Stunning Concepts
Are you looking into buying a luxury watch? Whether you are an aspiring collector, want to buy the perfect gift for a loved one, or want to get your hands on a model you’ve been eyeing, the ongoing market correction might work in your favor.
We prepared this post to examine the ongoing market correction, its possible causes, and why now is an excellent time to buy a luxury watch.
Is the Watch Market Correcting?
For the past three to four weeks, watch enthusiasts have heard rumors circulating in the mainstream and social media of a possible dip in the watch market prices. Is it true there is a market correction going on as far as luxury watches are concerned?A market correction is a rapid decline in the price of a commodity by 10% or more but less than 20%. Some hot luxury watch prices have gone down, like the Rolex Daytona, whose price has dropped by 7.2% so far.
The correction is being witnessed across high-end and middle-class luxury watches, and there are several causes of the dip.
What Are the Possible Causes of the Market Correction?
For the last two years, or atleast in the Covid-19 era and afterward, the prices of luxury watches skyrocketed to a point where collectors found it hard to part with their hard-earned money. The prices climbed exponentially until April 2022, when they started going downstream.
But what are the factors behind this market correction we are witnessing?
Let’s look at the probable causes.
Shrinking Economy
When consumers lack confidence in the economy, they stop or reduce buying products and paying for services. The US economy is shrinking due to trade shortfall, less government spending, and reduced inventories.
For this reason, investors are unwilling to buy more inventory, unsure whether the one they already have will gain any profits in the future. A shrinking economy causes insecurities among buyers and sellers, causing the demand for luxury goods to fall. With less demand and more supply, the prices plummet.
External Events
Various unfortunate events are happening in some parts of the world, causing a drop in demand for luxury watches. These events include the ongoing geopolitical war between Ukraine and Russia and the lockdown in China.
The war in Europe has interrupted trade and business activities in Russia, one of the largest markets for luxury watches. The Chinese are also big spenders on luxury watches, and being locked in and not carrying any businesses has affected the demand and supply of watches.
Fear Among Investors
Investors have been counting their gains for the longest time as the prices of hot luxury watches in their possession rise. The peak was around March, after which the prices started falling. Investors operate on greed and fear.
When prices rise, they buy more inventory with hopes of making a kill when they sell the watches. Fear kicks in as soon as the price falls slightly, and most start selling the existing inventory before the prices dip further.
New Models
When a luxury watch manufacturer announces that they will launch a new model, collectors will rush to clear the existing inventory to make room for the upcoming models. This increased supply with less demand causes the prices to fall as collectors dispose of their old stock
Why It’s the Best Time To Buy a Luxury Watch After the Market Correction
For luxury watch enthusiasts and collectors, it’s a great time to invest in that watch you’ve been eyeing. Here are reasons why this is the best time to buy a luxury watch:
Saves You Money
The number one reason you should buy that luxury watch you’ve been eyeing is right now when the market prices are dropping. You’ll buy a high-quality watch at a lower price than someone who bought it when it was at its peak.
Moreover, the market correction won’t last forever, and the prices will start rising again after some time. Take advantage of the low prices as long as they last to stock on your preferred luxury watches.
You Can Buy More Watches
When prices are high, buying one luxury watch is challenging, let alone several pieces. After a market correction, the prices fall by as much as 10% or more. For instance, if you had a million dollars and wanted to invest in luxury watches retailing at $100,000, you would buy ten watches at the peak of high prices.
If the price plummets to $80,000, the one million dollars will buy you 12 watches and save you some change. Market corrections provide the perfect opportunity for collectors to stock up on their watch inventory.
Best Time To Buy Gifts
Luxury watches are the perfect gift for your loved ones, whether your significant other, parent or favorite uncle. Gifting someone with a luxurious item is a grand gesture because spending your hard-earned money on someone else is not easy. It shows you care for them deeply and don’t mind breaking your bank account for them.
What if you can make a grand gesture without hurting your bank account? Buying a luxury watch during a market correction means you spend less on a luxury watch compared to buying one when the market prices are high.
Larger Profit Margin
When measuring your net profits, you compare your earnings with the amount you spent on an item. If you are a collector or luxury watch investor, you want to buy watches at their lowest possible price and sell them when the prices are at their peak.
However, this is not easy because the luxury watch market conditions are volatile. Fortunately, when there is a market correction, the low prices last a bit longer( typically upto four months). If you take advantage of this period and stock up on your inventory, you will make a good profit per unit when the prices rise again.
Passion
If you think luxury watches are amazing and have a passion for them, your buying habits don’t depend much on market prices. Whether there is a market correction or not, you’ll still buy your favorite watch brand. However, fulfilling your passion and getting a great deal while at it won’t hurt.
Do you agree that this is the time to buy a luxury watch amidst the market correction?