Fear: The New King on the Street

It almost seems as if there is more depressing news about the economy and the financial markets now more than ever. Bad news about Company A should have some sort of impact on Company B if they were competitors. However, should the bad news about Company A have an impact on Company X in a totally different sector? Not necessarily, but lately there has been an impact. We see this with the volatility index being at all time highs. Spikes in this index have occured on the pure basis of fear and nothing else. How is the common investor supposed to act with the constant ups and downs of the market?

Benjamin Graham wrote in his book The Intelligent Investor, "The investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage." This gives us the basics for long-term value investing. We need to invest in a company for its long term growth and management. At this point we can then invest in said company for the long term and should be able to go a significant amount of time without having to look, or worry, about the current stock price. Besides, at times like this when the market is significantly depressed that we see value stocks at their greatest. Warren Buffett once said, "Be fearful when others are greedy, and greedy only when others are fearful." If you ask me, we are at wrong point to be fearful. We should be embracing this market as a seldom chance to find truly great companies at a cheap price. If there was ever a chance or reason to be greedy, this is it. Take advantage.