Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance,

examining events occurring in markets right now and financial history to see what lessons can be taken away,

including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit

onfinance.org.

Over the last few years, we've seen a number of assets spike in value only to decline

once interest rates rose. At peak prices, there were all sorts of claims, both in the media and by people

in the business of buying and selling them, that these were new asset classes and that

everyone should consider investing in them. The spike in luxury watch prices is maybe a little

bit more interesting than some other asset prices that rose rapidly in value in the pandemic years,

as watch prices started rising well before the pandemic.

And while the pandemic era stimulus added fuel to the fire, there were a few other factors

at play.

At the peak, certain hypewatches like the ceramic bezel Rolex Daytona, the Patek Philippe 5711,

and the AP Royal Oak 15202 were trading at multiples of their new prices on the used market.

At the peak, Rolex boutiques were open with no watches available in the store and dummy watches on display

in the window, a rather bizarre situation. It makes you wonder what the store employees did all day.

With the huge price spikes, an idea began to spread that what are mostly mass-produced watches were now investments that you

could buy, put in a safe and maybe retire on one day. Collecting watches was no longer a

hobby for wealthy connoisseurs. It was now pitched as a way for regular people with good taste

to grow their wealth. To be clear, luxury watch prices have always seemed high.

A high price is a basic requirement of being a luxury good, and the high price is frankly

a part of their appeal.

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