I Regret Not Buying This Stock
When You Don't See The Forest For The Trees
Dear Investor,
I have strict rules that guide me when choosing stocks for my portfolio. While I almost never break them, every now and then, an opportunity comes along that makes me reconsider.
Sometimes, the signs are so obvious that I miss them entirely because I don’t see the big picture. As a result, I occasionally pass up great investments.
I could pretend that every stock I buy is a winner, but I’d rather keep it real with you.
This article is about one such missed opportunity, something many of you may have overlooked too, and the lessons we can take from it.
Every year, I pass on dozens of stocks simply because they don’t appear my radar. That’s not surprising, given that there are over 100,000 traded stocks worldwide.
What’s frustrating is when a buy signal practically lands in my lap - not once, but multiple times - and I dismiss it as random noise instead of recognizing it for what it is.
Even more frustrating is that part of my research process is designed to uncover subtle hints from everyday life, clues that aren’t immediately obvious.
In a previous article, I explained how something as simple as a purposeful walk through town can give you an edge in getting investment ideas.
In the digital age, some of the most valuable stock market signals don't come from complex financial models or Wall Street analysts - they emerge from our daily social media feeds and cultural observations.
A prime example of this is the recent resurgence of Ralph Lauren RL 0.00%↑. While traditional investors might have focused solely on quarterly reports and market trends, those paying attention to social media platforms like TikTok and Instagram would have noticed the explosive growth of the "old money aesthetic" trend, where young consumers increasingly gravitated towards the classic, preppy style that Ralph Lauren has embodied for decades.
This cultural shift, which gained momentum through viral hashtags and influencer content, preceded significant gains in Ralph Lauren's stock price, showing how cultural awareness and social media trends can serve as legit indicators for momentum strategies (buy when the hype starts - sell when the hype falls).
If we take a look at the Google GOOG 0.00%↑ search results for “old money style” we can see that the momentum started in 2022 and peaked in autumn 2024:
“In the past decade, Ralph Lauren enjoyed growth only after 2021 when the old money aesthetic began gaining traction among Gen Z. Years before 2021, the old money brand struggled with decreasing sales due to the COVID-19 pandemic, a decline in wholesale and retail sales, economic uncertainty, and store footprint reduction.
RL responded to its younger consumers quickly by leveraging digital channels and now sees a staggering 34% growth in e-commerce sales, significantly contributing to the company's overall revenue increase.” - Yahoo Finance -
It's no surprise that when the "old money style" trend gained momentum on social media in 2022, the company's fundamentals improved, and the share price began to rise. Since then, the stock has doubled - not bad for a fashion brand!
I mean, the signs were quite obvious. There was literally one main player in this fashion niche which got rediscovered by Gen Z:
Their management also stated that focusing on classic styles is one of their main strategies and a key reason for their recent success:
Moving next to our second key initiative: Drive the core and expand for more. In uncertain times, consumers continue to turn to brands they know and trust and styles that have longevity beyond 1 season. Timeless classics have always been our core proposition, and Ralph and our design teams continue to deliver with an unwavering focus on the quality and quiet luxury that are central to our way of living.
- Patrice Louvet, CEO -
We have a product offering that's really resonating with our target consumer. And if you think about what's happening around the world right now and this -- there's a lot of conversations around quiet luxury. What Ralph Lauren has stood for from the time this company was founded, 56 years ago, has been quality, has been timeless style, has been confidence in what you're buying, and that's what consumers are looking for today, and particularly what women are looking for today.
- Patrice Louvet, CEO -
I wouldn’t invest in a fashion brand as a long-term option. The reason is simple: there’s too much competition, and the business model is unstable. Fashion brands don’t have a strong competitive advantage. They need to stay innovative every year, and one bad collection can damage their reputation.
Instead, I prefer businesses that build a strong competitive edge once and then reap the rewards for years.
That said, investment rules are only useful if you truly understand them. And understanding them includes knowing when it’s smart to break them - like in the case of Ralph Lauren.
I should have seen the signs.
So, what’s the takeaway from this missed opportunity?
Pay attention to the world around you. Trends often start in everyday moments, whether it’s what people are wearing, talking about on social media, or searching for online.
Behind every popular movement, there’s usually a company benefiting from it. If you can identify that company early and determine if it’s publicly traded, you might uncover a profitable opportunity.
While it’s important to stick to your investing principles, it’s equally important to recognize when it’s wise to make an exception. Sometimes, the signs are too significant to ignore, and being adaptable can be the difference between a missed chance and a successful investment.
The market rewards those who can see beyond the obvious and connect the dots. So, stay curious, stay observant, and never stop learning from both your wins and your mistakes.
Until the next issue. 🥂
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Disclaimer: This analysis is not advice to buy or sell this or any stock; it is just pointing out an objective observation of unique patterns that developed from my research. Nothing herein should be construed as an offer to buy or sell securities or to give individual investment advice.
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