Veteran investor Samir Arora uses Big B's London tie-shopping incident to impart lesson on valuation

The post suggested that sometimes it is good to take the advice that something may indeed be too expensive (or mispriced).

Veteran investor Samir Arora has used a discussion on Amitabh Bacchan's experience with a London shopkeeper to discuss the importance of valuations.

Bachchan had recently narrated an experience he had with a London shopkeeper, who had tried to dissuade him from buying a tie, thinking Bachchan couldn't afford it. The actor said that he responded by buying ten of the ties.

Reposting a headline on this incident on X platform (formerly Twitter), Sensibull founder Abid Hassan had written how he took a shopkeeper's advice and walked away from a watch. He wrote that the shopkeeper at an airport had said that the watch, priced at around Rs 25,000, maybe outside of his budget. Hassan thanked him and walked away, later commenting that he believed that the shopkeeper had done him a favour.

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Helios Capital's founder and fund manager Arora seemed to agree with Hassan in reposting it, and used the incident to comment on people's attitude's to valuations.

The post suggested that sometimes it is good to take the advice that something may indeed be too expensive (or mispriced).

Arora tweeted, "Once I met an analyst and he showed me a company growing at 10-12% p.a. and trading at around 80 P/E. He then told me that "most probably this stock is too expensive for you"."

Arora added that he agreed with the analyst, told him that he was right and then shorted the stock.

One of the comments below Arora's post pointed out that the actor was merely trying to stand up to a shopkeeper who the actor believed was showing India down.

To this Arora, tongue in cheek, responded that there were fund managers who carried an attitude similar to the shopkeeper's--that investors were walking away from opportunities because they could not afford it.

He wrote, "There were Indian fund managers, not long ago who looked down on investors who looked at valuations."

The point he seemed to be making is that sometimes investors walk away from opportunities because they are too expensive--mispriced--and not because they are unaffordable.