Definitely agree with the law of diminishing returns and it applies, very much, to the actual kit itself - I reckon most people could hear the difference between a £100 CD player and one costing £1000 but how many would hear a difference between players costing £1000 and £5000 or £5,000 and £50,000 ?
The hifi store I worked in for a few months offered a relocation service for customers when they moved house. One guy we went to had spent £20,000 on a Naim system, two channel hifi, CD only and there must've been about a dozen individual boxes of kit to move...mono blocks, separate power drives for volume pots, AC stablising kit etc etc....on paper this should've been the best system I was ever likely to see, let alone hear.
I've never been more disappointed in my life, it left me absolutely cold, no sense of depth or space to the music (I forget what we listened to).
Best system I ever heard...Rotel CD, Denon amp, B&W 601 speakers, bi-wired with Cable Talk spkr cable, Atacama spkr stands, total cost £2,500...listening to something like Van Halen's 'For Unlawful Carnal Knowledge' album, jaw dropping.
Always let your ears rule your cheque book