An Essential Charlie Munger Quote…

“A lot of success in business and in life comes from knowing what you want to avoid.”

That’s a quote from the late, great Charlie Munger. And in the world of investing, it’s sometimes good to create “automatic disqualifiers” for certain sectors or businesses.

Why?

Because doing so helps you avoid future problems further down the line.

And in today’s dispatch, I want to highlight three sectors that I personally avoid — as well as my rationale for doing so.

Fashion is a volatile industry. Trends are constantly changing and today’s hottest brand or designer may become completely irrelevant two years from now.

1. Fashion

Burberry Group plc is down by more than -42% over the past decade. Lululemon athletica is down -22% this year. And Ralph Lauren Corporation, which is up +252% over the past five years, still underperformed the S&P 500 on a 10-year timeline.

• Ralph Lauren Corporation 10-year average annual total return: 9.02%
• SPDR S&P 500 ETF Trust 10-year average annual total return: 12.94%

Maybe fashion stocks are a great trade if you’re a growth investor capable of spotting trends before Wall…