the occasional gem, or bargain, as a result.

    Cheers,

    Tony C.
    Last edited by Habitant; February 27th, 2017 at 10:40.
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    Re: Peak Vintage

    I suspect that interest in vintage watches will continue, even as the younger generation comes into the market, in economic terms. As Dan says, we are really talking about functional jewellery and human beings love adornment. One case for vintage continues to be the fundamentally organic nature of mechanical watches: most of us have watches that are 50, 60, 70 years (etc) and which get daily wear, managing to attain a reasonable accuracy.There will be few, if any, Apple watches around and running in 50 years.

    And Tony's gloom about the future of the economy comes from a place of greater expertise than my own, but my take on it is that the economic collapse he predicts has already happened. We're living in it, we just haven't realised just how broken our economic and now, political, models are…yet. Any checks and balances which were once more effective in Western capitalist economies are dysfuntional and we now are addicted to central bank manipulations just to keep the lights on. Our societies are bifurcated, with fewer people gaining greater wealth as most around them slip back, in relative terms. Yes, in relative terms: this means that there is still a lot of money floating around out there.

    At the top end of the market, prices are driven by the ultra-wealthy needing to have some outlets for their money, just as they also play in the fine art market, fine furniture, jewellery and so on. There have always been bubbles in these markets as the various advisers manipulate their relatively inexpert clients (with some exceptions, of course…).

    In the sector that most of us reading and writing here work in, prices are driven primarily by rarity, condition and function. Most know what they're looking at and the going rates for things. We are the expert class, with more time than money on our hands and watches that are mostly well chosen, well maintained and well loved. In my opinion, the watches that I collect (generally $500-750, undervalued, stylish and lesser known in mass market terms) have gone up, but in steady terms.

    In general, insecure buyers are lead by outlets such as Hodinkee. I'd warrant that most of these mid-level and overhyped brands will have volatile values over the next 10 years as they get shifted into and out of the limelight to suit the manipulators.

    But humans are irrational and i don't see that going away in a hurry.
    Last edited by Habitant; February 27th, 2017 at 11:31.

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