The key for me is not in what is happening in the micro. But what is bound to happen in the macro. I buy companies for a reason, and that is that I think the companies are worth more than what their current share prices are. I am buying the future valuation of the company as I see it. Not the near term valuation. The reality is that the future is sometimes hard to see when everything else in the near term seems to be a mess. When the entire markets are taking a spill, the future is going to be even harder to grasp when it comes to any given stock, but you still have to see beyond that. You have to see the macro.
When the markets tumble this is effectively putting stocks on sale. If it happens to be a solid company. And of course you buy it because you believe it truly is a solid company. Unless the future fundamentals of the company are falling with the markets, there is no reason to sell. In fact, there is an even bigger reason to buy more in the selloff.
About eight years ago when the markets took their biggest hit since the infamous Crash of 1929, it was damned painful to watch. There were more than a few occasions when I thought to myself, this is it. We're done. The markets are done and I will never see my money ever again.
I could not have been more wrong. And luckily there was another side of me that knew, despite the grand mess before my eyes, that I was indeed wrong. The markets would come back. The money would not be lost forever. In fact, what was before my eyes was a terrifying mess of epic proportions, but it was also a major opportunity to make money I never could have made had the mess not happened.
I bought all the way down despite my better judgment. And I also bought all the way back up. What I did essentially was try and forget about the rotten, empty pit in my stomach and just keep on doing what I always did. Find good companies to buy whose fundamentals looked strong for their future.
...and then wait.
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