“A bubble is created by irrational expectations of a market fuelled by speculation and greed,” states industry veteran, Olivier Müller. This is by any measure, a sensitive topic. Whenever we talk about the rise and fall of values, we are ultimately dealing with a matter that can generate strong feelings, as value is so often subjective. Those who are invested in certain corners of the market, whether for passion, profit or both, are always going to have something to say when it comes to the perception of mysterious bubbles forming, and if, or when, they might burst.

However, taking a pragmatic view of these things can be particularly useful. Studying the various times that collectors have labelled certain fluctuations as bubbles, helps us to understand when they were right, or when they may have been a little hasty in their doomsday calls. As we will discover, it can be almost impossible to correctly spot a bubble every time, although there are certain signs of which to be wary.

After breaking down what a bubble really is, we’ll look more closely at a few examples which can help inform our understanding of watch markets. Specifically, we will examine trends around vintage Heuer, Panerai and Rolex Bubbleback pieces, to see what parallels can be drawn and insights gained. By no means are we insinuating that all three of these were bubbles, but we intend to gain a better understanding of how they evolved and what caused them to behave the way they did.

By any financial definition, it is almost impossible to correctly identify and label a financial bubble before it pops. We spoke with @NYCWatchGuy, a collector and venture capitalist, about this very issue and he put it bluntly, “anyone who says they can spot a bubble is either Nostradamus or simply a speculator themselves. You only know something was a bubble if and when the bubble bursts, and everything in hindsight is 20-20.”

For a clearer idea of what a bubble actually is, he also gave us a working definition. “In simplest terms, a financial bubble refers to a time when the price of any asset exceeds any rational or fundamental value, and where even if you look to the future, it is hard to believe that the asset can realistically catch up to the current price.” This is echoed by Oliver Müller, founder of LuxeConsult, who points out that, “a market bubble is created by speculation, fuelled by people expecting the prices to grow forever.”

This often occurs over time, through an incremental process. “Most of the time you have a rational element – let’s say in our case t