The Low-Priced Way to Lose Money in the Stock Market

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Once upon a time, I used to recommend stocks. I did that for a living. One of the most common questions I received when I recommended a stock priced in three or four digits was this – “What is the point of buying a stock this expensive? Recommend something under Rs 100, or better, Rs 10, or better, Rs 5.” The reasoning was simple – “It’s easier for a Rs 10 stock to go Rs 100, than for a Rs 1,000 stock to go to Rs 10,000.” At the start of my career, this reasoning sounded reasonable. But it turned out to be one of the biggest misconceptions I’ve ever had in my career as a stock analyst and investor. Thankfully, I got over that misconception early. Of course, a car that sells at Rs 20 lac may be more expensive than one that sells at Rs 5 lac, even

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