Hi Everyone, I hope you enjoy this video. Since shooting this, there have been some updates with the story with Rolex finally making a public statement. I wanted to be as thorough as possible with this video as there is a lot involved in this equation. Thanks for watching and leave a comment with your thoughts regarding the subject.

Many 'KZfaqrs' continue to comment on this complex issue - 'Teddy's Take' is on another level. Wise words for a young guy; keep up the great work!

Came for the watches, stayed for the economics.

The inability to get the watch I wanted has caused me to look elsewhere. I now have a small collection of Omegas and am perfectly happy with them.

12:54 is this so on point. I’m finally reaching a stage in my career where I can afford some of the nicer things in life and I was ready to dive into higher end watches as a new hobby but what’s going now is ridiculous. As he states, doing the research and jumping through a few hoops is par for the course, but all this crap with these dystopian ‘lists’ and having to form relationships with AD reps (“Hey I’m back…how youuuu doin’ [wink]) is just too much for now. I think I’ll look into other things. And yes you could say say ‘Rolex doesn’t give sh*t whether they get my business or not’ but eventually it’s going to come back to bite them in the rear b/c when a brand stops becoming accessible then it eventually ceases being aspirational.

One of the best videos I've seen. As a marketing professor, I appreciate your inclusion of the fundamental economic forces driving this current market. The biggest risk I see for Rolex is the failure to bring in new customers because of supply shortages and waiting lists. I recently bought a luxury sports watch and wanted to include the Oyster Perpetual on my short list. The local AD had no inventory to show but plenty of Omega, Breitling, and TAG watches. I bought a Seamaster Diver 300 and am very happy with my purchase. Watching your videos has helped me become a more educated consumer and appreciate the many brands and product options out there. Thank you, Teddy!

40 years ago I bought a paper thin Seiko for myself and a normal one for my Dad while in the Orient. My paper thin one actually "bent" as most own them did so Seiko apologized and said they wouldn't repair it any longer. I just selected another like Dad's and gave it to my Brother. I think each watch was ~$150.00 then. 20 years ago I was going to buy a used Rolex Sub from my local Jeweler for $3,000.00 but sadly my Dad passed away, so I took his Seiko and started wearing it. It still runs perfectly and I noticed today you can buy a new one for $275.00 I also went to look for a Rolex today, but when I heard about the prices, I am walking away. Great article Teddy. Like you say, the new generation like my Grandson doesn't want ANY watch since his phone tells time just fine. Watchmakers beware the next generation!

After owning a GMT and OP for almost 10 years I wanted to get myself a Hulk for my 60th birthday, about 2 weeks later I came across a page about high end clones and decided to give it a try. Once came I compared it to my original GMT (in terms of quality, feeling of the steel etc), I understood one thing, China can't be beaten. There is no chance ANYONE will be able to spot it as a fake, Even the inside movement is identical. The build quality and finish put a lot of legitimate Swiss brands to shame.

I've worn a watch since I was 6 years old; I have always liked watches. My first Rolex was purchased in 1991, when I finally reached a goal in life and was able to buy one. I bought a Polar in 2008 during the recession, and got a discount! I bought my 3rd one (Submariner) in 2018, no problem, BUT now good luck getting one. I recently went to a major Rolex store, they had 2 watches for sale, that's all. Will I buy another one? No. Am I going to sell any of the 3 I bought? No. I did not buy them to sell. It's just getting ridiculous.

This is the most valuable KZfaq video about luxury watches - period!! Amazing job and great inspiration!

This situation with Rolex, Patek, and AP has made me uninterested in ever trying to obtain one of their watches. Why would I want to be associated with people who care only about status? I couldn't imagine a more insufferable community. The watch industry has no shortage of other brands at all price levels that are available to people for MSRP at a moment's notice. There is no problem unless you are someone obsessed with status. If not being able to get a Rolex or a Patek means you're not interested in watches, are you really a part of the watch community?

Absolutely spot-on analysis and the best explanation I've heard to date. Unfortunately, this amounts to a sad situation for the true watch collector and lover chasing watches made of unobtanium. On the positive side, this redirects the focus to the lesser-known and hidden gem watches that may have been otherwise ignored. Keep up the great work.

This is an absolute master class in producing a quality, well-researched video. Well done, Mr. Baldassarre!

I have to admit, I find the whole epidemic of “flex culture” and constant Instagram-fueled narcissistic bragging totally nauseating…. It has to a large extent ruined what once was a sophisticated hobby of learning about, collecting and appreciating fine watches. I probably sound grumpy and cynical, but I truly hope the tulip-bulb-like bubble bursts very hard and very soon.

This is money. Everything about it is great. Nice work, Teddy!

Finally, a cogent and relatively thorough explanation of the current watch situation. Like many luxury manufacturers who have set up direct to the public stores, I bet the watch companies will follow suit. Porsche attempted it in the late Seventies and the dealers sued to keep their franchises, and Weisach backed off. But they were ahead of the game and wanted to put their customers ahead of dealer concerns. Thanks Teddy!

Loved the video, explains a lot of things. My love for watches started when I was gifted on my graduation a luxury watch; ever since, every couple of years I buy one and not necessarily the same brand. But with all the premiums being requested and no stock at dealers; they made me hate the watch brands, which never have stock. So, I bought myself an Apple Watch and all the other watches are now in storage.

Probably one of the best videos you've made to date. As for transparency, I feel it'll always be secretive as none of the big brands need to disclose anything. It's a matter of who they prefer to own their watches

I never comment on KZfaq videos, but in this case I need to. I have an economics degree, and Teddy is spot on with all of his analysis. I was especially surprised and delighted to see the discussion around Veblen goods, a concept few know about and even fewer understand. Great work Teddy.

Best watch video I've seen for a while! Love that you get the whole picture and can articulate it to us. Not convinced every watch KZfaqr could explain these concepts!

Nice work and analysis! I can be tired of overplayed, macro shots or watches from time to time, but this is quality content right here! Stayed way longer than I thought I would!

I was on the Omega wait list. It was brutal! I had to wait for the AD to take it out of the display case and hand the watch to me.

Fully agree with one of your last points: The current situation is alienating an entire generation of potential future (watch) consumers from that space in general. And that’s a dangerous game to play…

Thank you Teddy, this is by far the most intelligent and wholistic analysis that I've ever seen on this topic. Really appreciate it , and looking forward to more of these series going forward. Cheers mate.

You knocked it out of the park! Your content is generally very good but you managed to do a conprehensive yet concise, very informative video.Well rone

I think maintaining a “luxury status” by ensuring lower supply v/s demand is meaningless when it comes to Rolex as they were considered luxury even when you could buy any model off the shelf at any AD anywhere. Scarcity isn’t doing them any favors on that count at least. For me the issue with Rolex is the appalling arrogance and in your face superiority that many ADs show. Just because it’s a sellers market (for now) is no reason to treat potential customers with disdain and make them feel like idiots for even asking about popular models. What goes around comes around and a lot of these self important dealers will one day wish they hadn’t disrespected so many genuine potential customers. I for one will never even go near their stores again,

Hello Everyone, as a long term collector of luxury and high quality timepieces such as Patek, A. Lange and Rolex I must admit that I am totally turned off by the current situation with supply and demand of these brands and similar ones to the point that I completely turned my back on them after 25 years of loyalty. Instead, I turned my attention to the middle of the road brands like Omega and Grand Seiko and I believe there are thousand of watch enthusiasts like me whom are fed up with games authorized dealers have been playing and sadly manufactures have been turning a blind eye. The bottom line is if brands like Rolex and Patek continue moving along in this road, they will be losing more loyal clients and possibly damaging their brand's image. I believe these brands must eliminate the middle man, in this case the AD's, and start offering their products directly to the consumers through their own on line channels or their own boutiques. This could put an end to all the games and abuses of authorized dealers.

I love the amount of detail that goes into your videos. During the upcoming crash in the stock markets the demand for these watches will plummet and the used market will be flooded. I have a 2 ozt gold bar set aside that I will use to buy the new Rolex I've been wanting for some time. It won't be the first time, or last, that I've used this strategy to buy something nice.

Awesome video, Teddy! This should be included in current MBA classes, 100%. On the spot, specific and easy to understand!

If only my college Economics 101 professor presented supply and demand the way you just did Teddy. Always easier to learn about something when put in the context of something one can relate to. Keep up the AMAZING content Teddy!

The one variant at the moment that is unique since the industrial revolution is the pandemic. We have high GP per capita and the majority of first world countries have been in and out of lockdown and limited avenues for discretionary spending. As a result, luxury products are one of the few products you can spend your money on as you can’t go on lavish overseas holidays.

Love watching you. This was a great video! I love that you brought in the business aspect of watches and luxury goods. A bonus is the history part. Love it!

A brilliantly researched and produced video. It should be compulsory viewing for anyone interested in watch collecting or watches in general. Five stars Mr Baldassarre.

This situation impacted my buying decision just a few days ago. I was looking at the tudor black bay chrono and had to deal with the whole waitlist situation, I left the outlet with a bad taste in my mouth. I walked across to the Omega outlet and was treated much better, I was able to get 20% off the retail price and picked the watch up that day, so I ended up with a seamaster. Couldn't be happier with my decision.

I've been collecting luxury watches since 2011 - mostly Rolex and Patek. I'm now so frustrated with Rolex & Patek that I've moved on to other watch brands such as Vacheron. The watch supply/demand issue has been a blessing for me because I discovered how much I love Vacheron and possibly wouldn't have taken a look if it wasn't for this supply/demand issue. So for my watch collecting experience, it's been great! I'm discovering new brands that I wouldn't have otherwise looked at. I am now the proud owner of some IWC, Tudor, Vacheron and soon Grand Seiko.

Great video essay. Editing done very well and the script was amazing to hear.

After watching countless videos but Teddy, I decided to get the Omega AT as my first luxury watch. Wanted to get the Rolex oyster but with no stocks and crazy prices, the Omega was the way to go. The Omega is no less of a watch and wearing great on my wrist for the last 2 weeks. And so true, my friend wants to buy apple watch when she can buy a watch at the same price they will last her much longer. So yes watch makers are loosing out to technology

This is the best KZfaq video on watches I’ve seen all year! Thank you for putting this together. The point on future generations who are not growing up with the need for watches is key for all watch brands to address. This was addressed in one form years ago with the Swatch watches. I suspect the situation today and going forward will be much more grave.

In the past, people made money and celebrated with a watch, now they make money just to buy the watch. We are seeing a crisis for wealth aknowledgement from strangers, its all about the bragging rights in 90% of cases unfortunately.

These are fun informative videos, your shopping or documentary videos are excellent... I am happy to have found your content

I had a great watch buying experience with Rozett this week. He responded quickly to my inquiries and shipped the watch out immediately. It even arrived one day sooner than expected. Thank you for being excellent to work with. Would do business with you again in the future.

A comprehensive video Teddy, one of the best I’ve seen about the scarcity theme. In my opinion one of the current problems of the market is people buying these watches as investment, like stock or commodities that you buy an hold waiting for their value to increase. Too many are taking this approach instead of buying the watch to use an enjoy it. Add that to the rising Asian market where consumers are crazy after exclusive items to own and pile up and the speculation of the grey dealers. A long time ago i decided that the only watches I’ll buy are the ones I’ll actually use in my daily life. No paying premium above MSRP and no safe queens locked on a bank. All my watches get wrist time.

This is one of the most thoughtful and accurate descriptions of the current watch industry/culture! Very well done video!

Well said Teddy, thanks! I believe that that there should be more direct to consumer selling by the luxury watch makers. I am not sure what value the ADs contribute in the information age that we are in today. I would love to make my next purchase directly with AP or Rolex, rather than a secondary seller!

This is the easiest explanation for most to understand of Veblen goods that I have seen on a watch channel. The rest of your points made are on point as well. You have been killinng it in the last year or so. Keep up the regular content and you will rival the best salesman in the watchspace. Good luck.

Great video. I think “hype” in certain watches is the biggest factor. There are many Patek and AP watches that are brilliant, but sell for less on the grey market than list price. It’s is what it is.

The spike in all the higher end brands has made me appreciate mid - entry level brands even more. Seikos and Tissots to Oris, Tudor, and Omega. You can’t go wrong with any of these watch makers. Great video by the way!

What a great video. Really well spoken and made the nearly 20 minutes feel like a couple minutes. Excellent points made, and interesting seeing the similarities in the car market at the moment. Many of us have brand loyalty and see value in a particular car, but the barrier of “difficult to obtain” is a bit of a buzz kill.

Excellent explanation Fo supply and demand. I spent many years in the car business, where new models were often in short supply. But it’s about managing that demand and not pissing off long standing, loyal customers.

Thanks so much for this video Teddy, one of my favorite videos you’ve done so far. You give clear rational points on all sides involved in what’s happened in the recent years of luxury watches specifically steel sport luxury.

Enjoyed this type of content Ted...a slight twist from the norm. Keep up the Excellent work 👌🏽

Thank you again, Teddy, for your very thoughtful analysis of not only basic market forces but also the psychology of exclusivity and insecurity. We are all flawed individuals and some of us will spend whatever it takes to try to deceive others and ourselves of this fact. True luxury is inner peace and independence. Great job!!!

Compelling presentation! I liked everything, from the use of economics to the great combination of images, videos, graphs and text appeared! Congrats, there is not a single small recommendation I could make if you would ask me how to do it better!

I’ve been watching the channel for years now, best video by far. Well done Teddy. Love the MBA level macro/micro economics lesson.

Outstanding video! The most thorough explanation on the current watch market developments. Bravo!

Truly a brilliant summary Teddy! Concise and accurate from an economics perspective. Perhaps the one thing missing is the historical boom and bust cycles of luxury items. Like the quartz bust, technology changes can signal an abrupt dip or even massive sustain dropped. That is looming as you point out with disengaged genZ. More to the point, the global nature of this market makes it very vulnerable to bigger forces such as recessions, conflict and instability, never mind change consumer preferences; what was once conspicuous consumption becomes gaudy and passé. My two cent, well done!

Great video - seriously well done. Appreciate the economics aspects and the psychological dovetail. I do recall the days of buying a Submariner out of the display case (2005) where there was plenty of inventory at the AD (in the mall!).

Hey Teddy. Great video. I think you hit the nail on the head when you said these luxury brands manage for the long term. As a result I think consumers are now looking to other brands when they can’t find the watch they want from Rolex or Patek. Zenith and Tutor are two brands I think are well position to gain market share from this lack of supply phenomenon coming from Rolex and others.

There is a concept I call the "Outback Model", which I first started talking about back when Outback steak restaurants were a new thing (late 1980s, early 1990s). The concept basically goes like this: Outback restaurants ALWAYS, at that time, had long lines. You might wait an hour or two to get a table. A lot of people would get angry and demand that Outback build MORE restaurants, so that there would be no wait, or at least shorter waits. But Outback wouldn't do it. Why? First, if every restaurant has a line ALL THE TIME, then that means your restaurant is operating at or near 100% capacity. That means you are probably maximizing your profit, since the number of customers you are serving (and getting paid by) is at or near the maximum possible. Second, if you open another restaurant nearby, then there is a lot of overhead involved: Construction, equipment, etc. Basically, your operating costs double. And there is the almost absolute certainty that the new restaurant will take customers away from the old restaurant, thereby reducing ITS profit potential. Third, the fact that people are willing to wait an hour or two before they are even seated means they WANT what you are selling. Don't lessen the value of that. People who don't want to wait will go somewhere else, but that's OK. And fourth, what happens if the demand for steak goes down? Now you have more restaurants, whose operating costs are somewhat fixed (rent/mortgage, power, staffing, etc.), but less customers coming through the door. That's a great way to overextend yourself and fall into a financial hole. As Teddy pointed out, these watch companies take a VERY long view of their business: Centuries in some cases. They know for a fact that they can continue to operate as they are (making X number of watches per year and generating a tidy, almost predictable profit margin that makes everyone there happy) and it's not hard to sell every single watch they are capable of producing. If they over-expand their production capacity -- which involves building new facilities and having very expensive, bespoke equipment built -- then they will absolutely lessen demand AND they run the later risk of having those facilities sitting idle and having to lay off staff. That's the last thing they want. So it is smart for them to be VERY conservative about expansion -- in many cases, they absolutely should avoid expanding and just keep doing what they do so well. Let the market decide what their pricing should be. In the case of that Patek Philippe, it wouldn't surprise me if PP are keeping track of all of that secondary market pricing and if they raise the MSRP on that watch. Obviously demand is high enough that they can justify raising their pricing -- it would mean more money for them AND more money for their authorized dealers. Why should watch scalpers be making more off each watch than PP or the dealers do?

This was an absolutely accurate description of the current watch situation. As the Director of an Authorized Patek Philippe/Rolex Retailer… I couldn’t agree with you more. Great job!

Great content. I really enjoyed watching this. Interesting to see if watch manufacturers decide to go with the direct to consumer business model. I think this should be carefully thought and use the sneaker industry as an example to avoid the same problems they did (such as bots) when using this type of business.

Great Video Teddy💪

What do you think the exhibition pieces are going to do? Annoy or appease?

Amazing video very informative and educational

First of all, kudos to you, Teddy, for laying complicated economics out so simple and easy to understand. When it comes to watches, i don't care for these luxury pieces anymore because the moment they are hard to get, counterfeiters start selling more fakes. That completely brakes exclusivity because e.g. Submariners are everywhere even on the wrists of ordinary schoolboys. So it's no big deal anymore. Designwise there are lots of great ideas and layouts to admire, but when it comes to buying an outstanding piece for me, brands like Tudor, Sinn or Fortis come to mind.

Great analysis, personally for me pieces from these brands have become so difficult to obtain that I've lost interest and am considering selling my collection and putting the money into other things.

Thank you Teddy for another well made and well thought out video. The professionalism, research and overall effort you put into you work places you a cut above the rest.

I'm just getting into watches and this video and the comments are providing me with a lot of knowledge about watches.

This is a great video Teddy, very educational! Would love to watch more stuff like this.

Thanks for this insider look and info. As someone saving up for my 1st luxury watch, it’s good to know what I’m in store for and what’s happening behind the scenes! 🙌🏾

Excellent deep dive. Thank you.

Let there be light, and suddenly there was light. Wow, Teddy! I think of myself as intelligent and perspicacious but your expose has provided the clarity I was so lacking! Stunning video!

Very helpful and educational. Thank you!

Love luxury watches and as a high school economics teacher, I appreciate the blend of the two topics! Great use of examples and flow of graphics! Also, I think you are spot on with your take on younger consumers. By creating the extreme exclusivity but "devoid" of the "tech" those younger users are use too, they risk losing future consumers to the market. The students I deal with use their phone as their watch and many would have difficulty telling time without a digital display!

GREAT video. This was a fantastic lesson in applying economics and marketing to the watch market. Thanks. Cleveland rocks!

That is a great video Ted, a superb overview in luxury brand supply and demand dynamics.

enjoyed your input. in fact, I learned some new terms such as "Veblen Good," "Conspicuous Consumption," and "Discretionary Income." Nice work!

I'm an economist and I must say this is a fantastically well-executed video! Amazing job.

I’ve had many Rolexes over the last 30 years and each and every one of them has either gained or lost time for me. Whenever I bought a new one, I knew that, before long, I’d have to send it back to Rolex for an adjustment. With some of them, I’ve had to have them adjusted 2-3 times. This year, I decided to forget about Rolex and buy an Omega (Seamaster 600). What a difference!! It’s well made, a third of the price of Rolex, and ACCURATE!! Imagine that. Why the heck didn’t I do this a long time ago…

Excellent video. I ordered my bespoke Patek Grand Complication in platinum with diamonds two months ago and am picking it up tomorrow!

Love this video! Very informative

This was and remains a very informative piece. It has also confirmed that to tell the time you don’t need an expensive watch. I firmly believe that a good quality Casio, performs better than any luxury watch. These expensive brands are more like art that you collect and hang on the wall, but are not practical to wear daily. As a collector of time pieces, I appreciate the work that goes into these luxury watches, but as daily watch user, I would much prefer something less attention seeking and more practical. Hence my absolute devotion to the Casio brand. Truly a watch for the masses with extreme reliability.

The problem with the "they're not making more watches so they can maintain prestige" theory is that brands like AP, Rolex, and Patek were still considered prestige luxury brands back when you could walk into a store and buy one.

Great video! Enjoyed it so much

A very well-done video, enjoyable and knowledgable at the same time. I like how you use economics theory, easy-to-understand illustration, and excellent graphics to show the highly demanded watches in this video. Regularly check my local Rolex's AD for the polar explorer II, but they don't even take a waiting list nowadays. While waiting, I went through your other videos and find the Tissot Visodate is also come to my liking, happy with my purchase. Thanks, Teddy.

There's another element, with an unknown relationship to the other elements: bubbles. The most ridiculous and well known is the tulip bubble some centuries back. Tulip bulbs were bidded up incredibly, with small differences making a huge difference in price. This "investment" ultimately ended with incredible speed. That applies, certainly, to the flippers of watches. On average, watches are poor investments, as, even if they appreciate, they do not do so as well as stocks. They are also not diversified. This whole thing will tank. Meantime, I am offended by watch companies requiring me to prove my merit and then wait a long time. Who are THEY?

Love the Thorstein Veblen reference - Conspicuous consumption! Perhaps the prestige watch makers may decide to cut out the ADs and begin to sell their products all themselves to control distribution and pricing better as well as maximizing their profits. They would be following the airline industry (seen many travel agents lately?) and pro sports teams that control ticket prices that vary according to demand (dynamic pricing).

Great article, so well presented. Thank you. for an articulate view on a very hot topic, and I'd agree with all your thoughts

Really great vid thanks!

Hey Teddy, thanks for a comprehensive overview of the market dynamics of these luxury watch brands. I wonder how much the current global supply chain disruption plays into the shortages, though brands like Omega don’t seem to be short at all. 🤔 Also, just fantastic video production with graphic support, etc. Would love to have a five minute chat with your video “person” as I’d like to make similarly well produced videos for my building products company. Much props all around.

I rarely comment on KZfaq. But I have to say that that the analysis provided here is just excellent and brings a lot of question marks. Kudos. I have an appointment next week at Patek Philippe’s Salons in Geneva. I will certainly bring to their attention some of the arguments displayed in this presentation.

This is great, really enjoying your vids.

I’d point out that the “hard to get” watches are actually easy to get from grey dealers for the market price. I’d also point out that the number of grey dealers has gone up (Sharf says by 25%), suggesting this is a speculative bubble. During the tulip build mania, the bulbs were not planted, they were sold to another speculator.

Nice video! I will just add two things to consider. First, how the boom in money supply has led to a surge in valuations for assets of all classes globally, including stocks, real estate, and collectibles, including art and watches. How the values of these watches will react when liquidity begins to tighten as growth recovers worldwide will be interesting to ponder over. Second, that the behaviour of demand for utilitarian goods - goods that are consumed - is inherently very different than for assets - goods that can be resold for a certain value, even if there was no prestige involved. For the latter, Nobel Laurette Vernon Smith has shown in his very interesting trading experiments that demand behaves in a way that tends to create booms, which are invariably followed by busts. His experiments are of course incredibly stylised, but are interesting to refer to when considering how and under what conditions will the current boom in certain watch models end. After all, we have seen booms and busts for values of other watches before, like Panerai in the later 2000s, and (I am told) other Rolex models as well before that. Food for thought I hope.

Loved the episode! Great informative episode

Excellent video, enjoyed watching it a lot.

Great video, and I absolutely agree! Too many people are upset that they can’t buy what they want and jump to blame the brand. In reality, I feel the brand is the least to blame between them, the retailers, the buyers, the resellers, and those paying market price. Rolex already makes 800,000+ watches per year, more than any brand out there, and certainly more than other brands with astronomical resale value. If they go and boost production, they will likely diminish their quality due to rushing things or hiring inexperienced workers. When that happens, people no longer feel the product is worth it’s cost, and they lose their place on the ladder. Rolex has just over 1,700 ADs, and they have 14 distinct models in their catalogue. If you do some simple math, that is 33 of each model per store, per year - assuming an even distribution to all stores of all models (which we all know isn’t the case). That doesn’t include all the watches that are given away to brand ambassadors, sports events, etc. and it doesn’t include the fact that there are different configurations of every model. To me, the biggest issue is the person willing to pay market value. We live in a world of instant gratification, and for people with more money than patience - buying market value seems an easy out to get the “clout” they’re after. If people stop paying $15,000 for a $9,000 Submariner, then the people flipping them quit going to ADs and scooping them up. When that happens, the wait list disappears, or at least gets significantly shorter, and those that really want the watch to wear and enjoy are now happy.

Watching this makes me realize how lucky my dad was to be able to just walk into a Rolex store in 2007 and walkout with a Sub, and how lucky I'll be when that watch is passed down to me, since I won't have to be on a years long waitlist, or spending crazy prices.

Great video! Very interesting

Oh. So informative. Learnt so much. Thanks.