At some point in our watch collecting journey, we've all secretly thought, "If I had a time machine, I would go back and buy the complete Rolex stock," or "I wish I could get that full-set Paul Newman Daytona from a 1990s auction." It's a watch enthusiast's dream and probably the only form of cheating we allow ourselves to indulge in.
In 1970, a Rolex Submariner 5513 cost around $230, a steal by today's standards, but of course, not equivalent in monetary value. $200 today is not the same as $200 in 1970, 80, or 90, due to inflation and other factors. But the question remains, who could historically afford such a watch, and how much of their salary did they have to sacrifice to own one?
Looking at the raw retail prices over the last 50 years, we see increases from a couple of hundred to a couple of thousand dollars, with the pace accelerating in recent years, particularly in the 2000s. However, humans are not wired to intuitively understand exponential growth, which is the case for constant price increases, such as a 7% annual increase. On a logarithmic scale, this increase would still appear linear, but the multiplicative increase would be constant.
From a multiplicative standpoint, Rolex's retail prices increased most between 1980-2000. However, this only pertains to "prices," and does not account for the historical context of what those numbers meant for people at the time. To determine this, we need to look at inflation-corrected prices, which reflect the approximate value of money from back then in today's terms.
Using the classic Rolex Datejust in steel as an example, we find that even inflation-corrected prices have increased over the last 50 years, indicating that inflation is not the sole factor behind Rolex's price increases. The watches have been continually updated and upgraded over the years, such as the Caliber 3035 overhaul in 1977 and adding a sapphire crystal in 1988, leading to spikes in value increase, with the value evolution reflecting the technical evolution.
But the question remains, how much of a person's salary historically would they have to give up to own a Rolex? The average American household would not have to sacrifice everything to own a Datejust, but it is still a substantial amount. Since the new series and the subsequent increase in 1988, one would have to spend over one month's salary. The relative increase has made it less and less affordable for the average American to buy a new Rolex, which makes sense since the inflation-corrected median household income has remained relatively stable over the last 50 years.
However, Rolex watches are luxury items targeted towards upper-income households, and when we look at the percentage of income the upper 10% would have to give up to purchase a brand-new Rolex Datejust, we see a different picture. The relative value decreases again until the next innovation period starts, indicating that technical developments fuel retail prices most.
In summary, the world of vintage watches, and watches in general, is primarily driven by enthusiasm and passion. It is important to recognize that big corporations, such as Rolex, prioritize maximizing their profit margins and catering to upper-income households rather than the average consumer. While technological advancements and economic growth have contributed to increasing prices, it is important to note that value in the watch collecting hobby goes beyond monetary worth. Personalization and engravings on the caseback of watches can make them unique and historically significant. Watches worn during important life events or sentimental moments hold far greater value than their resale price. Ultimately, watches are a meaningful investment in a hobby that transcends monetary value.