Rolex's prices 2022: Crash or Adjustment?

May 2022 has not been the month of Rolex.
As many have noticed, during the beginning of 2022 the watch market has been quite volatile due to the inflated watch prices. 

The causes of this are inflation and confidence in the global markets combined with scattered supplies: could this "perfect storm" crash the watch market in 2022?

 

In the picture: a Rolex price index that tracks 30 models with high trade activity. (source: Watch Charts)
The prices fell by 9.3% in May, after having peaked In April.

At the moment, the prices are still advantaging mid-long term investors, so the answer would be "no": watch collector who stayed patient over the last 2-3 years are currently in the best position because they will now be able to wisely buy some of the most wanted Rolex at a better price.

However, as always, some are going to be affected. The secondhand watch market saw a mix of new people getting interested in collecting, "fast" investors, whom have rode the wave of enthusiasm, fueling speculation of a rise in prices.

So as any other inflated market, where there will always be an eventual stop, crashes are likely to happen. 

Some of the reasons are:

• Low products quantity: Rolex produces roughly 800,000 new watches per year, not enough to meet current demand.
  
• Inflated Prices.
• COVID restrictions: less travelling or leisure time translated in more savings. It also reduced the stock market opportunities (ex. the real estate market), guiding people that were looking to a return on investment to the luxury goods market.

At the height of the 2022 watch market, the conditions were not sustainable.
Collecting turned to investing and prices became out of control: just consider that, at the beginning of this year, stainless steel Rolex watches are being sold for 3 times more than the manufacturer's suggested retail price.

However, in the long term, Rolex and other high-end brands will probably resume their decades-long trend of appreciating in value, even if at a slower rate than the past two years.

Maybe this is an opportunity to invest in the Rolex you were dreaming of, that were unaffordable until 2 months ago.