Keeping your head in trying times

The hardest part of watching the stock market recently has been keeping things in the right context.

The stock market is not a crystal ball that reveals a company's true worth. It merely shows what people are willing to buy and sell partial ownership of companies at any point in time.

But who is buying and who is selling?

Are sellers under pressure because they bought with borrowed money? Are they professional investors who are selling because their customers are cashing out in a panic?

Are buyers carefully considering the value of companies? Are they waiting to see what the government or other buyers and sellers will do next?

Markets do not reveal underlying worth, they simply reveal what people are willing to pay at a point in time. But, those assessments change over time--sometimes dramatically.

The way I'm keeping my head in these difficult times is to look past stock prices at the underlying businesses I own. Such businesses are in good shape and have bright futures.

Focusing on the underlying business is key to keeping your head. It allows the market to be your servant instead of your master.

Right now, and for some time to come I think, that servant will provide wonderful bargains on great companies.

As long as you look past the price at the underlying business, you too can keep your head and benefit from trying times.

Nothing in this blog should be considered investment, financial, tax, or legal advice. The opinions, estimates and projections contained herein are subject to change without notice. Information throughout this blog has been obtained from sources believed to be accurate and reliable, but such accuracy cannot be guaranteed.