My companies are down today. Particularly the oil-related names I own. These days play on emotions -- it is painful to open the account and see so much red.
I want to pass along a key learning from Mr. Chuck Carnevale. Mr. Carnevale described this situation in a way that really resonated with me; perhaps it will assist you, too.
And I must confess I am paraphrasing because even though I looked for 30+ minutes this morning, I cannot find his original article. So all credit for this concept goes to him.
Mr. Carnevale offered a way to think about our stocks when quality companies go down in price. A possible emotion is to panic; some people, to avoid that pain, sell when the price tanks.
Mr. Carnevale said to imagine that we own our home. And that we have a pretty good sense of the value of our home. Then one day a stranger knocks on our door and offers to buy our home for a fraction of the value of the home.
Most of us would send the stranger on his way, because we know the value of our home and the offer made was simply below that value. For now we don't sell -- we wait for an appropriate offer.
Same for stock investing. Today, for many of the companies I own, the market bid from strangers is well below the value of the companies. Rather than panic, I should calmly say "no thank you" to the offer and go about my day. I don't sell -- I wait for an appropriate offer.
This paraphrased metaphor offered by Mr. Carnevale helps me keep emotions in check. Hopefully it gives us all a new way to think about these challenging days.