Questions from a non-watch enthusiast

Marketing…🤯 ohhh no

I feel a @HotWatchChick69 dissertation looming…  

I will take a crack at it:

1.  Designs that become popular take an old idea and make a simpler more readable version. They always seem obvious in retrospect. Panda and reverse panda chronographs are instantly recognizable and the subdials are easy to see.  Early chronographs are complicated and cluttered. By merely adding contrast, the pandas are a huge improvement. Divers have often used color to aid in reading the bezel.  Primary colors will always be more popular than secondary colors. Tiffany blue is a different sort of faddish color.  Blue is the default favorite color of humanity. Variations on blue will always be more popular than hot/warm colors.  Blues are thought of as more versatile. I think that Tiffany blue is a way of making a warmer, brighter blue.
2.  Race cars and physical beauty. Paul Newman occupied an odd cultural spot. It is hard to understand today because no one currently combines those attributes. He was both attractive to women and non-threatening to men. His love of auto racing was sincere. Fast cars, blue eyes, and Rolex made for a hell of a combination.
3.  No. Throw a rock where you are and you can hit a luxury watch wearer. Supply and demand. 
4.  It is hard to imagine other brands capturing the combination of reputation, popular appeal, and relative scarcity that is driving the high end of the market. Swatch is sitting on some very expensive brands:  Harry Winston, Jaques Droz, Leon Hatot, etc. They are all niche brands. You won't get a commodities trader in Chicago to spend their bonus on one of those. Richemont has plenty of high end brands in its portfolio.  None has the reach to make a splash. We read about Piaget. Very few buy them. The brands that are hot now will cool off, but I don't see them being replaced in that market any time soon. But, we will see. Rolex's dominance is a fairly recent phenomenon. 

Ooh I'll take a stab at these 

1. Hype of novelty
2. Hype of celebrity 
3.  Hype of a secondary market "crash" will probably keep these on par with retail, at worst. (Or best?) 
4. Microbrand digital quartz is the next trend.

Here's my take.

1.  Popularity
2.  High profile actor and race car driver
3.  No
4. Sinn 

I didn't say it would a long and in depth answer, I'll leave that for HotWatchChick69 & Aurelian 💯

I’ll leave others to answer the 1st 2 questions more elegantly than “media” or “hype”. 
 

3) No, and to @Aurelian ’s point of supply and demand. Would take decades to trend even close to retail prices but not in this social medial timeline we live in. 
 

3) I’m gonna say classic big brand quartz, like maybe TAG Auquaracers, from 80’s. Watches like these (and other brands in the same timeframe) are what got a lot of us into this mess inherited or passed down from parents. 

1. They are more or less fashion trends, especially rediscovered fashion trends, sometimes merged with periods of technical innovation. No real rhyme or reason to it.
2.  The right actor and movie at the right time. 
3.  Yes, they will crash, the question is when. It will not be part of a normal recession, but people losing the connection with watches in general. They will go the way of the pocket watch.
4. Nothing new. New color for Rolex, Seiko releases another 62MAS clone, but maybe the Chinese will innovate.

Interesting answer to q4, I do see increasing interest in the quartz side too. Guess we’ll have to wait and see

I'll throw my 2 cents in here...

1.) I think the uniqueness of the piece and the craftsmanship/design.

2.) Hype and nostalgia of Paul Newman + the story of the watch. Most people love a great story and the story of it coming from his wife made it even more memorable.

3.) No. There's still a large appetite for these brands. Will they come down, sure. 

4.) Creative, masterfully and beautifully crafted brands wit low volume (i.e H. Moser and Cie and Lange for examples).

Oh wow, since I’m fairly young I didn’t know much about Paul Newman. Would be interesting to see who the next Paul Newman would be given how there are a lot of celebrities with killer watch collections. 

This was my answer as well and he proceeded to ask “so what exactly is hype? And how does it form?” 🧐

1. What makes certain designs so sought after e.g. pandas, tiffany blue dials, pepsis etc.?  I think either history or hype, sometimes both.  
2. Why was it specifically Paul Newman’s watch that was valued so highly vs. other more well-known celebrities at the time?  I don’t think this is an entirely accurate statement as phrased. 
3. Do you think Rolex, AP, Patek Philippe watches will crash below retail in the secondary market?  Unlikely.  However, I do think They will dive a little lower and stabilize.  Once something becomes a commodity it is hard to undo. 
4. What’s the next big watch trend / brand / line that you think will go up in value?  Montblanc.  based upon finishing, quality control, price point, etc., I think Richemont will continue to build this one out to the ranks of the other great houses it owns.  

1. Part of the answer has to do with just good watch design - legibility, functionality, form factor, how it wears, the details and finishing, how colour, materials, fonts and space are used etc. I think there is a certain group of watch enthusiasts and non-enthusiasts that can look at a watch and agree on how pleasing the aesthetics are, no matter their taste. An example I can think of is the BB58. The other part of this answer is related to marketing, hype and association with an image, lifestyle etc. And there is no better recent example than Tiffany Blue OPs.
2. Who it belonged to, how it was acquired. Again I think the allure of what Paul Newman represents (Hollywood superstar, race car driver, entrepreneur) has somehow been weaved into a narrative, that appeals and aligns with collectors. Probably more appealing than say Marlon Brando, who had arguably just as cool a piece of watch folklore (bezel-less 1675 from Apocalypse Now), although in the collecting game, Brando prob has less pull.
3. No. Especially AP and Patek's.
4. VC or Lange (if they haven't already). Cartier maybe.

can i answer it too? lol

1.  because they often show on random ig reels
2.  he is a respectable figure and racecar are very popular back then
3.  no, i dont think so
4.  affordable gmt, microbrand using seiko 4r34

But, in this case, I'm going against type!  No dissertation!!!  Short answers this time.

1. I think @Aurelian deserves a Nobel Prize Peace Prize for this one - certainly more deserving than many a recent awardee

2. Here, again, @Aurelian has a phenomenal answer!  Though, I will say that humans suffer significantly from fundamental attribution error and hindsight bias.  So, X will happen, which was due to entirely stochastic factors and 100% unpredictable and unforeseen, and then ex post we'll all say, "Oh, here's exactly why X happened, and I could see it from a mile away!"  It's possible that Paul Newman and his watch became so popular just because of random happenstance!  I mean, sure, he was A, B, and C, but it could very well be that A, B, and C were all necessary but insufficient conditions, and the sufficient condition was "random luck."  More interestingly, I once read about how female celebrities had it tough, because they couldn't appeal to as large of audiences as male celebrities could.  Both men and women will like particular male celebrities.  But, as a female celebrity, you can either appeal to men or women, but not both.  The examples the author used were the following - and I leave it to you to decide which of the two appealed to which audience!

3.  Probably yes.  Prices of luxury goods always fall significantly when a recession hits.  Everyone begins selling off marginal assets in order to try to shore up balance sheets.  Heck, I, myself, am already beginning to cash hoard, and have put a stop to all marginal spending!  Beyond that, check out the below chart - it's the nominal 10-2 yield curve.  I know, I know...  everyone uses the 10-2 real yield curve, blah, blah, blah.  And we could have a 6 hour debate as to which is more appropriate and why, and then we'd get into a fist fight over the importance of rational expectations, money illusion, fiscal versus monetary effects, transmission effects, etc., etc., etc.  Suffice it to say, the summer before the contraction in GDP in 2020, the 10-2 nominal yield curve dipped below zero to -0.04%.  Today, the nominal 10-2 yield curve is at -0.19%.  Hence, my cash hoarding and the end to all my discretionary spending!

4.  None.  If a recession hits, last thing on people's minds is gonna be "Which watch will help me flex best?"  Instead, it's gonna be, "How the f*ck do I make these mortgage payments?"  Even if somehow the Fed pulls off a "soft landing" - and my money is on that the Fed won't be able to do so - there should be enough economic pain and dislocation that market prices come down significantly, and supply catches up to demand, and prices for watches goes back to historical norms - at or below MSRP for whatever you want, whenever you want

Dammit!  I did write a dissertation!

The answer to all those questions is money. make what sells, milk the celebs for sales. chase the ascending commodities, predict the next big buying push as soon as China comes out of lockdown. Money drives it not content or style.

there should be enough economic pain and dislocation that market prices come down significantly, and supply catches up to demand, and prices for watches goes back to historical norms - at or below MSRP for whatever you want, whenever you want

The only way to avoid that would be watches functioning as barter, the Rolex currency, so to speak.

But given the current inflation data, the watch category is actually slightly deflationary, so I would say you are correct. Few things are more discretionary than watch spending.

I'm going to answer the Paul Newman question since I've been studying Paul Newman Daytonas for a long time now. 😀

The reason his watch sold for a record-breaking $17.8 million in 2017 was not that he was a celebrity who owned a nice watch. It was because an entire subset of highly collectible Daytona watches with a very particular dial design was nicknamed after him (long before his own watch sold at auction). 

I know collectors who spend their entire focus (and fortunes) simply collecting vintage Daytonas with "Paul Newman dials." The main differences between a Paul Newman dial (originally called an exotic dial by Rolex and designed by Singer) and a standard Daytona dial revolve around the colors, fonts, and subdial designs. PN dials will have contrasting subdials with Art Deco numerals, squares on the hash marks, and crosshairs -- standard dials did not. This is a simplified explanation of the differences but I'm not about to write a @HotWatchChick69 / @Aurelian style dissertation here. 😂

Standard dial on the left, Paul Newman dial on the right.

Why were these exotic dials nicknamed Paul Newman dials? Vintage Daytona watches were crap sellers and those fitted with exotic dials were even worse. However, Paul Newman regularly wore a Daytona with one of these exotic dials -- while making movies, racing cars, and selling salad dressing. Apparently, Italian auctioneers in the 1980s saw this as a fantastic sales tactic and began calling these slow-selling watches "Paul Newman" Rolex Daytona watches and the trend eventually picked up. 

The vintage Daytona Paul Newman market was already at a fever pitch in 2017, so when it was announced that Paul Newman's own Daytona "Paul Newman" was coming to the auction block, collectors lost their damn minds. 
 

https://www.linkedin.com/pulse/isnt-18-million-paul-newman-daytona-really-joanne-simon-alaeddin

Hype is a type of cool. It's so cool that it implodes in on itself and becomes kinda lame. But you can see something with hype and still think it's cool. The most recent example is the moonswatch, that spilled over into regular (nonwatch) people. There's a g shock that just got released and as of now it's seemingly just a UK g shock thing. But I didn' see it on some watch blogs, just through g shock groups. A small Hype because it's very very niche, but I a Midwesterner,  has still heard about it. Hype, to me, seems random. Suddenly there. Hype usually leads to outrageous flipping and people willing to pay for it. And we all kinda roll our eyes at it, but still it'll be cool to get that Bamford. 

There will not be a "next" Paul Newman for the same reason there will never be another James Dean or Steve McQueen.  Dean came first and was one the first to cross the actor/driver threshold. McQueen was the "King of Cool" for similar reasons, but history has not been as kind to his reputation and honestly, his movies do not hold up. That brings us to Newman, Cool Hand Luke.  He does not come with the baggage of McQueen, he was a professional race car driver, one of the best actors of his and all time, and by many accounts an all-around good guy. That is a rare combo in his field.  Throw in the fact cars and watches are so closely appreciated by a similar audience, having a watch tied to a major celeb who also happens to be a car enthusiast, check and mate.

Movie studios as well as major record labels have insurance clauses that prevent major stars today from having a dangerous hobby, like racing, be-it motorcycles or cars. So we largely have folks who stick to one thing and are not the same type of star. Throw in the fact that many "stars" today are ambassadors or influencers, and the genuine nature of a Newman type being gifted a watch from an equally famous spouse just isn't going to happen. Think about it; will anyone care if Giselle gives Tom a watch? Affleck to J-Lo? Nope.

Note, I am not saying that because he is from my generation; he is not, not even close, but times have changed too much since his fame. All that said, I bet there are some collectors that command a premium later; The green and gold Mayer watch may command a premium, but his fame, even at his height in 2003, he was never as popular as Paul Newman.

My guess is it will be a piece from someone we do not regularly talk about or is in the headlines. For example, if Rita Wilson gifted Tom a watch during Apollo 13 for example.  Something like that could take off.

I’d put my money on Ryan Gosling. But it won’t come apart until he’s in his late 40’s/early 50’s. 

Paul Newman never really flaunted his watch like how celebrities do these days. He lived the life back then. 

I almost didn't buy a Tudor just because Beckham was endorsing it!

That’s part of it right?  Too many paid influencers and few authentic like Newman was. just a different time, which is why I feel there will not be another Newman Daytona, unless one of his other watches comes up.

He’s in his 40s already, so that doesn’t leave much time. Lots of cool watches though.

With regard to question 1 I would say that hype and social media tend to drive up the factors that make a watch desirable.  Many newbies see some influencer wear an AP Royal Oak, Patek Nautilus or a colored dial Rolex OP and associate it with being the best watch ever.  I don’t mean to take anything away from any of these watches as they are great pieces and I would love to own any one of them but for me what ends up happening is that the desire is so high that even people who know nothing about the watch world want these desirable pieces just to sell them and make a profit.  Then, the true enthusiasts or even newbies who genuinely enjoy the watch and want to wear the watch have to resort to paying 2-5X over retail.