Day 1 Quote 1: Buy Cheap, Sell Dear

Quote 1: Buy Cheap, Sell Dear

– John Greenleaf Whittier

This officially marks the start of the 365-day journey.

 “Buy cheap, sell dear.” Where have we all heard that before? It’s the most common line or rule used in the stock market.

I’ve been dabbling in stocks for almost 4 months now. From my perspective (that of the stock holder), when prices go up (higher than your acquisition price), you have to sell your stocks. That is the most fundamental way of earning a profit: buy low, sell high.

Sell it!!! But, to whom and how?

What is the most recent thing that you purchased? Why did you purchase it? Did you think about the price? (of course, you did) But, what else influenced your decision? This other factor is what I like to call the “umpf” factor.

Yes, price can be a factor in your decision-making. But, overall, you buy something because it’s important to you or because it adds some value to you. That’s what I like to call the “umpf” factor. It’s pretty simple. It’s the value of possessing it that makes you want to buy that product, service or any other thing that has a price tag.

It’s just a matter of weighing out which is more important:

-         The opportunity cost of spending your money on it instead of keeping your money or spending it on something else

   --> then don’t buy it

-         The opportunity cost of not having that object in your hands

       --> then buy it

This is where sellers strike the difference. Successful sellers are those who are able to position their products in a way that it appeals to their target market. In a way that makes the product very “dear” or with a high “umpf” factor to their market. 

  

Two sellers can sell the same product. Let’s say, bottled water. Everything is the same.

  

What will make you choose an Absolute water from a Wilkins water? A factor may be availability. If you go to a local sari-sari store, you don’t ask them for the brand of water that they have. You just tell them, “Isang water please.”

                                          Availability – that’s the “umpf” factor.

It’s that simple. Buy cheap and sell dear to earn profits. It’s not necessarily buying something cheap and then selling it with a high margin. It’s selling something at a price that is above your total unit cost (acquisition cost, overhead cost, etc.) in a way that emphasizes the “umpf” factor that your market looks for. Like for the bottled water example, make sure that you sell it at a price where you still make a profit. But, for your customers to buy that product make sure that you have a good logistics/distribution scheme.

 For the stock market example, the “umpf” factor is the type/nature/name of the stock. If it comes from one of the prominent companies (Del Monte, Ayala Corp., etc.) there’s a very good chance that you will easily be able to make a profit from your stocks.

Bottomline, buy cheap and sell dear. Choose your product. Choose your market. Find what makes your market choose your product over others. Find the “umpf” factor. Highlight it!