Investing Lessons from Shopping For Groceries and Cosmetics

I recently had a “discussion” with my girlfriend about the new lipsticks that she had bought. “Why buy another one when you already have so many? Moreover, why pay hundreds for one that probably cost only a few dollars to produce?”

Many of you might have had similar experiences in trying to convince your other half that you are right, but get no real conclusion from the talk. Yes, men are from Mars and women are from Venus – no wonder that book by John Gray became a bestseller.

Anyway, as I continued talking to my girlfriend about her new lipsticks, an idea lit up in my head and I thought of a simple way, by using grocery shopping as an example, to explain to her why it is not rational to buy expensive cosmetic products.

And as I thought further about the whole episode, I realised the whole grocery and cosmetics talk can be tied nicely back to investing.

Grocery shopping

If you’ve ever been to a wet market, where housewives do their grocery shopping, I think you will be amazed by how well they understand the prices of the different products – vegetables, chicken, pork, fish, you-name-it. The housewives know it down to the penny.

Just as you try to recover from your astonishment, they will again blow you away with their negotiation and deal-making skills. “It is $3.20 per kg for the chicken, so your 2kg bag will cost $6.40,” said the seller.  “$3.20! That’s too much. The other auntie only sells for $3.00 per kg, so there you go. $6.00.”

I have to admit, they are probably the shrewdest people I’ve ever met and they know a bargain when they see one. When grocery shopping, housewives are cool, calm, and collected – they are rational.

Cosmetics shopping

But, men will be equally amazed, if not more, by the knowledge that the ladies or housewives possess about cosmetic products. Chanel, L’Oreal, Lancome, Estee Lauder, Bobbi Brown, Smashbox, you-name-it.

You might expect that the same resourcefulness, enterprising attitude, and rational thinking will be applied when the housewives shop for cosmetics. Unfortunately, the reality is anything but.

In fact, I don’t think any man (I did check with my colleagues at The Motley Fool!) who has shopped with his other half ever really understood the reason given by his partner on why she wants to buy certain cosmetic products.

Here are my own examples:

  • “This is the most suitable product for me after testing all the products!” – But you say this all the time…
  • “This is the most famous brand for this season!” – What is a season?
  • “Ladies need this, and since you are a man, you will not understand!” – That is the reason you use when you can think of no other reason…
  • “This is the only lipstick that I have bought in this month!” – What about the foundation powder, makeup powder, the mascara, the day cream, night cream, perfumes….

When shopping for cosmetics, emotions take over and rationality is thrown to the wind.

Back to Investing

In investing, we try to buy companies at a discounted price to their intrinsic values to profit for the long-term. Such opportunities usually present themselves when the market loses interest temporarily in a particular company or there is widespread panic.

In other words, we try to remain rational and not be affected by the emotional stock market.

A Fool’s take

If we can buy stocks more like the way we buy groceries, then we should be on the right track to perform well in investing.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.