Sunday 12 October 2014

The autumn crash of the stock market

Mountain goats, herd, follow the flock

Just like you and I get a little depressed during autumn it seems as if Mr. Market is currently also depressed. This is not so strange since Mr. Market is a collective of you, me and everyone else so what we feel Mr. Market will also feel and wheels that starts turning in either direction is always hard to stop once it gets going. The going right now seem to be a bit downhill.

In just a few days my own portfolio has dropped by over -10% and I am sure that it is very similar for you guys. Are you worried about your investment?

Moments like this is very important to try to figure out what kind of a person are you? Do you run out and try to sell according to "save what can be saved!"? Or do you look upon this for what it really is which is a new chance to buy excellent companies even cheaper.

This is however a mentality issue that my guess is you are either born with it or you are not. I hope that I am wrong and that people can learn it but I doubt it. When the herd start running it takes stubbornness to the boarder of stupidity not to join in the race. 

The companies that you have decided to own parts of have, in most cases, not become worse in comparison to one month ago when they were valued 10% higher. They most likely did not loose any clients during this month.

So, breath in, hold it, hold it, hold it and now breath out. Relax. Share price goes up and down but the company, given time, will see increased revenues and earnings which leads to a higher value of the company with our without Mr. Markets depression.

If you have cash, then it will be a good time to start buying excellent companies that have gotten cheap. If you buy stocks each month then keep doing that. Increase what you already own or try to get hold of the spectacular companies on the cheap.

Don´t follow the herd! Stay the course and keep buying stocks or index funds!

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