About the only thing I know about diamonds is that they cost a whole lot and that the world-wide production and sales are highly controlled by a very secretative group known as De Beers. The stability of reported earnings and dividend growth for the last five years appears to confirm this.
In times of depression and uncertainty, many peoples will tend to hoard gold and jewlery instead of currency as a means of retaining savings.
Yet, the price of its stock is at a long-time low, having eroded from about 37 August 1997 to a low of about 11 last month. Furthermore, the so-called asian crisis and the monetary colapse in the soviet countries have caused great uncertainty in the world money markets, driving many markets (including the U.S.) to long time lows.
I would think this would create a demand for more quality diamonds, to drive up the price and earnings for De Beers. But the market has failed to recognize my thinking.
So, what's wrong? Why is De Beers only attractive to bottom feeders during a shark frenzy? |
