Discount - It's time to Buy, Not to Sell

Buying at discounts is an art. Everyone wants to buy quality and value products / businesses at discounts but people will hesitate when it is actually available at discount. Sometime at real world we will buy products at discount and feel the happiness. When comes to the financial world, people will ignore this concept. 

Let's take this with an example of buying an ice cream from a shop. If i go to an ice cream parlor and ask for an ice cream which is at the price of Rs.100 / piece, i pay the entire amount and get the ice cream. However i don't bargain here. Let's say, i ask for the discount and the shop keeper agrees to give me at a discount of 10% (which is at Rs.90). I will be more delighted and probably i will buy 1 more to reserve for future and eat it. 

In a special case, if the shop keeper agrees to give me the ice cream at a discount of 25% (which is at Rs.75). I might sometime get into a doubt, if that is an expired item but if i find that is not a expired item. I will definitely buy few more at that price, store it for future and even will buy for someone else (probably). This is the exact thing which should happen in the financial world and in investing but many of us don't do this.

When the stock price reduce or correct by around 10% we probably accumulate some quantity but when the same stock correct by around 25% to 35%, we don't accumulate, instead we will sell off all the stock available with us with the fear of losing all the money. This should be same like buying an ice cream. In the case of ice cream, we don't get any returns in future but by buying a quality stock with value, it will give great returns.

There are many quality stocks available at great discounts now. But many of our investors are hesitating to buy those at this price. Investors mentality is always like, if i would have bought this in 2000, now i would be a millionaire. None of them who talk this way will ever buy for future and they are generally losers. A true investors will buy / accumulate quality stocks in their portfolio at discounts. They will actually celebrate when the price of a stock falls. When it is keep on falling, they will buy consistently (Only quality stocks with great demand for its products in future). 

It is also very important to understand that not all stocks available at discounts can be bought. As i mentioned in the example. When the Ice cream shop owner sells at very great discount, i will check for the products expiry and quality first. Then buy more if it is suitable to buy. Similarly, when the stock price is falling and when it is available at great discount, it is very important to check its products value and demand criteria before accumulating. Infact there are many parameters to consider before doing this activity. But the underlining point is, it is time to buy and not the time to sell.

Having a diversified portfolio and accumulating more quality stocks at discount will give great returns in future. I am not a SEBI registered advisor and this blog is not an investment / trading advice. This is only for an informational / educational purpose. Please consider your financial advisor before investing.

Have a Great Day

B G Nareshkumar