$2 chicken rice vs $4 chicken rice

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I was quite inspired by this post: The $2 Chicken Rice Story. It talks about how people are a sucker for "cheapo" $2 chicken rice.

You see, we tend to have a psychological bias when it comes to prices. We see them in relative terms. Something expensive in absolute terms seems much cheaper when placed next to something much more expensive.

How is this important when it comes to stocks? The unit price is very important. In other words, the value for money. The business might be very outstanding, but if you have to pay a 10x premium, it may not be so worth it in the end. Everyone has their own way of valuing a stock. And the price you are willing pay depends on the value you give it. Don't overpay for something just because it looks good.


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