One of the original reasons I started blogging was to chat more about publicly listed hedge funds. I gave up the topic after realizing no one had any interest in them whatsoever in the US. Recent headlines confirm that the US is still at least 10 years behind the rest of the world here – Paulson considering launching a public fund in Canada.
From a recent WSJ article (the author, Brett Arends has a new book out Storm Proof Your Money: Weather Any Economy, Rebuild Your Portfolio, Protect Your Future):
According to the Rapaport Diamond Index, a respected industry benchmark, prices of top-quality stones have collapsed by as much as 80% in real, inflation-adjusted terms over the last 30 years.
But you’re much better off selling diamonds than buying them. The numbers tell the story. Anyone who invested $1,000 in the Tiffany & Co. IPO in 1987 and just sat back and left their money alone, merely reinvesting the dividends, would have about $26,000 today. Someone who sunk that money into diamonds instead: less than $2,000.
Anglo American, the South African mining company that owns a major stake in De Beers, has been a terrific investment for decades. Investors in the stock more than tripled their money last decade—while diamond prices rose by less than a third.
Diamonds are a marketing gimmick as much as anything else. Most men feel they have to give a diamond ring when they propose—even though, as anyone knows after a moment’s thought, the only woman worth buying a ring for is the one who doesn’t care how much you spent on her ring. (In Shakespeare’s “Merchant of Venice,” I might add, the successful suitor is the one who picks lead over silver or gold.)
The biggest winner in the diamond game is the Oppenheimer family, which runs De Beers, the Standard Oil of the diamond world.