Tulipmania

[freddy333]

As I was working on my next project, I began wondering what I would do if the bottom were to suddenly & irreparably fall out of the vintage Rolex market? What I had in mind is not a temporary or even long-term drop in values, but, instead, a complete collapse of the market for vintage Rolex watches, turning rare, valuable & highly sought-after collectibles into pieces of valueless old crap. Such a predicament is not without precedent (although this example is sometimes referenced in the context of economic bubbles, I think it merits specific consideration here).

In 1593, tulips were brought from Turkey and introduced to the Dutch. The novelty of the new flower made it widely sought after and therefore fairly pricey. After a time, the tulips contracted a non-fatal virus known as mosaic, which, instead of killing off the tulip population, altered the flowers causing "flames" of color to appear upon the petals. The color patterns came in a wide variety, increasing the rarity of an already unique flower. Thus, tulips, which were already selling at a premium, began to rise in price according to how their virus alterations were valued, or desired. Everyone began to deal in bulbs, essentially speculating on the tulip market, which was believed to have no limits.

The true bulb buyers (the garden centers of the past) began to fill up inventories for the growing season, depleting the supply further and increasing scarcity and demand. Soon, prices were rising so fast and high that people were trading their land, life savings, and anything else they could liquidate to get more tulip bulbs. Many Dutch persisted in believing they would sell their hoard to hapless and unenlightened foreigners, thereby reaping enormous profits. Somehow, the originally overpriced tulips enjoyed a twenty-fold increase in value - in one month!

Needless to say, the prices were not an accurate reflection of the value of a tulip bulb. As it happens in many speculative bubbles, some prudent people decided to sell and crystallize their profits. A domino effect of progressively lower and lower prices took place as everyone tried to sell while not many were buying. The price began to dive, causing people to panic and sell regardless of losses.

Now, when we consider that a Rolex watch is, at best, a crude proximate device, incapable of equaling the accuracy & reliability of even the cheapest, Asian-made quartz, 1 cannot ignore the bubble inherent in the vintage Rolex market. The real question, as I see it, is whether Rolex's aesthetic & historical qualities are sufficient to keep the bubble from popping? (Of course, with all of this in mind, work continues, unabated, on my next project. )

[redwatch]

Fascinating hypothesis Freddy. The only difference in your comparison of the tulip market vs. the vintage Rolex market is that tulips can be grown. A vintage Rolex, car, antique furniture, etc has a finite number to it. Only XX number of each was ever made. That's it. No more. No less. As they break, get lost, wear out, or get disposed of in favor of a newer, more accurate model, that number of pieces available to the market will go down, there by increasing their value just on the sheer speculation that there are only so many available.

Same thing happened in the 70's with Tube Audio equipment. Solid State gear was introduced and hyped to have better signal to noise ratios, dynamic range and frequency response so everyone dumped their vintage tube microphones, mic pre-amps, limiters and equalizers in favor of there better sounding siblings. To many engineers dismay, it was soon discovered that the new solid state equipment didn't have the color and sound quality of the tube equipment. Many years later, we have tube equipment selling for 1000% more than what it was worth. I worked at a studio that had a very coveted Fairchild 670 stereo limiter that the owner wisely bought in the 70's during the "Great Tube Equipment Garage Sale". He probably paid around $900 for it. Now they are selling for more than $35,000.00.

[docdoc]

hum

[JoJo35]

Hmm... some interesting thoughts here. I have a cellar full of tube stuff, maybe I should forget about the watches and start selling the old tubes!

Here's another idea regarding the vintage rolex market: The people that value these watches are probably middle aged and older. As they eventually die off, will anyone care about the vintage sports? Didn't the bubblebacks already transition into this phase?

As far as tulips go, I know who has them all, those little bastard squirrels lifted them all and are waiting for the next market peak!

[redwatch]

As far as tulips go, I know who has them all, those little bastard squirrels lifted them all and are waiting for the next market peak!

And those little bastard squirrels have their spies everywhere!

[freddy333]

Same thing happened in the 70's with Tube Audio equipment. Solid State gear was introduced and hyped to have better signal to noise ratios, dynamic range and frequency response so everyone dumped their vintage tube microphones, mic pre-amps, limiters and equalizers in favor of there better sounding siblings. To many engineers dismay, it was soon discovered that the new solid state equipment didn't have the color and sound quality of the tube equipment. Many years later, we have tube equipment selling for 1000% more than what it was worth. I worked at a studio that had a very coveted Fairchild 670 stereo limiter that the owner wisely bought in the 70's during the "Great Tube Equipment Garage Sale". He probably paid around $900 for it. Now they are selling for more than $35,000.00.

In the case of tubes, there really is a tangible performance difference (if you prefer the sound of tubes). But, in the case of mechanical watches, the differences are all historic & aesthetic. Unlike tubes (where 1 can make the case that tubes DO sound better than transistors - after all, electrons travel faster through a vacuum than they do through a semi-conductor), Rolex watches have no performance edge over quartz. Their worth lies solely in their perceived value as rare collectibles (& perceptions can change). Yes, there are finite supplies of vintage watches, but there are also finite supplies of big/blingy watches & look what has happened to that market. In fact, when I got into watch collecting, 25 years ago, The IT Watch was the Rolex Prince. How many of you would consider spending the time/effort/money buying/building Princes today? Not many, I would wager.

Imagine what would happen to the vintage Rolex market if James Dowling, John Mayer & a handful of the top collectors on VRF suddenly pronounced the complete liquidation of their collections in favor of, say, mid-century furniture, comic books or vintage tennis rackets. The market, as much as I hate to say it, could dry up overnight.

[kbh]

I owned a vintage 1965 Ferrari 330GT 2+2 for quite a while. I bought it used in about 1980 for $10,000 and watched the prices soar during the nineties. When my model was selling for around $100,000 I put it up for sale. Turns out this was the exact time that the used Ferrari market was crashing. I followed it down, lowering my price month after month down to $50,000 and never sold it. About 15 years later I ended up selling it for $15,000. Yes, it could happen to Rolexes and all the old mechanical watches when they go out of style once again.

[JoJo35]

One good thing about the mechanical watches vs quartz: when I see that really bright light in the east, the emp will knock out all the quartz watches but I will still be able to tell what time it is!

[patinga]

Just like anything that ages over time, will there be a time in the next 100 years where your vintage Rolex becomes an old paperweight on your desk because you can't source parts to fix it? Are there always going to be parts out there for the newer models? The purpose of a watch is to tell time. When that stops happening it becomes a shiny bracelet. Do watches have a finite lifespan?

[automatico]

"Here's another idea regarding the vintage rolex market: The people that value these watches are probably middle aged and older. As they eventually die off, will anyone care about the vintage sports? Didn't the bubblebacks already transition into this phase?"

I feel the same way. I recently bought a real nice 6050 BB for $350 that needs a balance staff...20 years ago it would have been $1000+ in the same condition.

I call it the 'Cushman Eagle Syndrome'. Cushman Eagles were hot when I was a kid and a new one was about $375 or so. A good used one would go for around $150 to $200.

(I had Ducatis and Nortons, never had a Cushman aka 'Pushman'.)

Fast forward 40 years...Eagles were going for $5000 in restored condition a few years ago and now are around $3500 as the buyers are getting fewer and fewer. In a few more years they will probably be $1000.

A friend of mine does engine work for Dennis Carpenter the 'Cushman King' and I drop by his shop now and then.

http://www.dennis-carpenter.com/cushman.php

[Ronin]

Interesting. Good arguments above. @Jojo35, I think you are onto something with your comment about it already happening to the Bubblebacks.

However, as I approach 40, I still have young friends (in their 20's), and older friends (in their 40/50's). I can only speak from living in a metro area where fashion, and trends help define people at the moment, but-- Old, vintage, are in and making a comeback. Also, as part of the 'green' movement, many are into repairing and re-using things. Some of this comes out of the current "hipster" trend. Old Bicycles, Old Motorcycle, Old European Cars, Vinyl Records are becoming the rage from my vantage point. I think for the foreseeable future Vintage Rolex will continue to thrive. Maybe for only 5 years, unless they burn into the conscience of the young hipsters that pass on the traditions.

I think I even saw a blurb in this months GQ Magazine about vintage/patina in reference to furniture, jewelry & watches.

I think the bubble will stay intact for awhile longer. Old is the new - new.

I might even go out on a limb and say Bubblebacks might make a comeback amongst hipsters. (A beat up Rolex from the 40's to them is more hip than a 70's Sub). What someone really needs to do is create a business model around replacement movements for vintage watches. Even going as far to make it OK, socially acceptable, for the Rolex on your wrist to have the wrong datewheel or hands (because of a modern movement transplant, etc). Yuki's ETA to 15xx case adapters are a step in the right direction. (This is a double edge sword that will either increase the value of GEN/Unmolested watches, or since anyone can power up a vintage Rolex with a ETA or 21J decrease the value)

[freddy333]

One good thing about the mechanical watches vs quartz: when I see that really bright light in the east, the emp will knock out all the quartz watches but I will still be able to tell what time it is!

Funny, I was having a conversation on the subject with a friend about my bike a couple of weeks ago. He has been on me to chuck the bike's oem points ignition in favor of electronic ignition (which provides a host of benefits). But, aside from the benefits of being stock, my pitch was that if/when the nightmare scenario occurs (a 'crowd-pleaser, as the military affectionatly refers to an above-ground nuclear detonation, is set off in a major Western city), my bike will be about the only thing left on the road running under its own steam.

[Dizzy]

What if rolex deceides to start mass producing and selling Vintage replacement parts and selling them freely through all AD's?? What if Rolex starts to sell off ALL their stockpile of used parts removed from customer watches during service and not returned over the past 50+ years?? They probably have massed hundreds of millions of parts in huge warehouses around the globe. Now THAT would kill the vintage Rolex market if suddenly there was used fair condition 9315 folded bracelets avail at every AD for $150 and used brown faded 1665 and orig NOS tritium red sub dials for $275, tritium pearls for $25 and faded bezel inserts for $75.... Suddenly our prized vintages would be worthless compared to todays figures.

I wonder what rolex does with all those old parts? Can you imagine how many complete watches you could build? Millions!!!! lol

dizz

[Ronin]

I am thinking back in the day they actually destroyed old parts after service to prevent 'out-the-back-door fraud'.

Actually, you spark another thought.

What if Rolex knows the error of its new 'bling oversized' way and fires up a "Heritage" line along side the modern stuff? If I can buy a "Heritage 6538" I would probably skip trying to build/acquire this grail. A Heritage line complete with dome crystals could kill the old stuff.

[freddy333]

From what I understand, Rolex does not save any parts removed during service & they have no plans to remanufacture vintage parts. This question comes up every 10 or so years & their answer has always been the same - silence.

[patinga]

Can you imagine how many complete watches you could build? Millions!!!! lol

dizz

My idea of heaven; having my parents back, fiance/soon to be wife, and my all my dogs with me. I do nothing all day but build watches and search for parts(and I actually find them!). Oh and watch college football and drink the finest bourbon.

On a serious note. I have an AD that pretty much gives me the aesthetic parts of the watches he works on. No movement stuff or major problems, he ships those off. Does Rolex keep all the parts? All I know with the new parts is that they have been microchiped on the label on the bottom. Whether that is for inventory purposes or to track where new parts go, I have no clue. Thoughts? Control the flow of new parts or a smarter inventory system?

[donerix]

To me it sounds like Freddy is looking for some parts for his next project(s) and is trying to single-handedly influence the market into a downward trend

+1 to Ronin's comment regarding a Rolex Heritage line (the Tudor Heritage Chronograph looks like a great first step), but in the end I think they really don't care what the customers want (see the YM II - who buys that ???)...

If I had any say in Rue Fran

[mcotter]

You guys are all older than I thought! The Cushman Eagle was like the coolest thing to own in the late 50's. The owners were all my hero's

Relating to the aging of vintage watch collectors.....Who do you see at the watch shows? Not the X generation! Glad I'm not the only elder on this beloved site...Regards, mcotter

[freddy333]

To me it sounds like Freddy is looking for some parts for his next project(s) and is trying to single-handedly influence the market into a downward trend

[Member X]

This is a great thread!

I think everything in the world only ever has a perceived value at the time. Unfortunately none of us can time travel so we speculate by buying what we think will be keep or increase its value (if we are collectors) and then just have to sit and wait to see what happens. I keep reading about how all these old rolexes used to go for pennies, and you could buy a tray of movements at $50 a piece, and that is because no-one saw the resurgence in interest that they've experienced in recent times!

What can you do?

I think we should just enjoy what we have and spend the money on something we like if we have it. After all, it's only money, and we could be hit by a bus tomorrow

[boneventura]

Great tulip-metaphore Freddy, or should I say, Gordon Gekko...

[Ronin]

New prediction: The new collectible Rolex's will be the first sapphire crystal models (synthetic sapphires) up to, thru the non-engraved rehaut models.

If Rolex does not do a "Heritage" line current, 16610's, 16600s, will be the way to go. If it weren't for the prevalence of replica SS Subs, speculating on the last generation Submariners might have legs.

That reminds me, I need a 14060.

[TeeJay]

An interesting discussion for sure Personally, I think the watches will always retain their value, all the time the Rolex name carries its air of prestige (yes yes, I know, back in the day they were just tool watches, not fashion items...) as the fact remains that Rolex is a recognized brand. None of the chumps my wife works with would probably ever think anything about a Tudor 79190, but would probably be more likely to comment on a 1680, simply because they know the name on the dial... I would agree with the above point that, as time goes buy, parts are going to start running out, and the only viable option will be to source aftermarket replacements, thus 'diluting the purity' of the watch in question. I think when that time comes, people will stop looking at the minutae of the parts of such watches, and begin to view and accept them solely by external aesthetics and 'the name on the dial'

[southcoast68]

Great thread with good opinions all around!!

What if rolex deceides to start mass producing and selling Vintage replacement parts and selling them freely through all AD's?? What if Rolex starts to sell off ALL their stockpile of used parts removed from customer watches during service and not returned over the past 50+ years?? They probably have massed hundreds of millions of parts in huge warehouses around the globe. Now THAT would kill the vintage Rolex market if suddenly there was used fair condition 9315 folded bracelets avail at every AD for $150 and used brown faded 1665 and orig NOS tritium red sub dials for $275, tritium pearls for $25 and faded bezel inserts for $75.... Suddenly our prized vintages would be worthless compared to todays figures.

I wonder what rolex does with all those old parts? Can you imagine how many complete watches you could build? Millions!!!! lol

dizz

I doubt this scenario would ever happen especially knowing that Rolex has always serviced a watch and replaced parts that they deemed not to be "like new", vintage dials, hands and crystals that were in perfectly good condition have been known to be replaced since their objective is to bring the watch back to "new" condition. Even if Rolex had stockpiles of vintage parts, they sure would not make them available to anyone for cheap. That folded link bracelet would be more on the order of $800-$1000, the faded red sub dials would be stripped and refinished before being re-used. That's just their way, go new and make the old used up parts go away.

Here is another scenario, and this one will probably make everyone here squirm. Rolex has been all about upholding their good name, tradition, and their status symbol image. That does not fit into a world of vintage Rolex watches selling on the cheap. Sure they may not care about their vintage products as much as they care to sell new watches, but the world having common knowledge that any used Rolex can be had for just a couple hundred could certainly have an effect on new watch values, after all, one way to charge $6k for a new Sub and get away with it is to demonstrate that the watch you buy new today will hold its value for life, maybe even increase in value. So, if all the heavy hitting Rolex collectors world wide were to suddenly liquidate their collections, thus making the values fall to the same level as say, a vintage Seiko, that would hurt the Rolex image. There would be no point in paying so much for a status symbol that no one cares for anymore.

What would they do? Who has virtually unlimited resources to buy up all the vintage Rolex watches left? Rolex themselves! Imagine a program where you get good solid trade in for your old Rolex, then Rolex takes the old watch and destroys it completely! They employ folks that go to pawn shops, watch shows, go on Ebay, etc., buying up all they can for the purpose of destroying it, thereby ensuring, once and for all, THE only way to get a Rolex, is to buy it from them. Of course, if there is no longer any interest in vintage, would there be much interest in new Rolex watches, enough to sustain the brand and the company? Wild scenario huh, Muuuhahahahahahaha, ok everybody, sleep tight .

Well, maybe that scenario is a bit out there (maybe not ). More likely would be that all Rolex watches will enjoy some form of collectability and value. There will always be some folks out there who will want to collect and be able to pay the necessary price for admission. Even if vintage Rolex values fall through the floor, the name, and its history will continue for a long time to come. Sure, collector prices of Ferrari have fluctuated over the years, but there are still enthusiasts around to keep them going, same with Rolex. Although, it would be nice to see prices come down to a stable, reasonable level for all vintage watches, so that all who wish to own the real thing can do so.

And that's what it's all about isn't it? Buy and collect what you like and don't sweat its future value, realize you're interest in watches and that they are for you and you're enjoyment. Prices of tulip bulbs may have taken a beating at some point in history, but the flower itself is still beautiful, and that beauty carries a value all its own.

Cheers

[ubiquitous]

Let's look at this from the angle of what determines the worth of an item? The short and simple is whatever someone is willing to pay for it. If there is a buyer out there that deems an item to be worth the sum of money he or she is willing to part in exchange for said item, that helps shape and determine the going rate for such items.

However, with that in mind there are also many factors to consider, such as availability/rarity, condition, whether an item is 100% original, has service replacement parts, aftermarket parts, has all boxes and papers and/or partial documentation, etc.

But let's specifically take into consideration the aspect of condition and parts content, as that could be a factor that really determines the increase or decrease of such an item. As time progresses forward, and with the stance Rolex has taken on (not) supporting certain watches or movements within a certain time frame or era, this alone will have a major impact on what collectors perceive as original or collectible watches. If one were to buy a 6265 for $30k for example, and if that same 6265 turned out to need some serious overhaul work in the next 10 years with movement parts required, what do you think will happen to the value of that watch if said Rolex specific parts were not available, or if those parts had to be replaced with a standard Valjoux 72 equivalent (say the signed bridge for instance). That is going to cause that watch to drop in value, as it will now be a non-original-now-frankenstein, or an all original watch that doesn't work correctly or at all. Which is worse? Keep in mind that the possibility of getting an RSC to even do the work may not be a possibility.

I suppose there will be a long supply of Rolex parts on the secondary markets, but with all things being driven on supply and demand, if those parts cannot be procurred via the RSC channels, this is going to really drive prices up for such things (as if it weren't the case already). Will this have an impact on the overall value of a watch? Will it cause people to buy watches to simply part out? I know people that do this already, as it appears to be quite the lucrative sport for the pocket book. And with those watches now exiting the overall global market, what will that do for values of existing watches remaining in the market? Less supply... Maybe more demand? A bit of a cannibalised scenario I suppose, as perfectly fine watches are taken out of the market and dismantled to service those that stay.