The fallacy of bargains

[WinkHPD]

hmmm,

In 1975, when I was a young man still at GIA studying to be a gemologist, I bought a 0.97ct light Fancy blue - VVS2 in a platinum mounting with 0.88cts of white melee goods for $1,300. The dealer I bought it from was also new to the business and when he told the owner how he had bought from an estate and sold that diamond in only a couple of hours for a nice profit the owner (his father-in-law) told him to buy it back. I kept asking my lovely wife, for whom I had bought it, if she wanted to sell at $2,500, $5,000 and then $10,000 all in the space of about three minutes of negotiations.

Turns out the son-in-law had about as much experience in the trade as I did and was in a LOT of trouble with his father-in-law.

They had a buyer for that diamond at well over $20k I would find out later, but my wife still owns it.

I would say that was one heck of a bargain.

Wink

That's wonderful!

... and it has nothing to do with my point of this thread that all grades are an equal bargain.

You are bringing up a seller selling for a tiny fraction of going value, which I've already stated is not the subject of this thread.

But again, congratulations!
I'm jealous!

LOL, me too, I wish I could do it again!

Kenny,

You have made me think long and hard about this, and I thank you!.

I wonder though if you are not in some ways confusing us with your choice of the word bargain when perhaps you might be better off with the word value, as in, assuming equal quality of cutting (never a safe assumption) that all color and clarity grades have a market value and are thus priced accordingly. (Also never a safe assumption.)

I am not a good enough grammarian to argue the semantics of the word "bargain" effectively, but I suspect that your argument for not using the word "bargain" is over broad in many ways and over restrictive in others.

The fact that the seller in my example was as ignorant of the value of what he was selling as I was in what I was buying does not negate the fact that to me the price seemed a great value, enough so that I got my wife to pool some of her money with me so that we could together buy the diamond. To me it seemed a bargain at the time. I had just gotten out of the Marine Corps a couple of months early to go to the GIA along with my wife and we were rapidly depleting our savings to cover the costs of our education and living arrangements in Santa Monica. She too had given up her day job to go into this adventure called Gemology.

Now that I know more about values, I know that this was a once in a life time find. Were I to buy such a diamond at a price like this today, it would be because I was using my knowledge to defraud someone who had no idea of the proper value of their item. Knowing what I know today, to do so would actually be criminal fraud in some States. I know this to be true because I was actually an expert witness for the prosecution of such a crime in Oregon back in the late 1970's. (He was convicted, quite properly in my opinion, since he knowingly used his knowledge to cheat a client who came to him for advice.)

I know that there are occasionally great values to be had, even if not a bargain under your definition.

For example, a 0.99ct AGS 000 F-SI2 might not be a bargain by your description, but I can guarantee you that if I had a Crafted by Infinity Diamond with that size, color and clarity that it would be a tremendous VALUE, even at the normal retail price. So great a value that many would consider it a bargain, no matter the truth of your statement that it is, in fact, at its normal market price. It would NOT be on the market long.

Why?

Glad you asked.

Because, such a diamond could easily have been "swindle cut" just a little to achieve the coveted 1.00 ct weight, and sold as an unbranded diamond that still achieved an AGS 000 cut grade and sold for more than the branded CBI diamond that was only 0.99 cts.

Would it be a bargain? Not under your definition. Would it be a tremendous value? To many, but not to a woman who coveted being worth at least a carat.

How can it be a great bargain to many and a great value to others and not worthy to many others all at the same time?

This is where our efforts to label things fall apart. Each of us have our own lusts and desires for what we value and what we want. To me, a 1.80ct F-SI2 CBI is a much better value; indeed a rare bargain, but to many a poorly cut 2ct F-SI2 cut from the same piece of rough would be a better value and a true treasure in their mind.

Who are we to say they are wrong?

Respectfully submitted,

Wink

 

[denverappraiser]

I’m mostly with Kenny but I tend to phrase it differently.

Different people value different things and the right price on the wrong thing is no bargain.

Take, for example, the new/used question. People buy from dealers for a bunch of reasons. It may be because they know what they’re getting (or at least they think they do), because they have a selection to choose from, because they can return and trade up, because they have easy access to designers and setters, because they like the shopping experience, because they can get current styles, because they like the assistance of the sales people, because they like the trust. It's easier. It's faster. It takes less talent and there are decidedly fewer pifalls. These are all fine reasons, but none of them are gemological properties. It’s simply not correct to say that it’s the thing to omit this sort of thing. For people who value these, and MOST people do, the issue now is a matter of price. That too is not a gemological property. A hot dog is worth more at the ballpark but the difference isn't in the dog and it's not evidence that the one at the gas station is a bargain.

I also agree about the bargain component of various grades. Is ‘eye clean’ better? It DOES cost more, which means you can’t spend your money elsewhere. Many many people would rather go for size. The difference between a guaranteed eye clean VS2 and a ‘clean if you don’t look too close’ I1 is a factor of 2. I2 cuts it in half again, and thanks to EGL and the like, people have no idea what REAL I2s actually look like. It’s a big range and some of them are actually quite pretty. Does that make them bargains, or ripoffs? It depends on what you want. Again, the right price on the wrong thing is no bargain.

 

[mrs-b]

Well.. sense I am sure some of this is direct at me and my recent post, Ill be happy to decent.

Actually, Neil, since I currently have a thread going in SMTB asking specifically if I colored stones are a bargain in people's opinion, I think I'd better take this one!

So Kenny - here's the thing. Firstly, I was after a little alliteration between my bargain and bust title, although of course what I was really asking was if people considered their I colored stones to be good value.

For me, good value - or even a bargain (to tie myself to the post of my original wording!) - is a diamond that 'does what I want it to do' for less than perhaps a stone of greater specs and more money. The bargain for me is when I almost buy a stone with E VVS1 stats - then find that an I SI1 stone scratches the exact same itch. Are we comparing apples and apples here in diamonds? Nope. What I'm comparing is my reaction. And if THAT'S the same, then the I SI1 is a bargain compared to what I almost spent.

But gees - how long did you actually want me to spend on my SMTB post??

Best not to hang people by their words, I think.

 

[WinkHPD]

Wink, I think you'll probably win the prize for the best bargain! You might be able to sell that ring now and buy a nice retirement vacation cabin somewhere!

Not if I want to continue breathing.

Many years ago she turned down a solid offer of $30k and now, even though she rarely wears it, she is too invested in the joy of leaving it to our daughter to even entertain the idea of sale.

I do want to acknowledge and thank those of you who have so kindly commented on my bargain. I appreciate the kind comments and it is fun remembering some of the wonderful successes that I have had along the journey that I am enjoying called life.

This was the same dealer from whom I had earlier bought my wife's Fancy Vivid yellow marquise diamond. (At a fair wholesale price. I sold this diamond to my father-in-law for a $1.00 token profit and my mother-in-law wore it for many years before passing it on to my wife.) This was a whole lot of years before Fancy Vivid Yellow was a color grade and when I had the occasion to show it to Stephen Hofer the day after a presentation on colored diamonds he got very excited about it and told me it was one of the finest yellow diamonds he had ever seen. (Mr. Hofer has made the study of colored diamonds a huge part of his life's work, and his tome on fancy colored diamonds "Collecting and Classifying Coloured Diamonds: An Illustrated Study of the Aurora Collection" is still available on Amazon for $975. I paid $300 for it when it came out. I bought two copies and gave one to a client whose wife loves colored diamonds.)

When I laughed and told him his eyes had glazed over when I tried to tell him about it the day before he said it was because he had heard of beautiful canary diamonds so many times only to be disappointed by the pale yellow poorly cut diamonds that they really had. I was staying with my in-laws while at the show and borrowed the ring to share with him.

For the terms of this discussion, that diamond was not a bargain, but it was , in fact, a tremendous value.

Wink

 

[makemepretty]

When you buy something brand new at retail price, it is now worth less than you paid for it when it comes into your possession. However, when you buy a used item, you are more likely to get a better value for your money than the person who bought it brand new(as long as it's in excellent condition). Not always...but usually.

Some people aren't sensitive to color so to them, you are overpaying for what they can't see(same with clarity). I feel that way when I see the AVR, Octavia's posted. Paying a premium for something that to my eye, doesn't look prettier than anything else I've seen seems ridiculous. They are pretty but so are the majority of the diamonds in the Show Me The Bling threads, without the fancy pictures, they all look the same to me. Pretty but none more prettier than the next. You buy what you love though, no matter what anyone else thinks is always my motto. Then none of the other stuff even matters.

In my own opinion, even if something is not worth as much, it might be easier to sell because there is a wider audience for it, it makes it more of a bargain because you can recoup your money faster and easier.

 

[denverappraiser]

When you buy something brand new at retail price, it is now worth less than you paid for it when it comes into your possession. However, when you buy a used item, you are more likely to get a better value for your money than the person who bought it brand new(as long as it's in excellent condition). Not always...but usually.

How much you can get for something on resale is a definition of value, but in most cases, I think it’s the wrong mindset in the diamond world and it leads to some distinctly faulty conclusions. Ignoring the fact that resale is a problem with nearly everything you buy anyway, a giant component has to do with what’s popular. That both changes over time and it’s not a synonym for best in any case. The best is the one you like the best. The best is the one your bride will like the best. It’s the one that sings to you. Do not go into a diamond deal expecting to ever see your money again. There are plenty of good reasons to buy diamonds but if return on investment is your objective, the ‘best’ is usually to avoid them entirely.

 

[diamondseeker2006]

I hear you, Wink. Everything I buy at this point is with the heirloom factor in mind. I think my only qualm about a blue diamond is the insurance premium that will go along with a ring of that value. I worry about that a little with what I plan to leave my girls as I don't want the items to come with a burden. I guess we'll have to leave them money designated for insurance! lol! Although I do not have a single item worth anywhere in the vicinity of a blue diamond!

Your wife is very fortunate to have some very special jewels!

 

[cflutist]

Wink, I think you'll probably win the prize for the best bargain! You might be able to sell that ring now and buy a nice retirement vacation cabin somewhere!

Not if I want to continue breathing.

Many years ago she turned down a solid offer of $30k and now, even though she rarely wears it, she is too invested in the joy of leaving it to our daughter to even entertain the idea of sale.

I do want to acknowledge and thank those of you who have so kindly commented on my bargain. I appreciate the kind comments and it is fun remembering some of the wonderful successes that I have had along the journey that I am enjoying called life.

This was the same dealer from whom I had earlier bought my wife's Fancy Vivid yellow marquise diamond. (At a fair wholesale price. I sold this diamond to my father-in-law for a $1.00 token profit and my mother-in-law wore it for many years before passing it on to my wife.) This was a whole lot of years before Fancy Vivid Yellow was a color grade and when I had the occasion to show it to Stephen Hofer the day after a presentation on colored diamonds he got very excited about it and told me it was one of the finest yellow diamonds he had ever seen. (Mr. Hofer has made the study of colored diamonds a huge part of his life's work, and his tome on fancy colored diamonds "Collecting and Classifying Coloured Diamonds: An Illustrated Study of the Aurora Collection" is still available on Amazon for $975. I paid $300 for it when it came out. I bought two copies and gave one to a client whose wife loves colored diamonds.)

When I laughed and told him his eyes had glazed over when I tried to tell him about it the day before he said it was because he had heard of beautiful canary diamonds so many times only to be disappointed by the pale yellow poorly cut diamonds that they really had. I was staying with my in-laws while at the show and borrowed the ring to share with him.

For the terms of this discussion, that diamond was not a bargain, but it was , in fact, a tremendous value.

Wink

I bought this book new from Amazon in March 2006 for $210. Did I get a bargain?

 

[Dancing Fire]

A bargain is when Kenny decides to sell me his Octavia for 5k..

 

[arkieb1]

I think we are confusing the terminology here. When someone recently bought a medium to largish sized Ashoka that no-one knew what it was off ebay for a song - THAT was a bargain.

What you seem to be referring to is that the fact a number of people here suggest stones that are better value for their budgets and they compromise and colour, and sometimes clarity over everything else first. You seem to have some sort of huge issue with this, but the truth for the average person that appears here asking for help is they frequently have expectations well beyond their budgets - that is also what leads to so many people saying I went to a jeweller recommended by a friend or I just purchased this huge "bargain priced" EGL stone at which point we all roll our eyes and think here we go again.....