DarkRange55
🎂
- Oct 15, 2023
- 2,421
Alternative Economic Indicators: Looking at the Market from a Different Angle
There are plenty of unconventional ways people try to understand the health of the economy—ways that go beyond the usual government stats. These include quirky but surprisingly telling benchmarks like:
• The Gold-to-Lumber Ratio
• Yield Curve Spread
• Consumer Confidence Index
• The Fear Index (VIX)
• The Hooker Index
• Unclaimed Corpse Index
• Japanese Haircut Index
• The Ferrari Index
• The Rolex Index
Each one tells a story about spending habits, confidence, and economic cycles in its own weird, specific way.
⸻
Rolex Index: Watches as a Window Into Wealth
Rolex prices, in nominal terms, may look high—but once you adjust for inflation, they've mostly returned to where they were pre-COVID. There's been a lot going on:
• Rolex has bumped up its MSRP several times in 2023, 2024, and again for 2025.
• Even so, secondary market prices have continued to drop over the past couple of years.
• Some of today's Rolex prices are buoyed by newer, more expensive releases that didn't even exist in 2017.
• Most watches bought back in 2016 haven't gained much real value—except for models like the Daytona.
• But if you bought a Rolex any time after 2021, chances are you overpaid—they're now the cheapest they've been in years.
What happened? During COVID, Rolex (and pretty much every other luxury watch brand) became part of a broader speculative frenzy. People couldn't travel or spend money the usual way, so luxury goods became the outlet. Prices shot up. But now that the world has opened back up, we've seen a cooldown. It's not a crash—it's more of a return to normal. Long-term, the Rolex market still looks solid.
⸻
Ferrari Index: A Glimpse Into Discretionary Spending
Luxury cars, like watches, aren't essential—they reflect how confident (or flush) people feel.
During the 2022 luxury boom, prices went wild. Now? Many of them have come back to earth. Take the Ferrari SF90 for example—it went from about $1 million to $450,000. But that drop wasn't just the economy—it was also about the car itself:
• The SF90 turned out to be less exclusive than Ferrari initially suggested.
• It was seen as overpriced and less desirable, especially with newer models like the 296 Speciale offering similar performance for less.
• Ferrari's shaky track record with hybrid support (as seen with the LaFerrari) didn't help.
That said, Ferrari as a brand remains incredibly strong, even during downturns:
• Less than 15% of its sales come from China, giving it less exposure than other luxury brands.
• Around 70% of its revenue comes from repeat customers—which says a lot about loyalty.
• Their cars often sell out before production even begins.
• Despite increasing production from 5,000 cars a year (20 years ago) to over 13,000 now, Ferrari maintains exclusivity by releasing limited editions of their regular models.
• Ferrari isn't just a car company—it's a luxury brand, with brand licensing income and sky-high margins.
Buying a Ferrari isn't just about the car. You're buying the brand, the story, the prestige. And because of that, Ferrari is arguably recession-resistant.
⸻
The COVID Luxury Bubble and What Came After
Both Ferrari and Rolex were part of a huge wave of pandemic-era luxury spending. People had extra money, nowhere to go, and a desire for status or investment. The result? A surge in watches, cars, comics—you name it. Prices peaked around 2022.
Now? We've seen a pullback. But again, it's more of a reversion to the mean than a collapse. If you zoom out, things are mostly back in line with pre-COVID trends, maybe a little higher after accounting for inflation.
⸻
Other Offbeat Indicators of Economic Mood
Some other indicators people talk about:
• The Big Mac Index vs. Minimum Wage: This can be a helpful way to understand how much real purchasing power an average worker has. It's a good leading indicator for Main Street.
• The Ferrari and Stripper Indexes: These might be better seen as lagging indicators of luxury and discretionary income.
• The idea that candy is recession-proof: A former business owner once said that when people feel good, they buy candy. And when they feel broke, they still buy candy—just as a small treat. Makes sense, right? It's like the lipstick effect, where people turn to small luxuries when they can't afford the big ones.
⸻
Companies That Tend to Ride Out Recessions
There are a few brands that seem to do well no matter what the economy is doing:
• Coca-Cola
• McDonald's
• Walmart
Why? Because they sell basic, affordable staples—the kind of stuff people keep buying even when they're tightening their belts.
⸻
Ferrari vs. GM: Brand vs. Scale
For context:
• Ferrari stock is up ~16% year-to-date
• Ferrari has an ~$80 billion market cap
• GM, despite selling way more vehicles, is valued around $50 billion
That's the power of branding, pricing power, and perceived exclusivity. Ferrari has positioned itself more like a luxury goods company than a car manufacturer, and the market treats it that way.
(Edited, not written by ChatGPT)
There are plenty of unconventional ways people try to understand the health of the economy—ways that go beyond the usual government stats. These include quirky but surprisingly telling benchmarks like:
• The Gold-to-Lumber Ratio
• Yield Curve Spread
• Consumer Confidence Index
• The Fear Index (VIX)
• The Hooker Index
• Unclaimed Corpse Index
• Japanese Haircut Index
• The Ferrari Index
• The Rolex Index
Each one tells a story about spending habits, confidence, and economic cycles in its own weird, specific way.
⸻
Rolex Index: Watches as a Window Into Wealth
Rolex prices, in nominal terms, may look high—but once you adjust for inflation, they've mostly returned to where they were pre-COVID. There's been a lot going on:
• Rolex has bumped up its MSRP several times in 2023, 2024, and again for 2025.
• Even so, secondary market prices have continued to drop over the past couple of years.
• Some of today's Rolex prices are buoyed by newer, more expensive releases that didn't even exist in 2017.
• Most watches bought back in 2016 haven't gained much real value—except for models like the Daytona.
• But if you bought a Rolex any time after 2021, chances are you overpaid—they're now the cheapest they've been in years.
What happened? During COVID, Rolex (and pretty much every other luxury watch brand) became part of a broader speculative frenzy. People couldn't travel or spend money the usual way, so luxury goods became the outlet. Prices shot up. But now that the world has opened back up, we've seen a cooldown. It's not a crash—it's more of a return to normal. Long-term, the Rolex market still looks solid.
⸻
Ferrari Index: A Glimpse Into Discretionary Spending
Luxury cars, like watches, aren't essential—they reflect how confident (or flush) people feel.
During the 2022 luxury boom, prices went wild. Now? Many of them have come back to earth. Take the Ferrari SF90 for example—it went from about $1 million to $450,000. But that drop wasn't just the economy—it was also about the car itself:
• The SF90 turned out to be less exclusive than Ferrari initially suggested.
• It was seen as overpriced and less desirable, especially with newer models like the 296 Speciale offering similar performance for less.
• Ferrari's shaky track record with hybrid support (as seen with the LaFerrari) didn't help.
That said, Ferrari as a brand remains incredibly strong, even during downturns:
• Less than 15% of its sales come from China, giving it less exposure than other luxury brands.
• Around 70% of its revenue comes from repeat customers—which says a lot about loyalty.
• Their cars often sell out before production even begins.
• Despite increasing production from 5,000 cars a year (20 years ago) to over 13,000 now, Ferrari maintains exclusivity by releasing limited editions of their regular models.
• Ferrari isn't just a car company—it's a luxury brand, with brand licensing income and sky-high margins.
Buying a Ferrari isn't just about the car. You're buying the brand, the story, the prestige. And because of that, Ferrari is arguably recession-resistant.
⸻
The COVID Luxury Bubble and What Came After
Both Ferrari and Rolex were part of a huge wave of pandemic-era luxury spending. People had extra money, nowhere to go, and a desire for status or investment. The result? A surge in watches, cars, comics—you name it. Prices peaked around 2022.
Now? We've seen a pullback. But again, it's more of a reversion to the mean than a collapse. If you zoom out, things are mostly back in line with pre-COVID trends, maybe a little higher after accounting for inflation.
⸻
Other Offbeat Indicators of Economic Mood
Some other indicators people talk about:
• The Big Mac Index vs. Minimum Wage: This can be a helpful way to understand how much real purchasing power an average worker has. It's a good leading indicator for Main Street.
• The Ferrari and Stripper Indexes: These might be better seen as lagging indicators of luxury and discretionary income.
• The idea that candy is recession-proof: A former business owner once said that when people feel good, they buy candy. And when they feel broke, they still buy candy—just as a small treat. Makes sense, right? It's like the lipstick effect, where people turn to small luxuries when they can't afford the big ones.
⸻
Companies That Tend to Ride Out Recessions
There are a few brands that seem to do well no matter what the economy is doing:
• Coca-Cola
• McDonald's
• Walmart
Why? Because they sell basic, affordable staples—the kind of stuff people keep buying even when they're tightening their belts.
⸻
Ferrari vs. GM: Brand vs. Scale
For context:
• Ferrari stock is up ~16% year-to-date
• Ferrari has an ~$80 billion market cap
• GM, despite selling way more vehicles, is valued around $50 billion
That's the power of branding, pricing power, and perceived exclusivity. Ferrari has positioned itself more like a luxury goods company than a car manufacturer, and the market treats it that way.
(Edited, not written by ChatGPT)
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- but my Tesla would smoke it! 
