Stock market affect diamond purchases?

[WillyDiamond]

I have to think that "luxury" goods like diamonds, automobiles, home buying have to be affected by this stock market. It would seem many but not all would have the money for these purchases sitting in the market. If I had money in the market now, I would not want to withdraw it now because this will erode my balance much further than prices from 12/31/15. People I speak to are waiting for the market to go back up again, this may take time and anyone's guess.

I am wondering if anyone is delaying the reset, outright purchase of a diamond, due to the stock market? Or now looking at a smaller diamond. Also have to wonder if this will put some diamond dealers out of business.

 

[diamondseeker2006]

Diamond prices are low right now and it is an excellent time to buy! I have heard that the jewelry market is slow, too, though.

 

[ringo865]

I haven't ever liquidated stocks or other market funds to buy diamonds. I consider them to be discretionary purchases and thus would use savings or save up for something I wanted. That said, I haven't spent five figures on a diamond (to date ). If I did though, I think I'd have cash on hand. Otherwise, by liquidating my portfolio or retirement, I would feel like I couldn't really afford it. Then I'd feel guilty. knim?

 

[John P]

Fun topic. I hope others will weigh in.

For context: Diamond prices historically rise over time. I am sure long-time posters here will remember the dramatic increases circa 2010-2011 (+20% in 2011 alone). These increases happened in response to mid-term supply-demand projections juxtaposed with explosive growth in emerging Asia-Pacific markets. But after 2011 the global recession, slowing of Chinese demand, the terribly-beleaguered Rupee and standoffs between rough sellers and buyers made it clear that some of that inflation was overly speculative. To that end, diamond prices actually softened over the last two years. This was a logical adjustment, looking at the big picture.

Diamond prices are low right now and it is an excellent time to buy! I have heard that the jewelry market is slow, too, though.

True on both counts. Where key trade shows in the USA and Asia were slow for several years, reflecting the need for an adjustment, the mood seems to have changed. In particular, a strong Hong Kong show last September correctly portended a positive 4Q, and growing optimism among many jewelers.

As for stock market dynamics: No doubt this has an influence on luxury spenders in terms of conspicuous consumption and budget... If you're someone who was considering that 5ct E VVS1 emerald in the window of Harry Winston last month, but your portfolio is taking a bath, you may decide to scale back the purchase or wait entirely for some kind of rebound. With that said, I don't know how much market ups and downs resonate with current e-ring shoppers who don't play the market, or those with a portfolio who already have a budget, a process and a proposal schedule in mind.

Along the lines of the original question: Neil Beaty points out that Anglo American (DeBeers') stock is plunging into oblivion. No doubt there are some interesting fallout scenarios possible there.
https://www.pricescope.com/community/threads/are-we-seeing-the-end-of-debeers.218083/

 

[WillyDiamond]

Well, this might be the answer. According to the article DeBeers sold diamonds at 7% below previous prices for 2106 and they tried to reduce supply 3 times last year to adjust for weakened demand.
Hold onto your coins everyone, prices are coming down (Just like a barrel of oil)

http://www.bloomberg.com/news/articles/2016-01-19/de-beers-said-to-cut-diamond-prices-in-first-sale-of-the-year

 

[diamondseeker2006]

But as very wise men here have said before....there is risk in trying to wait for the bottom, because no one knows whether we are at the bottom now or if prices might decline a little more.

 

[FancyDiamond]

I buy luxury items with spare money which I do not count on to live or pay bills. However, given the current market correction (and expect further drop to go), I would hold all luxury purchases and use the spare money to accumulate stock mutual funds/quality stocks and pay taxes for additional Roth conversion (since fund shares are now worth less). The former is for investment opportunity of "buy-low", and the latter is to reduce deferred retirement account balance (so as to minimize tax bracket when Required Minimum Distribution kicks in).

Diamond prices may remain low for a much longer time than a stock market recovery. Furthermore, I do not think there will be as much competition from Chinese buyers as before. Thus, I would take my time sitting on the sideline enjoying other people's reveal threads. If the Diamond prices turn out to be much higher when I am ready to buy again, then so be it. Hopefully, my pockets would be loaded with so much capital gains and tax savings that I would be able to make larger and more significant Diamond purchases.

 

[Rockdiamond]

There's a totally different perspective I became aware of in 2008.
When stock prices are falling, some people realize that if they'd invested in something they would love, as opposed to the stock, they'd still have it.
IOW, if I had purchased that 1961 Les Paul guitar in 2014 for $30k instead of the Debeers stock I could still at least play a sad song- even if my guitar was now worth $20k

Many consumers expressed this sentiment to me regarding diamonds in 2008.
Might as well enjoy it while you can.

 

[Rockdiamond]

But as very wise men here have said before....there is risk in trying to wait for the bottom, because no one knows whether we are at the bottom now or if prices might decline a little more.

True dat DS!!

Right now it's very difficult to find the most desirable stones. And prices on such stones are strong.
DeBeer's stock price seems to have little to with polished diamond prices

 

[ChristineRose]

There's a fair number of people who buy precious stones during a crash because they think fiat currencies will collapse. Many more buy gold of course. I think that if fiat currencies do collapse, we'll all trade in something besides shineys. Cigarettes are the classic example, having been the economy of a good hunk of Europe for the entire 20th century. But others as diverse as Tide (yes, that Tide), beef jerky, and baby formula have been used.

 

[ADN]

Great thread!
I'll add another perspective which I'm sure some of the other trade members can comment on...
If anyone in the trade has been overseas on a buying trip lately, as you know, it's pretty slim pickings...a lot of the sight holders have rejected the last few assortments of rough because of high prices. This means that there isn't a lot of new polished inventory hitting the market, and what there is in existing goods isn't always that flash (if anyone has been sorting through 5/4s in H+SIs you'll know what I'm talking about )
So while prices might be a bit soft in some sizes/qualities, make sure that the quality you're getting isn't a bit 'soft' as well.

 

[Dancing Fire]

Fun topic. I hope others will weigh in.

For context: Diamond prices historically rise over time. I am sure long-time posters here will remember the dramatic increases circa 2010-2011 (+20% in 2011 alone). These increases happened in response to mid-term supply-demand projections juxtaposed with explosive growth in emerging Asia-Pacific markets. But after 2011 the global recession, slowing of Chinese demand, the terribly-beleaguered Rupee and standoffs between rough sellers and buyers made it clear that some of that inflation was overly speculative. To that end, diamond prices actually softened over the last two years. This was a logical adjustment, looking at the big picture.

JP
10 month ago you were laughing at me when I said...

For the past 2 yrs the Chinese government are cracking down on the use of corrupted money, it is all over the Chinese newspapers. These corrupted officials were buying luxury goods like there was no tomorrow..i.e. expensive Cognac, watches, cars. Yes, the population in China is HUGE but the avg. citizen is still poor and can't afford to purchase expensive diamonds. Most of the so called "rich people" in China are corrupted officials who are hiding under their beds now. Even my favorite bottle of booze have dropped 25% in price.

 

[laurenk]

I feel the awful stock market has made me nervous about my impending purchase of a loose diamond in the USA because I'm Australian and the dollar is sh*t and it currently means the diamond is going to cost me a LOT more than I planned for!! I am praying for a vast improvement soon!!!

 

[ADN]

I feel the awful stock market has made me nervous about my impending purchase of a loose diamond in the USA because I'm Australian and the dollar is sh*t and it currently means the diamond is going to cost me a LOT more than I planned for!! I am praying for a vast improvement soon!!!

I feel your pain...remember only a few short years ago when we at 1.05 to their 1...good times... ...that's not gonna happen again anytime soon...

 

[munchee]

I never see diamond as investment, so I never think of the price in the future, its just my need of bling just like some guy loves cars. I put my pocket money in the stock market in order to satisfy my bling needs. This “pocket money” is not a portfolio, not retirement account whatsoever. Others saving money to buy blings, I didn’t save money in the Bank but I save it in stock form. I buy stocks a little by little each month and when I reached my goal on December 2020 and I thought I found the diamond that I want, I liquidate all my pocket money aka stocks which I regretted because it turns out the diamond that made me liquidate my stocks back in December wasn’t the one and I only found the one this month. If I wait until February, I could get a lot more. But if I found the diamond that I want back in December I wouldn’t regret it. If I only put my money in the bank, a stay at home mom like me won’t be able to make this purchase. And as for the reset, I don’t feel comfortable now seeing the stock prices these days as I’m not a gambler and I can’t do trade with young kids on my back all the time. But my dad and brothers have been making good money out of these craziness in stocks these days, but its not for me, my heart can’t handle it. So I don’t know when will I’ll be comfortable going in stock market again.

 

[LilAlex]

But my dad and brothers have been making good money out of these craziness in stocks these days, but its not for me, my heart can’t handle it. So I don’t know when will I’ll be comfortable going in stock market again.

Buy and hold -- low-cost indexed mutual funds and ETFs.

Anyone can (and could) make money during this short boom coming at the end of an incredible decade. Anyone who is invested in US stocks has had a great run. The most recent run-up is exactly like the dot-com boom and the biotech boom and I remember how those ended.

The smartest quants in the world earning seven or eight figures at hedge funds can't reliably beat the overall market year after year. But every twenty-something thinks Teslas are cool cars so TSLA must be a winner . This level of irrationality feels so familiar it's almost nostalgic.

 

[munchee]

Buy and hold -- low-cost indexed mutual funds and ETFs.

Anyone can (and could) make money during this short boom coming at the end of an incredible decade. Anyone who is invested in US stocks has had a great run. The most recent run-up is exactly like the dot-com boom and the biotech boom and I remember how those ended.

The smartest quants in the world earning seven or eight figures at hedge funds can't reliably beat the overall market year after year. But every twenty-something thinks Teslas are cool cars so TSLA must be a winner . This level of irrationality feels so familiar it's almost nostalgic.

I need to learn more about mutual funds and ETFs. I know absolutely nothing about them. Zero knowledge.

The interesting thing is, this “Phenomenon” isn’t only happening in the States. My Dad and brothers living in other country and the market down there is behaving the same way. They also use netizen to move the stocks amongst other things.
I’ve had a good run with TSLA tho, bought it before the split for $250. But I don’t think I’ll rebuy $800 coz I simply don’t think its the right value. As you said, Irrational. I feel like the whole stock market these days is irrational. I haven’t live long enough to experience those booms, this is my first boom. I’m extremely new to this whole thing, because it only started with: “How to save money to buy bling?” Saving money in the bank actually costs me money because the inflation rate, so how do I save money? So all of these are new to me. I have a lot to learn.

 

[LilAlex]

I’ve had a good run with TSLA tho, bought it before the split for $250. But I don’t think I’ll rebuy $800 coz I simply don’t think its the right value. As you said, Irrational. I feel like the whole stock market these days is irrational.

Stock-pickers are crazy-overconfident now since it has been a can't miss environment for their entire investing lives.

And in the US, the stock market run-up (rich getting richer while tens of millions are out of work) is why gem prices are higher than ever. They won't come down again until the rich stop spending (= market crash) like the financial crisis a decade ago.

This is a great, sensible, no-nonsense place to start getting background information and good advice. And it's a dot-org not dot-com: https://www.bogleheads.org/wiki/Main_Page