Why I Prefer Branded Clothes But Not Branded Stocks?

Dec 7, 2020

Rahul Shah, Editor, Profit Hunter

My wife doesn't like the way I shop for clothes.

She thinks I get fleeced under the garb of buying high-end brands as some of them offer no value for money.

She could be right. To be honest, I have no understanding of fabric quality. Zilch. Nada.

To compare one fabric with one another in terms of texture, feel, durability etc. and then to pit them against their respective MRPs is too much of a mental exercise for me.

Which is why I have figured out a pretty useful short cut.

Buy the best brand that fits my budget and voila, problem solved.

I know that these brands have been around for years, have made a mark for themselves and can be trusted blindly to deliver the goods.

--- Advertisement ---
Revealing at 5pm Today - The Great Indian Wealth Project

Today at 5 PM sharp, we will reveal our Great Indian Wealth Project at a special online event.

At this event, our co-head of research, Tanushree Banerjee, will reveal the details of your first stock for accumulating a potential Rs 7 crore in long-term wealth.

Please watch this short video message, which Tanushree recorded just for you.



Watch Now
------------------------------

Therefore, I often tell my wife that my purchases may not always be true value for money and it may look like I am paying a small premium most of the times.

But she has to consider the other angle as well.

What if I spend a few thousand rupees on some local brand and the purchase turns out to be bad given my limited skillset.

Here, we may have to write off the entire amount versus a small premium I have to fork out for well-known brands.

If you think this logic makes a lot of sense then you'll agree that investing also works the same way.

In investing, there are trained as well as untrained buyers of stocks.

The untrained buyer who has limited experience of how to conduct research, is better off buying the best quality companies.

He may end up paying a premium and at times a hefty one at that, but the risk of a permanent loss of capital is not as high as in the other direction.

This other direction being buying second grade or third grade companies even though their stock prices could be quite tempting.

Revealing at 5pm Today: The Great Indian Wealth Project

However, if a high quality stock offers limited downside, their potential upside could also be limited.

The reason is simple. If you think that a certain stock is of extremely good quality and has been around for years, the market also has a similar opinion of the same.

Therefore, it is seldom available for cheap. There's always a premium attached to it which limits the upside.

It is because of this reason I don't usually recommend high quality stocks in my Automatic Income project unless the premium to be paid for them is quite low.

I like to take it down a notch in terms of quality provided the prices are very attractive.

I'd like to believe that my more than 15 years of experience in the stock market qualifies me to be a trained investor and pick out those stocks where the risk-reward ratio is firmly in favour of the investor.

My interest therefore is not in stocks that scream quality and thus offer limited upside.

Instead, it is in those stocks where the discrepancy in price and the stock's true value is so high that it offers a huge upside potential.

--- Advertisement ---
How to Earn a Fortune in Gold, the Smart Way

Gold is on 'the verge of a decadal run' says Vijay Bhambwani, India's #1 Trader and Editor of Fast Profits Daily at Equitymaster.

He says gold has the potential to generate staggering gains in the coming years...And those who are betting on gold right now will hit the jackpot.

But wait.

While gold is an attractive investment destination, there's a very specific way to play this opportunity...

A way that ensures you rake in maximum profit and perhaps hit the jackpot...while minimizing potential pitfalls. Thankfully, Vijay - India's #1 Trader - can guide you step-by-step in the upcoming gold rush and help hit the jackpot just at the right time.

Sure, you don't want to be an average trader. That's not how you make a fortune.

Here's how you can get Vijay's guidance...
------------------------------

And it is precisely this approach that's at the center of my Automatic Income project.

It is an ambitious project where my goal is to double an investor's current income as early as possible by making intelligent investments in the stock market.

Investments not in high quality stocks at hefty valuations but in stocks where I am willing to sacrifice certain degrees of quality in exchange for a very attractive entry price and thus by extension, huge potential upside.

I will be sharing the details of this strategy in a series of free video classes between 9th and 15th December.

All you need to do is register for these classes. I believe I can positively change your financial future forever.

Sign up for my Automatic Income project here.

Warm regards,

Rahul Shah
Rahul Shah
Editor and Research Analyst, Profit Hunter

PS: Sign up for my free video classes and learn how to potentially double your income from your investments.

Recent Articles

What Godrej Consumer's 22% Single-Day Gain Tells About My Blueprint May 14, 2021
The company's FY21 earnings performance turned out better than my estimates but...
Beware! Not Every EV Stock Will Be a Tesla May 13, 2021
Analyse the business models of EV stocks before investing in them.
Look Out for Extra Cash from Your Stocks in Next Few Months May 12, 2021
Extra cash can be a boon or a curse in disguise.
Smallcap Index up 150%! Here's Why I Believe There's More Steam Left May 11, 2021
I'm excited about the select opportunities in the smallcap space but I would also like to warn you about the potential pitfalls.

Equitymaster requests your view! Post a comment on "Why I Prefer Branded Clothes But Not Branded Stocks?". Click here!