The threshold to meet

If the new thing you are considering purchasing is not better than what you already know is available then it hasn’t met your threshold. This screens out ninety nine percent of what you see.

- Charles Munger

The above quote is not only applicable for new stock additions to your portfolio, but also to any goods you want to buy or find it as an attractive replacement to what you already know. If I go to a departmental store and see a new brand of biscuits; attractively priced than the one I regularly buy, I would look at two things first. 1) Whether the biscuit is from a reputed manufacturer, 2) What are the ingredients and is it comparable to my regular brand.

The first question answers whether I can trust the new product (to what extent determines my trust with each company and its various products I have tried so far) and spend the money even though it is bargain. The second question makes sure whether I can quickly decide how much value I am deriving by making an apple to apple comparison with the product I am familiar with.

When I bought the new biscuit, my mind would say it is a bargain. But in true fact, it will become a bargain only after I taste it (at least few times; I always find it difficult to form an opinion on the first instance, whether it is biscuit or a shampoo). If the taste of the new product is equivalent or better than my regular brand, then only I can truly say the product is bargain. Otherwise, my purchase is 100% waste as it can't replicate the satisfaction I derive from my regular brand.

But there are various other factors also on play when we make a decision to buy a product. But keeping aside those factors, thinking along the lines of the above two questions helps me to come to a quick conclusion.

People can form their own filters which work for them based on their personality. These filters should help everyone in a long way to avoid petty expenses, which tend to have a big impact when repeated over a long period of time.