Look at market fluctuations as your friend rather than your enemy ; profit from folly rather than participate in it - WARREN BUFFET
Every investor who owns common stocks must expect to see them fluctuate in value over the years . Since the individual issues set their high and low marks at different times , the fluctuations in the group as a whole are less severe than those in the separate components .
We have traced through the price fluctuations of other types of diversified and conservative common-stock portfolios and we find that the overall results are not likely to be markedly different from the above . In general , the second line companies fluctuate more widely than the major ones , but this does not necessarily mean that a group of well-established but smaller companies will make a poorer showing over a fairly long period .
In any case the investor may as well resign himself in advance to the probability rather than the mere possibility that most of his holdings will advance , say , 50% more from their low point and decline the equivalent one-third or more from their high point at various periods in the next five years .
A serious investor is not likely to believe that the day-to-day or even month-to-month fluctuations of the stock market make him richer or poorer . But what about the longer-term and wider changes ??? Here practical questions present themselves and the psychological problems are likely to grow complicated .
A substantial rise in the market is at once a legitimate reason for satisfaction and a cause for prudent concern , but it may also bring a strong temptation toward imprudent action . Your shares have advanced , good ! You are richer than you were , good ! but has the price risen too high , and should you think of selling ?? or should you kick yourself for not having bought shares when the level was lower ??
Every investor who owns common stocks must expect to see them fluctuate in value over the years . Since the individual issues set their high and low marks at different times , the fluctuations in the group as a whole are less severe than those in the separate components .
We have traced through the price fluctuations of other types of diversified and conservative common-stock portfolios and we find that the overall results are not likely to be markedly different from the above . In general , the second line companies fluctuate more widely than the major ones , but this does not necessarily mean that a group of well-established but smaller companies will make a poorer showing over a fairly long period .
In any case the investor may as well resign himself in advance to the probability rather than the mere possibility that most of his holdings will advance , say , 50% more from their low point and decline the equivalent one-third or more from their high point at various periods in the next five years .
A serious investor is not likely to believe that the day-to-day or even month-to-month fluctuations of the stock market make him richer or poorer . But what about the longer-term and wider changes ??? Here practical questions present themselves and the psychological problems are likely to grow complicated .
A substantial rise in the market is at once a legitimate reason for satisfaction and a cause for prudent concern , but it may also bring a strong temptation toward imprudent action . Your shares have advanced , good ! You are richer than you were , good ! but has the price risen too high , and should you think of selling ?? or should you kick yourself for not having bought shares when the level was lower ??
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