What Are We Really Dealing With Here?

Dave Hutchison, CFA |

When someone feels they must bring up the importance of temperament in investing…. you know it probably hasn’t been smooth sailing in the markets. Moments where you are being tested.  And our hard-wired instinct to run from fires, tigers and falling rocks tends to kick in.

But are bumpy markets the same thing as an urgent, dangerous problem requiring split-second responses?  Shouldn’t we see these situations as an opportunity that is temporary and won’t persist?  With added emphasis that rash decisions based solely on current conditions can end up impairing your ability to achieve your financial goals.

From Warren Buffett:

“This is the one thing I can never understand. To refer to a personal taste of mine, I’m going to buy hamburgers the rest of my life. When hamburgers go down in price, we sing “Hallelujah Chorus” in the Buffett household. When hamburgers go up, we weep. For most people, it’s the same way with everything in life they will be buying – except stocks. When stocks go down and you can get more for your money, people don’t like them anymore.”