Value investors’ attitude to market falls

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Isn’t it great when share prices fall? If you intend to be a net investor, not a net seller of shares, over the next few years/decades then, when markets go down, you are given opportunities to buy portions of businesses you like at lower prices all because Mr Market is having a hissy-fit (assuming you have fully analysed the companies, and the price gives a good margin of safety).


For the person who is fully invested and expects to be running down a portfolio over the next decade or so falling prices may not be all that great – but for most of us falling markets are generally good news.

Here are some reminders of the positive attitude taken by renowned investors:

The only principle of timing that has ever worked well consistently is to buy common stocks at such times as they are cheap by analysis, and to sell them at such time as they are dear, or at least no longer cheap, by analysis….it requires no opinion as to the future of the market; because if you buy securities cheap enough your position is sound, even if the market should continue to go down.

Benjamin Graham

If you can’t convince yourself “when I’m down 25%, I’m a buyer” and banish forever the fatal thought “when I’m down 25% I’m a seller” then you will never make a decent profit in stocks

Peter Lynch

If you flip around the radio dial and happen to hear the offhand remark that an overheated Japanese economy will destroy the world, you’ll remember that snippet the next time the market drops 10 percent, and maybe it will scare you into selling your Sony and your Honda, and even your Colgate-Palmolive, which isn’t cyclical or Japanese

Peter Lynch

Any individual stock does not rise or fall at any particular moment in time because of what is

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