Saturday, 11 October 2008

recession..fear..panic..downturn.. perspective of the current environment and advice for the watch collector

note: this is a watch blog and views and advice are related to watches and watch collecting...

the facts are in the headline news... for this past week
- US$6 trillion was wiped out in global markets
- US$6 trillion pumped in by governments did little to dent the massive selloff
the predictions are foreboding...
- unemployment.. loss of jobs and incomes & ability to pay off loans..
- negative equity situations for all collateralised loans... mortgages... margin calls
- businesses will suffer.. exports dip further.. company closures.. business spending will fall.. cattle class travel, less excesses of the recent boom times...

interestingly enough at the extreme of the scale, the ultra high net worth are seemingly not so badly impacted or stand to gain the most from this time... many still have loads of $$$ to spend it seems... and to buy near the bottom (if inclined). lets see, there's
- strong bookings for the ferrari california recently launched in Asia...
- no significant decrease in sales in the higher-end luxury car marques...
- watches above the US$100k mark are still moving it seems...
but what about for those not sitting on huge treasure chests as a famine/winter approaches?

a definition of luxury

what is perceived as 'luxury' varies depending on your personal socio-economic standing at a point in time... it is the opposite of a necessity and is typically an expense more for personal pleasure thats there because of PERCEPTION, utility not being the key buying consideration (eg you have arrived if u get a merc, and you are a good dad if u have a patek to pass on to your son) the luxury sector is also more susceptible to changes in income being what it is.. luxury products are more expensive relative to average prices of the same product... eg. you can buy a leather alligator bag for a couple of hundred or low thousand if unbranded... drop a Hermes, LV or Prada on it and the prices go a bit haywire... the Hermes for eg. could be S$40-50k.

'stealth wealth'? sorry i don't subscribe to fashion dictates

apparently 'stealth wealth' is in and vulgar flashing of it is out...eg. don't drive the loud orange lambo and head out in a more quieter bmw sedan... don't wear that oversized Audemars Piguet Limited edition and wear a humble omega speedy :) so if u got it, nows not the time to flaunt it, it seems... but i have never cared for fashion n u shouldn't too.. buy what is a classic to you and that should be wearable/usable regardless of the fashion at the time...

brands and retailers are gonna take a hit

on another note, i think many of the brands and retailers are slowly realising the 2008 is not going to be anything like 2006 / 2007 which i believe were banner years for many in the haute horlogerie industry... the picture for 2009 is more bleak.

some advice then...

while i have always told folks to buy what they love and enjoy the watches they acquire, looking upon any rise in price of the watch in the secondary market as an added benefit should the day come that they have to sell it off...(that was a mouthful)...

if you still intend to acquire and not put your $$$ to other uses, it is also good to cater for some additional factors of consideration for buying in these times...

1. buy only those that are special to you and that are hard(er) to come by

people holding on to things they like may be forced to sell em and suddenly you could acquire what was previously not on the market or that could be obtained for closer to what you are willing to pay for it...

don't buy a watch that is in regular production now if u can avoid it, holding cash for other more important needs, as you could always buy it later when times are better.

2. pre-owned will save u a chunk of change

as list prices this year has seemingly defied all economic forecasts and continued to see price increases through the year, which i think is not very smart on the part of brands and retailers, the secondary market will be the place to go watch hunting... especially if sellers are desperate to offload pieces in full knowledge that its a buyers market, u could pick up finds at good value...

last but not least... the other side of the coin...

if you are thinking of selling, just be mindful that buyers will push your selling price way down, so if its not so desperate times, hold on to what u got. if u can't put food on the table or pay the utilities bills than that patek/ap/rm on your wrist does not make a whole lotta sense and u r kinda forced to dump it... i hope u r able to sell them for good values then (uhm thats unless u r selling them to me ;) jus kidding all)...

hold on to your rolexes guys, we're in for a bumpy ride and i wish whoevers reading this, a happy journey even through troubled times. cheers, raph

5 comments:

P. Chong said...

hi Raphael...interesting remarks.

So with this crunch on the commodities market and the stock market...where to put the $$$ if not for higher end watches like PP repeaters et al?

raphmeister said...

Hey Peter, well first u need the cash ready to plonk down for it, which u most likely do but i don't :)

and then of course the question on if u r looking at it for investment purposes which is tricky with hig end watches, art etc...

Stefano said...

Interesting Raph. I guess it'll also depend on how "rich" people will feel. Of course, the stratospherically rich won't feel a thing and will keep spending "like tonight is 1999" (to borrow from Prince).

raphmeister said...

Hi Stefano, this might not necessarily be the case depending how wealthy one is... unless its all locked in wealth in cash and not invested or used as working capital than its clean and they can probably go on like its 1999 ;)

if they have $$$ in equities, fixed income, mutual funds and any investment assets or they own sizable chunks of listed businesses, than their net worth is impacted and could be by quite a lot... this would deter splurging and some level of belt tightening... even if its a louis vuitton alligator belt ;)

cheers
raph

Stefano said...

Good point Raph, I guess you're right.....watch out for next week bro! I'm having a hard time sleeping.....but it's a good thing! :D

Sorry for the cryptic message.

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