During times of a down market and people all around you are selling their stocks left and right, I am reminded of a passage that I heard (or read?) from Warren Buffet. It goes like this:
You are perfectly free to ignore Mr. Market or take advantage of him, but it will be disastrous if you fall under his influence. Suppose the price you could see your home at was quoted every day. For several; months the quotations steadily decline. Would you then sell your home, the home you were comfortable in and satisfied with, just because its price was declining? Of course not! In this sense, an attractive investment is similar to a home you are happy to inhabit – Warren Buffet
I think this passage is important for two reasons. Number one, is that if you have done your research, and you are confident that the reasons you hold a stock are still valid, even though the price of the stock has been dropping for a while then there should be no reason to sell into the market. A dropping price is no reason to sell if the fundamentals are still the same. Number 2, sometimes the market just acts funny. There are periods of down time and periods of up times – the trick is to ignore them and listen to the fundamentals and not let Mr. Market dictate your actions. This leads to another passage I often think about from Jim Cramer:
No one ever made any money panicking!