If you got caught up in the hype of the post-pandemic watch boom, you certainly weren’t alone. However, as Jean-Frédéric Dufour, Rolex CEO has recently clarified, it’s important to remember watches aren’t investments, and shouldn’t 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 didn’t.
“I don’t like it when people compare watches to stocks,” said Jean-Frédéric Dufour, the CEO of Rolex, to Swiss newspaper NZZ last week. “It sends the wrong message and is dangerous.”
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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 didn’t 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: it’s great if you own a few watches that have happened to increase in value over the time you’ve had them. But that’s 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.
“We make products,” concluded Dufour, “not investments.”
