Watches, Auctions, and Financial Turmoil: Part 1.
Originally posted on Instagram on April 2016.
Often times I wonder of how do important watches perform during financial turmoil? This is something I will attempt to answer in this post by showing you auction results during the financial crisis. The catalogues in the picture here range from the 24th of April 2008 to the 28th of April 2009, a period in which the S&P 500 went from 1,396.37 to 855.16, loosing almost 40% of its value.
For those of you in the market, you will remember the angst felt everyday. The unknown and the fears. So perhaps the most relevant auction here is the one that occurred in April 2009, which was shortly after the lows of the crisis...Not surprisingly, this auction had only 169 lots, vs. the common 200-300 watches offered per auction (I will leave this catalogue for Part 2). But the October 2008 (middle photo) is also quite interesting. During this month, a lot of important things happened: Congress passed the USD 700 billion TARP Program, Wells Fargo bought the troubled Wachovia Bank, and the FDIC insured up to USD 250,000 per depositor (This was actually announced the exact same day of the auction). The volatility was such, that the VIX Index traded as high 89.53 during this month, and the S&P 500 recorded its best daily percentage gain, rising by 11.58%, on 10/13/20008.
So how was the effect to watches that sold in auction?
As much as I wanted to have a definite answer, there really isn't one. Prices were really all over the place with no clear correlation to ANYTHING. As you know, auctions are always completely unpredictable, but I will try to show that with some of the examples that caught my attention the most.
Let's start in October 2008 which is right after when things started turning ugly in the markets:
October 7th 2008. The financial world is in peril. The S&P 500 has lost over 30% of its value year to date. The US Government is doing everything in their power to restore confidence as markets are very nervous, and extremely sensitive to headlines. Just to illustrate, the S&P closed at 996.23 on this date. Three days later it would fall all the way down to 899.22. The very next day, it would rally back up to 1,003.35, recording a record daily gain of 11.58%. This 5004R comes for sale in at Sotheby's, and surprisingly sells for USD 249,000 (Estimate mas USD 190,000-250,000). For comparison purposes, in 2010 a SEALED (!!) 5004R sold for USD 209,000. 🤔
As I was mentioning, auction data is often hard to quantify, but the unpredictability side is what makes it human! Its just irrational behavior at its best... What drove this? Maybe a bidding war between two hot headed bidders? Collectors seeking "hard assets" as safe havens to the financial world collapsing? Truth is unless you were in that room, and remember that precise moment, nobody really knows, which is kinda sad in a nerdy way to me. 🤓😁
In this same auction, another collector favorite-performed really well, the 5970R, achieving one of the highest prices we have on record for this reference in that metal, selling for USD 149,000. (FX on that date was HKD 7.77) What's maybe even more crazy is that 5970Rs have recently sold in auction for around USD 110,000 in full sets! Not that you should, but if you want to compare that to the stock market, just look at where the S&P 500 is today, and compare to the close of 996.23 on that day. You might drop a tear...
What's incredible, is that these two examples here were NOT outliers, but rather the norm on highly coveted Patek's in this particular auction. For example, continuing with the R theme, a 5070R sold for a little over USD 67,000. In June of 2016, Sotheby's auctioned another one and it sold for USD 62,000. Both were full sets.
Interestingly, there was no notable vintage Rolex lots in this entire auction. However, I did look into other October auctions, and again, it's really hard to draw any concrete conclusions. In comparison to today, prices were much lower, but that is mostly because of the crazy rise in vintage Rolex prices, rather a downturn due to the times. Most were selling within its estimate, with a few exceptions, but nothing noteworthy in terms of pricing WAY over (or under) the initial estimate on the pieces that are still relevant today. However, looking back, most pieces were way cheaper than what they are today, but that is no surprise, vintage Rolex have really been on a tear the last few years!
Lastly, to end this blog post on a funny note, check this baby out. The one result that really stood out to me in terms of Rolex: A full set Bamford Daytona, sold for USD 48,000!!!!!!!! Whaaaaaaaaat. The sale was done in the 17th of October 2008 at Antiquorum.
This concludes Part 1 of Watches, Auctions, and Financial Turmoil. In the Part 2, I will dive more ito results right around the low of the market. If you have any suggestions, feel free to send me a note.
As always, thank you for reading.