February 28, 2008

Having a bear of a time

Did you see the stock charts today?

Why is it that whenever the Fed chairman speaks, the index charts start looking like those of a patient in V-fib?

I can't be the only investor who reads The Motley Fool.

What really cracks me up is that what Bernanke said today to the Senate Banking Committee was just a repeat performance of the speech he gave to the House yesterday.

Get a grip, guys.

This is such a basic rule of investing, I find it hard to believe that there are so many people who don't know it that they cause these wild market fluctuations for no reason. Here it is: You don't buy or sell based on news. You buy or sell based on each company's funamentals.

If all the reasons you bought a company's stock are true (and please tell me you're not buying stocks because your brother's neighbor's cousin knows a guy who said it was a sure thing), then you don't sell just because Ben Bernanke says boo to Congress.

Of course, if it goes down because a bunch of fibrillating traders who don't know Peter Lynch from Peter Pan bail out, then you can buy more. Honestly, some days, it's like a bargain basement sale.

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