If you got caught up in the hype of the post-pandemic watch boom, you certainly werenโt alone. However, as Jean-Frรฉdรฉric Dufour, Rolex CEO has recently clarified, itโs important to remember watches arenโt investments, and shouldnโt be handled as such.
In 2021, it felt like everyone was trying to cash in on the white-hot watch market. Some pre-owned models were selling for up to ten times their RRP, fractional NFT-linked watch ownership was conceived, and everyone thought the good times would roll on forever. They didnโt.
โI donโt like it when people compare watches to stocks,โ said Jean-Frรฉdรฉric Dufour, the CEO of Rolex, to Swiss newspaper NZZ last week. โIt sends the wrong message and is dangerous.โ
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While hindsight is always 20/20, the pre-owned watch market peaked in March 2022 and has continued to slide in 2024, dropping an additional 13% on average in the last 12 months according to market-tracking platform WatchCharts.
In fact, the last three years of gains and losses have now effectively canceled each other out, with the market down 1% since April 2021.
The watch market didnโt drop out of nowhere, with the peak of the market occurring in the same month as the first interest rate increase by the American Federal Reserve. These rate rises had the intended effect: the US economy began to cool and thereafter more speculative markets began to follow:
| Federal Open Market Committee Meeting Date | Rate Change (bps) | Federal Funds Rate |
|---|---|---|
| July 26, 2023 | +25 | 5.25% to 5.50% |
| May 3, 2023 | +25 | 5.00% to 5.25% |
| March 22, 2023 | +25 | 4.75% to 5.00% |
| Feb 1, 2023 | +25 | 4.50% to 4.75% |
| Dec 14, 2022 | +50 | 4.25% to 4.50% |
| Nov 2, 2022 | +75 | 3.75% to 4.00% |
| Sept 21, 2022 | +75 | 3.00% to 3.25% |
| July 27, 2022 | +75 | 2.25% to 2.50% |
| June 16, 2022 | +75 | 1.50% to 1.75% |
| May 5, 2022 | +50 | 0.75% to 1.00% |
| March 17, 2022 | +25 | 0.25% to 0.50% |
To be clear: itโs great if you own a few watches that have happened to increase in value over the time youโve had them. But thatโs unlikely to translate into financial advice that you should liquidate your net worth and buy hyped-up timepieces. Far better to collect what you love, and wear that with pride.
โWe make products,โ concluded Dufour, โnot investments.โ
