An insider's look into The World of Wall Street in all its glory How about some help? I have some knowledge of the diamond business. That number is for finished jewelery and most certainly is much larger than the actual wholesale cost of the stones themselves.

It also demonstrates something else: The diamond market is very large, and as anybody close to it can attest, very fluid. There is no need to keep inventory except of some unique high end stones. De Beers and others in the pipeline -- like the specialists on the NYSE -- assure that diamonds come to market in an orderly fashion, are always available and are priced consistently.

There is really no reason to maintain inventory beyond that which is needed to fulfill short term demand, and many reasons to avoid keeping inventory -- primarily the risk of theft and the high insurance costs associated with keeping large quantities of stuff that cannot be traced if lost or stolen. Long before Wal-Mart came along, diamond dealers understood the costs of keeping inventory and did everything they could to avoid it.

If OSTK are bragging that they have lots of inventory of diamonds, they're merely proving that their inventory control is terrible, which to my mind is a poor reflection on management. Incidentally, I just ran a search for "Overstock" on the National Jewler site referenced above. Two stories about Overstock entering the auctions market popped up, but nothing about their supposed diamond bonanza. Clearly, this bit of news is irrelevant to the overall market. It's a drop in the bucket as far as the total market size, and is mostly notable -- as I stated above -- as a demonstration of poor inventory management.

And i can't help but wonder why Jeff started this blog when he could have posted on TSCM. Sam's Club carries a better selection of diamonds than WalMart. Check it out if you have not done so. Permit me to add my own "I don't know much about the diamond business comments. In my experience and observation, the diamond market is pretty darned efficient.

Case in point -- Blue Nile. This gives a fair picture of how "true" the diamond market is -- how efficient and consistent from dealer to dealer, inventory to inventory.

At the Blue Nile site, if you input certain criteria -- size, clarity, color grade, etc.

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From whatever your starting point is, if you give up a little in color what you then see is all about the same in price. Ask for a little better clarity This says to me that a "steal of a lifetime" situation doesn't make sense -- given that there is evidently good efficiency in the market -- and one would assume there would be plenty of buyers if something were offered at even just slightly under market levels not "steal levels" -- just "flippable.

It does seem unlikely that with all of the experienced buyers out there that OSTK - a relative newcomer -- would be the one to dispaly such incredible savvy as to locate and execute such a deal. But let's say for the sake of argument that they did pull off a great deal. If so, why not just say what the nature of it was? Weird deal, weird company.

Friday, March 11, Diamonds Are Forever, But Where Did Overstock Get Them? Big talk, even for the voluble Doctor Byrne. Smack in the middle of the price range Overstock.

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But Wal-Mart's best sellers are right there in Bryne's price "gap," and I find it hard to see how Overstock. Another sketchy data point from the erudite Doctor Byrne.

So much for the hype behind the Byrne spin. But here's where the whole "steal of a lifetime" gets interesting. This is because Blue Nile operates with hardly any actual loose diamonds. Furthermore, even assuming Overstock. The wholesale diamond market is not exactly inefficient in the manner of, say, Chinese pottery. Diamond sellers know what their inventory cost them, and what it is worth, and the wholesale buyers know it, too. I have no answers. Any informed input here is welcome.

Jeff Matthews I'm Not Making This Up.

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Posted by Jeff Matthews at 8: OSTK has had four CFO's in two years? Byrne in the news again http: Newer Post Older Post Home.

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