This week's SDC delves into Richemont's leadership changes, Rolex's controversial purchase contracts, and Watches of Switzerland's results. We also examine the vintage watch market decline (again) as well as LVMH's expansion, That's not all, so dig in and discover the rest!
When I purchased my 114060 at Bucherer in my home city, I had to sign a waiver to not sell the watch for two years. I had, in fact, purchased the watch to flip. Promptly after buying it, I put it up on a local craigslist-esque platform. I blurred out the serial and used all the novice tricks of the trade when doing this sort of thing. Idiot, naive me also included a picture of the receipt, with purchase date and the Bucherer logo.
A few days later, I went in to Bucherer - I figured that, while I'm waiting for it to sell, I might as well enjoy the watch. I wanted to have the bracelet sized, so I handed the watch over to the sales rep who took the watch upstairs to remove some links. He came back with the watch and with a printout of my sales listing. He gave me a stern talking-to and reminded me of the waiver I had signed, emphasizing the fact that if I sold the watch, they would not sell another Rolex to me. Ever.
Two developments came from this interesting encounter: 1) I never again stepped foot into a Bucherer. 2) I still sold the 114060, though I did enjoy it for a good year before I did so.
No. I didn't think to photograph it, and I wasn't provided a copy. In fact, I signed the agreement when I was put on the waitlist. By the time collection day came around, I had sort of forgotten that I'd signed something.
Oh, I’m vindictive like that. I vote with my wallet. And I’ll make it a point to go back into any store that tries to put draconian conditions on what I can do with the product I paid my money for, and show them that I bought it elsewhere. We do not go gently into the night.
Always a pleasure this. Thank you for your service.
Very interesting on collecting - this is THE topic at the heart of it all, really. How and why? Discuss.
On watch journalism - a lot more to be done here. Watch press is an integral component of brand marketing and has been so for a long time. If anyone has figured out a way for truly independent, dedicated watch media to exist on a large and influential scale in a down market (like today) their insight would be most welcome.
For sure - lots more to be done re watch journalism - in this instance I was trying to be more circumspect instead of coming across like a sh*t-slinging independent with an axe to grind (I have no axe!)
If that Portugieser doesn’t account for the fact that the moon is receding from the earth and also slowing the earth’s rotational speed, then I can’t imagine buying it. It will be WAY off in a couple million years. Rubbish!
Two automotive market parallels to market dynamics outlined above:
1-Regarding the “lock-in” effect; is it the case that watch dealers have “floorplan”-style financing in place? I have always been curious about this.
2-Certain automotive OEMs have instituted mandatory lease agreements from time to time. For example, the Ferrari F50, or more recently the Porsche 911 S/T. These invariably piss off the lucky few who are granted the opportunity to purchase these cars at MSRP, as they (at a minimum) remove optionality. Ferrari runs a very tight ship on its dealers, who in turn will show the cold shoulder to someone who flips a hot car without letting the dealer whet their beak in turn! E.g., a fellow in Atlanta hopped on the Ferrari carousel a decade or so ago and bought every puke colored FF and California T offered to him. He was rewarded with one of the earliest F12 tdf examples delivered in the US. He promptly flipped it and put a $1MM profit in his pocket. But he burned a bridge with Ferrari and with the local dealer; last I saw him, he was driving a 992 Carrera.
On 1) - a great question, I don’t know, to be sure / but I do think the bigger ones don’t… Also, context matters. Back then, it was tulipmania style lack of risk consciousness. Today, 60-80% is consigned, would be my (wild) guess.
On 2) yeah, this seems obvious, but the watch co’s are still getting to grips with basic economics 101 shit, forget financial products 😂
I will defer to you on the first comment. (Secondary market) dealers are in the business of *selling* watches, not holding them. Even if you hand-waive away the cost of financing inventory (assuming watches that are not consigned), there are other carrying costs / overhead (e.g., insurance). There are probably some smaller guys who borrowed against (phantom) equity in their homes to facilitate the flippin’ hustle!
Cars are also much easier to keep tabs on because of their physical form, and the fact that they must be registered. They also tend to return to an OEM dealer for service work while under warranty - Ferrari offers 7 years of “free” maintenance!
7 yrs: that's what Richemont (might be others) do with watches - extend the warranty if you register a new account in a portal, and link the watch to your 'portfolio.' (not doing this, means you only get 2 years of warranty, IIRC)
Selling it, therefore, will be something they can track when it eventually does go in for a service or queried at a boutique by a new owner.
And yes, there are more than a few who built mini empires on leverage because it looked like "the more you put in, the faster you get a lot more out" - greed best captures the nature of this sentiment. It even went beyond greed - remember Timepiece Gentleman - that was just a criminal taking advantage of market conditions to extract free money from people, under the guise of success which was created and paid for by others' money. Again, greed is the overarching sentiment which enabled this outcome.
Can I also add: I appreciate your comments and food for thought here. Thank you!
It used to be a source of pride as a journalist to remove oneself from any personal involvement with the story and in particular, the subjects within the story. Observing journalists at various watch events, they seem to value the social aspects more, to run in certain circles so to say. Perezcope is perhaps an exception, and we can see the result in his work.
The summary of the chat is perfectly done, thank you!
Perhaps that is an example of how the ‘democratisation of news’ has removed any incentive to aspire to the high status afforded to journalists who do a thorough and unbiased job… so they “might as well” enjoy themselves and to hell with “integrity” because.., “what’s the point?”
Sure we see it - I meant, it's perhaps too judgemental in the dissection of motives - for all we know, they are viewed as successful in their own circles? Or perhaps they've reached the goals they set for themselves, despite us seeing them as 'poor goals' (in this example) - I'm new to this whole 'benefit of the doubt' thing. Bear with me.
I had a discussion about watch collecting with a friend last night; bear in mind that even if money isn’t a constraint, time is for everyone. Space is usually a negligible concern for watch collectors, but it becomes an issue when thinking about cars or boats or …
Let’s say someone who’s worth, oh, $500K wants to own 10 different $200 or perhaps $2,000 watches. That’s fine, and that collection of watches - whatever they might be - can offer a lot of satisfaction to a collector on the relatively modest end of the spectrum.
Let’s add some zeroes. What if someone who is worth $5MM owns 10 $20K watches. I suspect this person spends more mental bandwidth thinking about asset allocation, about opportunity cost, etc. This is a recipe for dissatisfaction I fear - what good is the watch that languishes in the back of the safe if it is rarely worn? It’s certainly an expensive call option on the opportunity to wear the watch should the desire arise. The hobby should be fun.
My father has been collecting and restoring (he has done a lot of the work himself over the years) wooden boats for over three decades. He has an unrestored Aquarama that he bought in the early ‘90s (but, uh, he definitely plans to send that one off to Riva any day now to get it restored). He has multiple boats that are fully, perfectly restored that sit in a specially constructed, climate controlled building behind his house … that have never touched water post-restoration. And this building can house less than a third of the collection, the remainder of which is stored across 4 different states, wherever he can beg, borrow, or steal space.
He is 70 years old. We had lunch last week, and he is beginning to realize that he may have overdone things a bit.
It’s his passion, and I don’t necessarily share it (certainly not to the degree with which he is afflicted); I’m not second-guessing his decisions at all, as I certainly have a number of indulgent hobbies that do not resonate with him - he wears a Timex and drives a 30+ year old Toyota Land Cruiser with a zillion miles on it. He has also started darning his old socks. To save money, obviously.
If I were in his shoes, I would regret (1) having so much tied up in one area, (2) having so much tied up in toys that have never been used (at least by him), and (3) depriving other collectors of the satisfaction of owning and enjoying those boats.
Firstly, thank you for taking the time to share this - I'm sure many others reading this will enjoy this comment as much as I did. Lots of insight in a few words.
Your own reflections on what you would regret were insightful; As I read them, I asked myself whether this would necessarily be the case for others - I concluded it would not, going back to a recent exchange about wealth and utility - the answer is, 'it depends' - If you had Bezos money, why would you regret tying up so much in one area? There's enough to do this in multiple genres: cars, boats, planes, etc.
As for utilisation - as the whatsapp chat highlights - actual use of an object can be a source of joy, but need not be, for some (I am not one). It apeears we are aligned in this view.
On depriving others of joy - that says more about you than anything else. As noble a view as any I've heard in recent memory. To this, I do wonder how true it is - unless these boats are some rare works of art or craftsmanship, the burning question I have is: "would anyone truly care?" The notion of 'depriving others of enjoyment' by hoarding things, kind of assumes a lot about scarcity and demand. It would be true if we were talking about an Eric Clapton Patek, or a Mclaren F1, of which there are limited examples and there is huge enthusiast demand for them. If that's true of your father's boats, fair enough. If not, then perhaps this argument is included in the list for status points regarding one's benevolent nature 😂 (not directed at you, but speaking to the principle more generally)
Just got round to reading - the discussion on watch journalism obviously strikes a chord. My experience of working in traditional media businesses is that it is surprisingly difficult to sell ads for other luxury products against watch content. Although I think that has a lot to do with how ads are sold (often incredibly old-fashioned practices, when it's not being handled programmatically) and the people selling them. If the ads are being sold by algorithms, niche specialist content tends to lose out because volume is still the metric that matters most. But I had so many conversations at the Telegraph, at Hearst about why we couldn't get car brands, drinks brands, travel brands etc. to advertise in a watch magazine and usually the answer boiled down to 'they can't be bothered to think that creatively; they're happy taking the route-one approach of advertising against their own subject area.' Which always seemed stupid to me, but there you go.
And, for what it's worth, I emailed Substack suggesting the 'pooling' idea you mention about 9 months ago - got nothing back obviously. But the most common barrier I encounter to converting people to pay for The Fourth Wheel is that 'there are so many Substacks, all asking for money'. If Substack could offer a multi-title bundle package, or perhaps subsidise slightly the cost of reading multiple newsletters ... e.g. you could buy 'Substack credits' at 0.90 on the dollar which you could then spend like real money across the site... then people might be more inclined to sign up.
Once Substack realises they can make a boatload of money selling credits that way, much like Amazon, Starbucks and many others earn a fortune in interest income on 'voucher' credit, this might happen. It might however tarnish their 'hands off' approach, and the counterargument is that ultimately, people can pay nothing, or have a monthly budget for online content and then pick the best one.
Which then means the onus is on writers to pool with others to offer the most attractive value proposition in a sea of options competing for that tiny monthly budget from their potential audience. As for the excuse you hear from potential readers - I think there are, first and foremost, exactly two types of people: those who will pay for content, and those who won't. Once you find someone who would pay, the budget doesn't matter as much as the quality of content. If they see stuff they enjoy and would like to read, it becomes an "entertainment or education" purchase. Still, I am not saying 'budget doesn't matter *at all* - it does; Just that content quality and value matter more.
As for the ad-selling - what you have described is old-school thinking by old-school people in an old-school industry. It rings true, is unsurprising, and will eventually change in the organisations who want to evolve and stay open - and the rest will go bankrupt. It may not happen immediately, but it'll be this decade. That much I am sure of. Just look at Substack's growth as (one of many) supporting counterpoints. The same 'limited budget' argument applies to Paid-MSM-subs vs Substack subs... as it does to Substack vs Substack and having 'too many to pay for' - we will find out soon enough, I suppose.
The moon phase accuracy shift is dependant on the chosen reference period, and ss the moon phase is constantly changing one can get a ridiculous accurary if one choses the "correct" reference period - a Norwegian collector have deciphered the chosen reference for IWC and its not that bad!
Well, this one took quite a few evenings to get through!
In short “ ditto to what Paddy Dane said!”
Kudos to highlighting Kurt Klaus! …..his career and genius are not as widely appreciated in the “ enthusiast” community as they deserve to be! 🏆🥇
Also George Orwell! Truly prophetic and unfortunately his words ring truer today than ever.
“Investigative journalism” has become an oxymoron to say the least
Re: your thoughts and insights on Diversified Revenue are intriguing and maybe even brilliant…… should be pursued and one of these luxury groups should snap you up as a consultant! 😜
NOW if I could just find some time to check out the links before you post again …..😩🥺😖
First and foremost, I am always astounded by the volume of writing you are able to accomplish and at the cadence in which you post. Bravo.
I enjoyed the section on Kurt Klaus and his contribution to horology.
My thoughts:
Thou Shalt Not Flip:
I have never seen or had a letter like this presented to me to sign or contractually agree to with any watch purchase. However, as a collector of a particular brand and having the fortunate opportunity to acquire a piece that was allocated to me. The conversation did arise regarding expectations, this conversation was not from an AD. This conversation took place at the North America flagship store owned and operated by the watch manufacturer. The brand stated their expectations to me as a collector and patron of their watches. The conversation was informal and not rude. It also came with the caveat that if my circumstances changed and I needed to sell watch this prior to the expectation of time this watch remained in my collection that I would let them know and they would note it and it would be without any negative impact on me or my future with them. A larger collector of this same brand, I know of, found himself in this spot several years ago, he sold his a large portion of his watches including several prominent pieces earlier than expected to make payroll for his company and keep it afloat. When he recovered and business was stable again this brand was happy to assist him in restoring the pieces of his collection he sold without fuss, all because he communicated with the brand, he respected the relationship and the brand in turn showed respect back.
I agree, once a transaction is complete and the sale is final, the property belongs to whomever purchased it to do with it as they like depending on terms of sale. I believe the terms of the sale that are known upfront and agreed to should be honored. Even if it is not with a brand and is with an AD. This applies to watches, cars, art, etc… If there is an exclusive lock out period that is contractual that must be met as a condition of the sale, and both parties know this going into it and one party chooses not honor their side of the agreement in order to gain financially says a lot about persons integrity. Reputation and time are the most valuable assets we have. I also have never seen a contractual agreement with a lock out period for resale that did not have an early exit clause depending on circumstances that defined how someone could exit out of the lock out period. While I did not sign a contract on that particular watch, I know the expectation, it was known before I arrived, discussed while I was there. If I had an issue with those terms and expectations, it is on me the consumer to renegotiate the terms or not complete the purchase.
An AD may or may not have a brands permission to do this, like in the Rolex example shared. That is an issue between the AD and the brand to sort out. It is separate and distinct than the AD and the customer purchasing the watch. The customer if they dislike or disagree with the terms can simply go elsewhere where the terms and conditions are more favorable to them. They have that choice. A customer knowing what they are agreeing to with the intent of not honoring the terms and conditions says a lot about that customer.
Independence and Journalistic Integrity:
I agree the market has changed how reporting and journalism has changed overtime and led to a greater degree of corporations and power brokers becoming the more overtly in control of the narrative. I would also put forth for your consideration that the incentives have always been there to sell influence and that is has taken place for well over a century, just perhaps not at the same level. Incentives will always drive human behavior and self preservation, be it a corporation, a reputation or a person’s career, will be a primary motivator for what is said, or not said. The internet and rise of social media only allows for the self censorship to be magnified in a way it was not capable of previously at scale. Technology and the internet also provides the solution with independent journalists and hobbyists adding to the space and for the bravest and boldest, can and will, in my opinion find their audience niche, primarily because trust is lost, that trust being established is capital that can be built upon. More and more people are looking for the independent voice. I like the idea of tangential products being the advertising revenue over the primary subject matter of interest. Monetizing independent journalism and reporting is a matter of marketing to, and finding, the correct audience that sees value in this. Too many people seek the “fee” version so they must then put up with those who actually paid for the “opinion” expressed. There are independent voices reporting on many spaces that have achieved financial success and independence, they solved their product, market fit. One particular publication is a newsletter about agriculture, independent voice, the subscription is $600 per year. They have have 35,000 annual paid subscribers and a total of four employees. Not too shabby.
Hey N - a treat, as always, to read your feedback. Thank you!
On flipping - sure, there's an element of honour and personal integrity; The issue is with the nature of the relationship. Customers don't owe them a damn thing, and as much as it is honourable to give one's word and keep it - it is the fact that they demand this promise in the first place, to which I take objection. Sure, we are free to not buy from them, but again, this is precisely what aggravates me. The Train problem comes to mind - there is no good solution.
On journos... Nothing to disagree on, and appreciate your thoughts - in particular, the example you shared. WOW. That is remarkable. That said, I think the watch industry doesn't have the volume of the agriculture industry. Not a wild guess, I have looked into it, and even heard from existing media players who feel the same. Maybe they are just not looking in the right places, I can't say for sure. I am still figuring it out myself.
Correct, the AD is owed nothing more than the terms of transaction that was made. Likewise the AD owes nothing to anything in return including future sales. I think we can both agree. My only point is, that if there is a contract with additional terms regarding the conditions of sale that is disclosed agreed to. Then my stance is it should be honored. Likewise, if there is known etiquette or gentlemen’s agreement it too should be honored and kept. Nothing more is technically owed by either party in the terms of latter example. Including the AD allocating or selling any more watches to a client and customer who breaks any such agreement or understanding because nothing further is technically owed. Recently as we all know, S. Stallone made a quite a fuss with the auctioning off of his Grand Master Chime still in plastic. Stallone knows what he did, he knows the consequences and he flipped this watch anyway. Perhaps flipped is strong since he did own it for about three years, however the still in the plastic part baffles me. T. Stern’s reply when asked what Patek Philippe thought of the situation was. "Of course, we do not like it, but it can happen," "I cannot control everybody. It is not fair for a client who may have been waiting for this piece for many years and then sees it being sold." Stern also in the same interview expressed the sentiment that Stallone will not be buying another Patek at retail from an AD in the future. There was an understanding and gentleman’s agreement that was well understood. So yes, T. Stern agrees. We cannot control everybody and nothing more is owed. But it is a two way street. The gentleman’s agreement was broken, thus the relationship has now changed.
I always seek to understand why the added agreement, or terms and conditions. I ask why the extra contract from the AD? To reduce the flipping of watches for profit that would be soaked up by the opportunist flipper and allow these harder to get watch’s that have a demand outstripped by supply to land in the hands of the collector, the enthusiast or celebrant who wants to mark a moment in time. I can understand and agree with the reasoning from the AD. I also understand someone seeing an opportunity to make a quick profit. Neither are wrong. One cannot assign any moral value or judgment to either party. I have not seen anything with added written contracts, only the gentleman’s agreement as previously mentioned on specific watches from manufacturers with those specific allocations to help insure the lesser produced, harder to get pieces end up in their patrons hands. I see these types of understandings pertaining to the rarer watch and not a black submariner from Rolex. And you are correct there is not a good solution. I have my thoughts on the Trolly Problem but that is another day. Have a good weekend
I suppose my ire stems from the nature of these ‘rules’ and how the game seems biased in favour of ADs and brands in all scenarios. We are aligned on the nature of agreements and the unwritten obligations to honour our word or face the consequences of not doing so.
How about the situation when an agreement is actually improper (ignore lawfulness for now)? If you found a guy who is struggling to make rent, and offered his services to fix your fence and do your gardening and other laborious jobs - then he turns up with his young kid to help him do this work - a bit of a morbid example, but the points are salient: 1) you did a deal, 2) he is following through with his end and 3) you now have a choice to follow through and pay him or tell him not to do the work and have him miss his rent payment. Do you endorse or softly support child labour?
On reflection, I realise this example is too extreme here. But an interesting thought experiment nonetheless. My point was that this ‘agreement’ is BS. They can’t legally sell you something, have it become your property (they have no rights over it) and then ALSO dictate how/what you do with it. The prior ‘gentleman’s agreement’ is a red herring to me.
This would be true if you bought it from a friend who sold it to you at retail, and you agreed not to flip for profit - that would be akin to stealing monety from a friend, otherwise they COULD have charged you market price instead. In that instance, I think it fits. But with a commercial setup like buying from an AD? Not for me. I can’t equate these situations.
Your final example with a friend selling you the watch at retail and then you flipping for the profit makes perfect sense. Poor form for sure. The rent money, fence fixing examples with their child doesn’t equate well for me. It’s my experience growing up in a small family business, we worked as kids and it benefited me greatly. My daughter started her own jewelry business at 8 years old and sold her jewelry at markets on the weekends. She had to do the work. She still has work she must do, it’s part of teaching a work ethic, something I see around us that is missing in the youth and is even more apparent when we interview young 20 somethings for our company these days. I know quickly who worked as a child and who did not. Not always but 80% of the time, but that’s a different topic altogether. I don’t think terms changed in that example like the friend and watch. I do ultimately agree the added stipulations are a bit too far. I think that’s why Patek and some others have an unwritten understanding of the expectations on specific pieces collectors know of long before they apply for those pieces, and those Stern said. “They have a preference but can’t ultimately do stop someone”. I do agree on principle it shouldn’t be a requirement to the transaction. We seem to do this with trusts however, and charitable contributions that are given with stipulations on how and where the organization spends it. Perhaps these are different circumstances, I believe they are.
Now, why isn’t there a lease market for watches like in the car world.. and speaking of collectors who own but don’t wear, why not a lending market, one could actually earn.. oh I know, because no one can fvcking stand it when someone else scratches one.. but I’m going to think through these.
Story time:
When I purchased my 114060 at Bucherer in my home city, I had to sign a waiver to not sell the watch for two years. I had, in fact, purchased the watch to flip. Promptly after buying it, I put it up on a local craigslist-esque platform. I blurred out the serial and used all the novice tricks of the trade when doing this sort of thing. Idiot, naive me also included a picture of the receipt, with purchase date and the Bucherer logo.
A few days later, I went in to Bucherer - I figured that, while I'm waiting for it to sell, I might as well enjoy the watch. I wanted to have the bracelet sized, so I handed the watch over to the sales rep who took the watch upstairs to remove some links. He came back with the watch and with a printout of my sales listing. He gave me a stern talking-to and reminded me of the waiver I had signed, emphasizing the fact that if I sold the watch, they would not sell another Rolex to me. Ever.
Two developments came from this interesting encounter: 1) I never again stepped foot into a Bucherer. 2) I still sold the 114060, though I did enjoy it for a good year before I did so.
Thanks for sharing! Good on you for following through 😝
Have you got a copy of the agreement?
No. I didn't think to photograph it, and I wasn't provided a copy. In fact, I signed the agreement when I was put on the waitlist. By the time collection day came around, I had sort of forgotten that I'd signed something.
That’s wild - I suppose while you wait is the best time to make you sign it lol!
Occasionally, sellers need to be reminded whose money is paying for the product. Good on you.
The fvcks they give are few and far between. We should take a page out of this book. Problem is collectors think of it too emotionally sometimes.
Oh, I’m vindictive like that. I vote with my wallet. And I’ll make it a point to go back into any store that tries to put draconian conditions on what I can do with the product I paid my money for, and show them that I bought it elsewhere. We do not go gently into the night.
No sir, we do not! Hahaha!
As always, in depth, varied, refreshing and humorous all at the same time. 🫡🫡🫡
Cheers bokkie 😂👊👊
Always a pleasure this. Thank you for your service.
Very interesting on collecting - this is THE topic at the heart of it all, really. How and why? Discuss.
On watch journalism - a lot more to be done here. Watch press is an integral component of brand marketing and has been so for a long time. If anyone has figured out a way for truly independent, dedicated watch media to exist on a large and influential scale in a down market (like today) their insight would be most welcome.
Always a pleasure to get any feedback - bonus when it’s positive 😁
“How and why” - I tried here: https://www.screwdowncrown.com/p/what-is-collecting?utm_source=publication-search
Maybe you have more thoughts to expand on this?
For sure - lots more to be done re watch journalism - in this instance I was trying to be more circumspect instead of coming across like a sh*t-slinging independent with an axe to grind (I have no axe!)
If that Portugieser doesn’t account for the fact that the moon is receding from the earth and also slowing the earth’s rotational speed, then I can’t imagine buying it. It will be WAY off in a couple million years. Rubbish!
😂 you should stick to egg timers
Are there any egg timers with multiple complications? I time my eggs differently depending on the phase of the moon.
Two automotive market parallels to market dynamics outlined above:
1-Regarding the “lock-in” effect; is it the case that watch dealers have “floorplan”-style financing in place? I have always been curious about this.
2-Certain automotive OEMs have instituted mandatory lease agreements from time to time. For example, the Ferrari F50, or more recently the Porsche 911 S/T. These invariably piss off the lucky few who are granted the opportunity to purchase these cars at MSRP, as they (at a minimum) remove optionality. Ferrari runs a very tight ship on its dealers, who in turn will show the cold shoulder to someone who flips a hot car without letting the dealer whet their beak in turn! E.g., a fellow in Atlanta hopped on the Ferrari carousel a decade or so ago and bought every puke colored FF and California T offered to him. He was rewarded with one of the earliest F12 tdf examples delivered in the US. He promptly flipped it and put a $1MM profit in his pocket. But he burned a bridge with Ferrari and with the local dealer; last I saw him, he was driving a 992 Carrera.
On 1) - a great question, I don’t know, to be sure / but I do think the bigger ones don’t… Also, context matters. Back then, it was tulipmania style lack of risk consciousness. Today, 60-80% is consigned, would be my (wild) guess.
On 2) yeah, this seems obvious, but the watch co’s are still getting to grips with basic economics 101 shit, forget financial products 😂
I will defer to you on the first comment. (Secondary market) dealers are in the business of *selling* watches, not holding them. Even if you hand-waive away the cost of financing inventory (assuming watches that are not consigned), there are other carrying costs / overhead (e.g., insurance). There are probably some smaller guys who borrowed against (phantom) equity in their homes to facilitate the flippin’ hustle!
Cars are also much easier to keep tabs on because of their physical form, and the fact that they must be registered. They also tend to return to an OEM dealer for service work while under warranty - Ferrari offers 7 years of “free” maintenance!
7 yrs: that's what Richemont (might be others) do with watches - extend the warranty if you register a new account in a portal, and link the watch to your 'portfolio.' (not doing this, means you only get 2 years of warranty, IIRC)
Selling it, therefore, will be something they can track when it eventually does go in for a service or queried at a boutique by a new owner.
And yes, there are more than a few who built mini empires on leverage because it looked like "the more you put in, the faster you get a lot more out" - greed best captures the nature of this sentiment. It even went beyond greed - remember Timepiece Gentleman - that was just a criminal taking advantage of market conditions to extract free money from people, under the guise of success which was created and paid for by others' money. Again, greed is the overarching sentiment which enabled this outcome.
Can I also add: I appreciate your comments and food for thought here. Thank you!
It used to be a source of pride as a journalist to remove oneself from any personal involvement with the story and in particular, the subjects within the story. Observing journalists at various watch events, they seem to value the social aspects more, to run in certain circles so to say. Perezcope is perhaps an exception, and we can see the result in his work.
The summary of the chat is perfectly done, thank you!
Perhaps that is an example of how the ‘democratisation of news’ has removed any incentive to aspire to the high status afforded to journalists who do a thorough and unbiased job… so they “might as well” enjoy themselves and to hell with “integrity” because.., “what’s the point?”
Maybe too cynical?
Thanks for reading man 🫡
I don't think it's too cynical at all. I think it's spot on and we can see it with our own eyes. Always a good read. 👊🏻
Sure we see it - I meant, it's perhaps too judgemental in the dissection of motives - for all we know, they are viewed as successful in their own circles? Or perhaps they've reached the goals they set for themselves, despite us seeing them as 'poor goals' (in this example) - I'm new to this whole 'benefit of the doubt' thing. Bear with me.
Fair enough, that's a noble endeavor. I'm also trying not to be so judgemental, but am failing here I suppose.
Practice makes perfect? Is this deja vu?
Tom Wolfe!
Lofty aspirations.
But yes… that status is a major driving factor isn’t really his concept alone, surely?
It’s not.
What’s his alone is his inimitable prose and remarkable observational abilities.
Challenge accepted.
In their dreams I suppose :D
I had a discussion about watch collecting with a friend last night; bear in mind that even if money isn’t a constraint, time is for everyone. Space is usually a negligible concern for watch collectors, but it becomes an issue when thinking about cars or boats or …
Let’s say someone who’s worth, oh, $500K wants to own 10 different $200 or perhaps $2,000 watches. That’s fine, and that collection of watches - whatever they might be - can offer a lot of satisfaction to a collector on the relatively modest end of the spectrum.
Let’s add some zeroes. What if someone who is worth $5MM owns 10 $20K watches. I suspect this person spends more mental bandwidth thinking about asset allocation, about opportunity cost, etc. This is a recipe for dissatisfaction I fear - what good is the watch that languishes in the back of the safe if it is rarely worn? It’s certainly an expensive call option on the opportunity to wear the watch should the desire arise. The hobby should be fun.
The most recent example of me talking about what you’re saying here, wasn’t too long ago!
https://www.screwdowncrown.com/p/do-you-want-100m
I agree with your assessment… and this topic will always be relevant 😄
To elaborate a little further on a similar topic:
My father has been collecting and restoring (he has done a lot of the work himself over the years) wooden boats for over three decades. He has an unrestored Aquarama that he bought in the early ‘90s (but, uh, he definitely plans to send that one off to Riva any day now to get it restored). He has multiple boats that are fully, perfectly restored that sit in a specially constructed, climate controlled building behind his house … that have never touched water post-restoration. And this building can house less than a third of the collection, the remainder of which is stored across 4 different states, wherever he can beg, borrow, or steal space.
He is 70 years old. We had lunch last week, and he is beginning to realize that he may have overdone things a bit.
It’s his passion, and I don’t necessarily share it (certainly not to the degree with which he is afflicted); I’m not second-guessing his decisions at all, as I certainly have a number of indulgent hobbies that do not resonate with him - he wears a Timex and drives a 30+ year old Toyota Land Cruiser with a zillion miles on it. He has also started darning his old socks. To save money, obviously.
If I were in his shoes, I would regret (1) having so much tied up in one area, (2) having so much tied up in toys that have never been used (at least by him), and (3) depriving other collectors of the satisfaction of owning and enjoying those boats.
Firstly, thank you for taking the time to share this - I'm sure many others reading this will enjoy this comment as much as I did. Lots of insight in a few words.
Your own reflections on what you would regret were insightful; As I read them, I asked myself whether this would necessarily be the case for others - I concluded it would not, going back to a recent exchange about wealth and utility - the answer is, 'it depends' - If you had Bezos money, why would you regret tying up so much in one area? There's enough to do this in multiple genres: cars, boats, planes, etc.
As for utilisation - as the whatsapp chat highlights - actual use of an object can be a source of joy, but need not be, for some (I am not one). It apeears we are aligned in this view.
On depriving others of joy - that says more about you than anything else. As noble a view as any I've heard in recent memory. To this, I do wonder how true it is - unless these boats are some rare works of art or craftsmanship, the burning question I have is: "would anyone truly care?" The notion of 'depriving others of enjoyment' by hoarding things, kind of assumes a lot about scarcity and demand. It would be true if we were talking about an Eric Clapton Patek, or a Mclaren F1, of which there are limited examples and there is huge enthusiast demand for them. If that's true of your father's boats, fair enough. If not, then perhaps this argument is included in the list for status points regarding one's benevolent nature 😂 (not directed at you, but speaking to the principle more generally)
Just got round to reading - the discussion on watch journalism obviously strikes a chord. My experience of working in traditional media businesses is that it is surprisingly difficult to sell ads for other luxury products against watch content. Although I think that has a lot to do with how ads are sold (often incredibly old-fashioned practices, when it's not being handled programmatically) and the people selling them. If the ads are being sold by algorithms, niche specialist content tends to lose out because volume is still the metric that matters most. But I had so many conversations at the Telegraph, at Hearst about why we couldn't get car brands, drinks brands, travel brands etc. to advertise in a watch magazine and usually the answer boiled down to 'they can't be bothered to think that creatively; they're happy taking the route-one approach of advertising against their own subject area.' Which always seemed stupid to me, but there you go.
And, for what it's worth, I emailed Substack suggesting the 'pooling' idea you mention about 9 months ago - got nothing back obviously. But the most common barrier I encounter to converting people to pay for The Fourth Wheel is that 'there are so many Substacks, all asking for money'. If Substack could offer a multi-title bundle package, or perhaps subsidise slightly the cost of reading multiple newsletters ... e.g. you could buy 'Substack credits' at 0.90 on the dollar which you could then spend like real money across the site... then people might be more inclined to sign up.
Once Substack realises they can make a boatload of money selling credits that way, much like Amazon, Starbucks and many others earn a fortune in interest income on 'voucher' credit, this might happen. It might however tarnish their 'hands off' approach, and the counterargument is that ultimately, people can pay nothing, or have a monthly budget for online content and then pick the best one.
Which then means the onus is on writers to pool with others to offer the most attractive value proposition in a sea of options competing for that tiny monthly budget from their potential audience. As for the excuse you hear from potential readers - I think there are, first and foremost, exactly two types of people: those who will pay for content, and those who won't. Once you find someone who would pay, the budget doesn't matter as much as the quality of content. If they see stuff they enjoy and would like to read, it becomes an "entertainment or education" purchase. Still, I am not saying 'budget doesn't matter *at all* - it does; Just that content quality and value matter more.
As for the ad-selling - what you have described is old-school thinking by old-school people in an old-school industry. It rings true, is unsurprising, and will eventually change in the organisations who want to evolve and stay open - and the rest will go bankrupt. It may not happen immediately, but it'll be this decade. That much I am sure of. Just look at Substack's growth as (one of many) supporting counterpoints. The same 'limited budget' argument applies to Paid-MSM-subs vs Substack subs... as it does to Substack vs Substack and having 'too many to pay for' - we will find out soon enough, I suppose.
The moon phase accuracy shift is dependant on the chosen reference period, and ss the moon phase is constantly changing one can get a ridiculous accurary if one choses the "correct" reference period - a Norwegian collector have deciphered the chosen reference for IWC and its not that bad!
Of course it had to be a Norwegian 😉
Here is the write up if you are interested - Google translate will help
https://www.tidssonen.no/forum/threads/m%C3%A5nefaser-urverk-og-utvekslinger.67242/#post-922285
That is unbelievably geeky, and so damn cool!
Super edition. Totally enjoyed the thoughts and associations provided.
Cheers M
Well, this one took quite a few evenings to get through!
In short “ ditto to what Paddy Dane said!”
Kudos to highlighting Kurt Klaus! …..his career and genius are not as widely appreciated in the “ enthusiast” community as they deserve to be! 🏆🥇
Also George Orwell! Truly prophetic and unfortunately his words ring truer today than ever.
“Investigative journalism” has become an oxymoron to say the least
Re: your thoughts and insights on Diversified Revenue are intriguing and maybe even brilliant…… should be pursued and one of these luxury groups should snap you up as a consultant! 😜
NOW if I could just find some time to check out the links before you post again …..😩🥺😖
Great stuff!
🫡
No rush!
SDC this week has a lot to digest.
First and foremost, I am always astounded by the volume of writing you are able to accomplish and at the cadence in which you post. Bravo.
I enjoyed the section on Kurt Klaus and his contribution to horology.
My thoughts:
Thou Shalt Not Flip:
I have never seen or had a letter like this presented to me to sign or contractually agree to with any watch purchase. However, as a collector of a particular brand and having the fortunate opportunity to acquire a piece that was allocated to me. The conversation did arise regarding expectations, this conversation was not from an AD. This conversation took place at the North America flagship store owned and operated by the watch manufacturer. The brand stated their expectations to me as a collector and patron of their watches. The conversation was informal and not rude. It also came with the caveat that if my circumstances changed and I needed to sell watch this prior to the expectation of time this watch remained in my collection that I would let them know and they would note it and it would be without any negative impact on me or my future with them. A larger collector of this same brand, I know of, found himself in this spot several years ago, he sold his a large portion of his watches including several prominent pieces earlier than expected to make payroll for his company and keep it afloat. When he recovered and business was stable again this brand was happy to assist him in restoring the pieces of his collection he sold without fuss, all because he communicated with the brand, he respected the relationship and the brand in turn showed respect back.
I agree, once a transaction is complete and the sale is final, the property belongs to whomever purchased it to do with it as they like depending on terms of sale. I believe the terms of the sale that are known upfront and agreed to should be honored. Even if it is not with a brand and is with an AD. This applies to watches, cars, art, etc… If there is an exclusive lock out period that is contractual that must be met as a condition of the sale, and both parties know this going into it and one party chooses not honor their side of the agreement in order to gain financially says a lot about persons integrity. Reputation and time are the most valuable assets we have. I also have never seen a contractual agreement with a lock out period for resale that did not have an early exit clause depending on circumstances that defined how someone could exit out of the lock out period. While I did not sign a contract on that particular watch, I know the expectation, it was known before I arrived, discussed while I was there. If I had an issue with those terms and expectations, it is on me the consumer to renegotiate the terms or not complete the purchase.
An AD may or may not have a brands permission to do this, like in the Rolex example shared. That is an issue between the AD and the brand to sort out. It is separate and distinct than the AD and the customer purchasing the watch. The customer if they dislike or disagree with the terms can simply go elsewhere where the terms and conditions are more favorable to them. They have that choice. A customer knowing what they are agreeing to with the intent of not honoring the terms and conditions says a lot about that customer.
Independence and Journalistic Integrity:
I agree the market has changed how reporting and journalism has changed overtime and led to a greater degree of corporations and power brokers becoming the more overtly in control of the narrative. I would also put forth for your consideration that the incentives have always been there to sell influence and that is has taken place for well over a century, just perhaps not at the same level. Incentives will always drive human behavior and self preservation, be it a corporation, a reputation or a person’s career, will be a primary motivator for what is said, or not said. The internet and rise of social media only allows for the self censorship to be magnified in a way it was not capable of previously at scale. Technology and the internet also provides the solution with independent journalists and hobbyists adding to the space and for the bravest and boldest, can and will, in my opinion find their audience niche, primarily because trust is lost, that trust being established is capital that can be built upon. More and more people are looking for the independent voice. I like the idea of tangential products being the advertising revenue over the primary subject matter of interest. Monetizing independent journalism and reporting is a matter of marketing to, and finding, the correct audience that sees value in this. Too many people seek the “fee” version so they must then put up with those who actually paid for the “opinion” expressed. There are independent voices reporting on many spaces that have achieved financial success and independence, they solved their product, market fit. One particular publication is a newsletter about agriculture, independent voice, the subscription is $600 per year. They have have 35,000 annual paid subscribers and a total of four employees. Not too shabby.
N.
Hey N - a treat, as always, to read your feedback. Thank you!
On flipping - sure, there's an element of honour and personal integrity; The issue is with the nature of the relationship. Customers don't owe them a damn thing, and as much as it is honourable to give one's word and keep it - it is the fact that they demand this promise in the first place, to which I take objection. Sure, we are free to not buy from them, but again, this is precisely what aggravates me. The Train problem comes to mind - there is no good solution.
On journos... Nothing to disagree on, and appreciate your thoughts - in particular, the example you shared. WOW. That is remarkable. That said, I think the watch industry doesn't have the volume of the agriculture industry. Not a wild guess, I have looked into it, and even heard from existing media players who feel the same. Maybe they are just not looking in the right places, I can't say for sure. I am still figuring it out myself.
Correct, the AD is owed nothing more than the terms of transaction that was made. Likewise the AD owes nothing to anything in return including future sales. I think we can both agree. My only point is, that if there is a contract with additional terms regarding the conditions of sale that is disclosed agreed to. Then my stance is it should be honored. Likewise, if there is known etiquette or gentlemen’s agreement it too should be honored and kept. Nothing more is technically owed by either party in the terms of latter example. Including the AD allocating or selling any more watches to a client and customer who breaks any such agreement or understanding because nothing further is technically owed. Recently as we all know, S. Stallone made a quite a fuss with the auctioning off of his Grand Master Chime still in plastic. Stallone knows what he did, he knows the consequences and he flipped this watch anyway. Perhaps flipped is strong since he did own it for about three years, however the still in the plastic part baffles me. T. Stern’s reply when asked what Patek Philippe thought of the situation was. "Of course, we do not like it, but it can happen," "I cannot control everybody. It is not fair for a client who may have been waiting for this piece for many years and then sees it being sold." Stern also in the same interview expressed the sentiment that Stallone will not be buying another Patek at retail from an AD in the future. There was an understanding and gentleman’s agreement that was well understood. So yes, T. Stern agrees. We cannot control everybody and nothing more is owed. But it is a two way street. The gentleman’s agreement was broken, thus the relationship has now changed.
I always seek to understand why the added agreement, or terms and conditions. I ask why the extra contract from the AD? To reduce the flipping of watches for profit that would be soaked up by the opportunist flipper and allow these harder to get watch’s that have a demand outstripped by supply to land in the hands of the collector, the enthusiast or celebrant who wants to mark a moment in time. I can understand and agree with the reasoning from the AD. I also understand someone seeing an opportunity to make a quick profit. Neither are wrong. One cannot assign any moral value or judgment to either party. I have not seen anything with added written contracts, only the gentleman’s agreement as previously mentioned on specific watches from manufacturers with those specific allocations to help insure the lesser produced, harder to get pieces end up in their patrons hands. I see these types of understandings pertaining to the rarer watch and not a black submariner from Rolex. And you are correct there is not a good solution. I have my thoughts on the Trolly Problem but that is another day. Have a good weekend
I suppose my ire stems from the nature of these ‘rules’ and how the game seems biased in favour of ADs and brands in all scenarios. We are aligned on the nature of agreements and the unwritten obligations to honour our word or face the consequences of not doing so.
How about the situation when an agreement is actually improper (ignore lawfulness for now)? If you found a guy who is struggling to make rent, and offered his services to fix your fence and do your gardening and other laborious jobs - then he turns up with his young kid to help him do this work - a bit of a morbid example, but the points are salient: 1) you did a deal, 2) he is following through with his end and 3) you now have a choice to follow through and pay him or tell him not to do the work and have him miss his rent payment. Do you endorse or softly support child labour?
On reflection, I realise this example is too extreme here. But an interesting thought experiment nonetheless. My point was that this ‘agreement’ is BS. They can’t legally sell you something, have it become your property (they have no rights over it) and then ALSO dictate how/what you do with it. The prior ‘gentleman’s agreement’ is a red herring to me.
This would be true if you bought it from a friend who sold it to you at retail, and you agreed not to flip for profit - that would be akin to stealing monety from a friend, otherwise they COULD have charged you market price instead. In that instance, I think it fits. But with a commercial setup like buying from an AD? Not for me. I can’t equate these situations.
Your final example with a friend selling you the watch at retail and then you flipping for the profit makes perfect sense. Poor form for sure. The rent money, fence fixing examples with their child doesn’t equate well for me. It’s my experience growing up in a small family business, we worked as kids and it benefited me greatly. My daughter started her own jewelry business at 8 years old and sold her jewelry at markets on the weekends. She had to do the work. She still has work she must do, it’s part of teaching a work ethic, something I see around us that is missing in the youth and is even more apparent when we interview young 20 somethings for our company these days. I know quickly who worked as a child and who did not. Not always but 80% of the time, but that’s a different topic altogether. I don’t think terms changed in that example like the friend and watch. I do ultimately agree the added stipulations are a bit too far. I think that’s why Patek and some others have an unwritten understanding of the expectations on specific pieces collectors know of long before they apply for those pieces, and those Stern said. “They have a preference but can’t ultimately do stop someone”. I do agree on principle it shouldn’t be a requirement to the transaction. We seem to do this with trusts however, and charitable contributions that are given with stipulations on how and where the organization spends it. Perhaps these are different circumstances, I believe they are.
Enlightening as always! Great stuff!
Now, why isn’t there a lease market for watches like in the car world.. and speaking of collectors who own but don’t wear, why not a lending market, one could actually earn.. oh I know, because no one can fvcking stand it when someone else scratches one.. but I’m going to think through these.
Yeah - wear and tear on a car vs watch… minefield. Not insurmountable though. Everything has a price.
Woooowwww!! That was quick. Thanks, mate!!! 😉
I cut a whole section for that 😂