Relax.................

If your portfolio is making you feel like you are sitting outside your first class cabin on the Titanic let’s talk for a moment on what you might do to help yourself as an investor. The first thing would be to shut off CNBC. I hope someday CNBC will be required by law to flash on the TV screen a graphic that says “Nothing that happens in the market in the next 30 days will matter in 10 or 15 years”.

Another thing you might want to do is fire your stockbroker. Wall Street firms only care if they can sell stocks, not what happens to investors. They are not paid to make clients money and are not fiduciaries.

Another thing might be to stop reading the negative financial press. Yes, I admit that I read 3 papers every morning before the average guy gets out of bed, but journalism always gets it wrong! It has a relentless bias to the negative. I call it financial pornography. Reporters haven’t written much lately about why the stock market is headed up in our lifetime and it isn’t the job of journalists to make people great investors. It’s their job to make people come back for more journalism.

Another approach in the market would be to copy Warren Buffet. He finds the right situation by locating value in businesses. He trades an economic purpose in the largest timeframe, the timeframe called forever. He spends essentially no time thinking about unemployment numbers or interest rates, the big factors that so many investors think about. He does care about the potential impact that inflation might have on various businesses. Warren Buffet, on October 19th, 1987 had his personal stock holdings marked down by a staggering $342,000,000. My one question to you is: How much money did Warren Buffet lose on October 19th, 1987 when the market cratered 508 points and an astounding 22%?

Do you know why he didn’t lose any money that day? On that day he didn’t sell. He was a buyer. It was a bear market. Stocks were on sale. If the stock market falls 25% that does not mean a loss of 25%. If you don’t panic, there is no loss. If you don’t sell, there is no loss. Warren Buffet knows that no one can forecast interest rates and that no one can forecast the short term swings in the stock market. Long term, the market always goes up. Always.

Today, more than half the volume on the NYSE is generated by traders whose long-term horizon is the weekend. The secret to making big money in stocks, is to not get scared out of them, and Americans, God bless them, are totally unable to distinguish between fluctuation and loss. Relax.