Feb
10
“In my mind, my portfolio is an import-export business. I import some goods (stocks), which I try to export at a profit. I adopt many of the practices of a full-fledged business, like double entry accounting, and annual compilation of balance sheets and operating statements. All businesses fluctuate according to macroeconomic and seasonal cycles, so I do not fold up shop every time business dips. I treat the stock market like my customers who are constantly bidding for my goods. I do not get mad when they lowball my wares, nor do I get fearful. I try to find out what the problem is. Perhaps I had imported a batch of bad goods (i.e. there was a mistake with my initial stock analysis). Maybe some goods were damaged during shipment (i.e. a new event has occurred that impaired stock value). I try to determine whether the problem is temporary or permanent, and then decide whether to cut my losses or hold onto the stock.”
How to avoid behaving badly as an investor
