christianch
4118
Great analysis 👏 Yet 'Cry Me a River' for Independent Watchmakers
Dear Patrick,
Thanks for your deep dive analysis. It's really got me thinking, and as a Swiss, I feel I need to add my own thoughts into the mix.
A strong Swiss Franc can really stir the pot for businesses that depend on exports. Our central bank has limited moving room too, especially since it printed a ton of Swiss Francs to buy US Dollars and Euros during the pandemic. Much of this money ended up in the stock market. Just to paint a picture - at the end of 2018, the Swiss National Bank had more Facebook shares than Mark Zuckerberg.
This action sparked some heated debates, as our central bank is supposed to pay dividends to our cantons, much like states. Everything was going well until we saw a big drop in the markets this year.
Switching gears a bit, I can't find it in me to feel sorry for independent watchmakers who are upset about losing sales because their prices have risen to $110K USD from $90K USD. It seems to me that a lot of independent watchmakers have gotten too big for their boots, helped along by attention from Instagram and auction houses.
In my opinion, all Swiss watches are now too expensive. That's why I'm not losing sleep over Rolex or independent watchmakers seeing fewer sales.Rolex boutiques with no stock? Independent brands with 8-year waitlists? It feels like the watch world has gone crazy.
I'm hoping for a reality check soon, leading to some price adjustments.
Christian
Swiss Franc CHF Currency On A Tear
RED ALERT! For our members who are constantly wiring monies to Switzerland (probably to pay for our mechanical watch, clock, music box, chocolate bars, and/or belt buckle bills) there is a big problem heading our way... The Swiss franc has been getting ex...
You're most welcome!
A few members asked me why this was happening off line. And I think the most well accepted explanation was the fact that the world's wealthy have been divesting out of the stock market and sitting on more cash. And a portion of that cash has gone into the...
Personally, I agree that it is a non-issue for most people spending $$$ on a watch
If you can afford 6 figures for a watch, it is not really a big deal. Mentally I already calculated this into the price of my voutillainen as I always figure FX will work against me lol
Dear m2
Do not forget that the rich are the "most price sensitive".... Called "complaining at a very high level"
I agree. I'm more in the price sensitive camp.
Unlike M2, I do not plan ahead for major currency fluctuations. I expect currencies to be fairly stable. I guess I'm not a great chess player today - I didn't predict this unexpected move!
Should've done that a long time ago!
That actually would've had more positives than negatives. Especially since most of the economic system in Canada is quite similar to the economic system in USA. But bigger powers at be were against this.
Perhaps this may increase the value of
watches on the secondary market as a side effect. What are your thoughts on this and also how it may affect auction prices? Thanks for any insight.
You bring up a good point!
It's definitely possible - if brands increase the prices of new watches, used watches should increase as well. Rising tide should lift new boats and used boats! The big problem is that big brands need to generally have stable prices. And this will hurt th...
What about saying USD is getting weak?
Try checking USD against Mexican Pesos, now I cannot afford going there anymore lol… Also remember in 2015, PP decided to decrease their price by 7% because of CHF? I will never forget because I bought my very first PP in 2014 and never expected a dream m...
That's true too! USD is getting weaker.
I did not enjoy Cabo the last time I was there. Stayed at the Waldorf Astoria and the JW Marriott and was far from impressed. The bill was sky high too. I'd say save your money and go to the Maldives instead! The Peso is in demand. Billions of dollars of ...
The USD is historically low....
... With this fact in mind, some CH investors are also exchanging CHF into USD and investing in treasury bills and / or gov. bonds that are actually yielding over 5%... Again, they do take the risk in the fx, knowingly that USD is histrocally very low. I ...
A Dodge DEMON in Europe would be VERY EXPENSIVE TO FUEL!
Fuel costs around 1.27 Swiss francs a liter in California, USA. Much less than fuel in Europe. But a Dodge Demon DRINKS A LOT OF GASOLINE! Probably more than double the typical petrol car in Europe! So it costs a lot to operate, even in USA. Now imagine i...
A friend here has a Demon. Considered what people usually driver here, i think demons are really a bargain heheheh
Ideally you gain on the currency as well, but i am afraid for the moment it goes rather the other way, but the ccy risk taken is usually part of the strategy.
Here in California...
Here in California it's really become Tesla-Country. In fact, it almost looks communist! Everybody drives the same car. At an intersection in my town (which is a high percentage Tesla town), it's not unusual if 30% or more of the cars are all Teslas. Almo...
Smaller players are definitely getting whacked
...and it's a double whammy, too. on one hand there's the watch bubble deflating over the past year, and on the other there's the more recent spiking swiss franc. a sharp example of this could be ming, which prices its wares in chf. look at listings on c2...
Good idea! We probably all have too many watches...
The vast majority of our readers have multiple watches - and generally enough to last the rest of their lives. Many of our readers (possibly still a majority) have so many watches that they could live multiple lifetimes with the watches they currently hav...
i always observe the CHF and USD exchange rate
and it has been going on a wild run for the last year. but even if you zoom out to a 10 year window i believe we are in an all time high. i have watches ordered (from independents) and they were supposed to be delivered later this year but i am seriously ...
Hmmm, I don't blame you!
The rates are definitely sky high! And still climbing! It's now 1.16 USD per CHF so it's climbed another percent in a short period of time!
Great analysis 👏 Yet 'Cry Me a River' for Independent Watchmakers
Dear Patrick, Thanks for your deep dive analysis. It's really got me thinking, and as a Swiss, I feel I need to add my own thoughts into the mix. A strong Swiss Franc can really stir the pot for businesses that depend on exports. Our central bank has limi...
I completely agree!
This definitely makes me slow down on new orders. I don't need to order more watches. But I feel for our readers whom have watches on order already - and those watches are undergoing these noticeable price increases just from the exchange rate alone. But ...
Inflation in CHF
The question is why do Swiss brands constantly increase their CHF prices... Inflation never been more than 3.5% or so but we have seen double digit increases over the last 1-2 years. Often cited here JLC and so on...🤔
These executives need to get big numbers to get their bonuses...
Management compensation structure is all about growth. And these executives need to strike while the iron is hot. Many brands' boards didn't limit the executive on how much percentage they can increase the prices. A lot of the executives are mercenaries. ...