Remember that the stock market is manic-depressive. Sometimes it is wildly excited about future prospects and at other times it is unreasonably depressed. Of course, this behavior creates opportunities, as particulary when shares of outstanding business are avaible at low prices. Bur just as you would not take direction from an advisor who exhibited manic-depressive tendencies, neither should you allow the market to dictade your actions.
The stock market is not a preceptor; it exists merely to assist you with the mechanics of buying or selling shares of stock.
If you belive that the stock market is smarter than you are, give it your money by investing in index funds.
But if you have done your homework and understand what you are investing in and have plans on owning shares in an outstanding business for a number of years, what happens in the market on a day-to-day basis is inconsequential.
The given principles ;
1. Focus on return on equity, not earnings per share
2. Calculate " owners earninigs" to get a true reflection of value
3. Look for companies with high profits margins
4. For every dollar retained, make sure the company has created at least one dollar of market value
