What would Warren Buffet Do (or not do):

• Don’t be too fixated on daily moves in the stock market:
• Don’t get excited about your investment gains when the market is climbing:
• Don’t be distracted by macroeconomic forecasts:
• Don’t limit yourself to just one industry:
• Don’t be short on cash when you need it most:
• Don’t wager against the U.S. and its economic potential:
• Don’t beat yourself up over wrong decisions; take responsibility for them

And a few other thoughts on overall investing…..

Welcome to Real Investing!

The reason to celebrate (a dip in the market) is that is a completely normal and healthy part of investing. Stocks have been on an almost uninterrupted climb since I started this blog in 2011, which may have given beginners an unrealistically rosy picture. But now we’re seeing a more natural pattern, and I’m glad. Because this actually means more wealth for all of us. It’s a sale on stocks.

Buying Stuff at Lower Prices is Better

Think of it this way: Suppose you’re just starting out as an egg farmer, and your goal is to build up a nice, profitable business. You want to build up a flock of hens so big that they are eventually producing thousands of eggs per month. Enough to live off for life and retire.

You buy your first 100 hens, and they get right to work. You allow those eggs to hatch so more hens can be born, and you also continue to buy hens from the farm supply store. Suddenly your phone rings and it’s Farmer Joe down the road. “The price of hens has just dropped by 50%! You’ve just lost five grand on those hundred hens you bought last summer!”

Is this a sensible way to think about it? No, of course not. You’re happy that hens are cheaper, because now you can build your egg business even faster.

Stocks are just like hens. They lay eggs called “dividends”, which are real money that can either flow automatically into your checking account, or automatically reinvest itself to buy still more stocks. Some younger companies don’t pay dividends, but that doesn’t mean they aren’t making you money – they are just reinvesting their profits to grow even faster – and eventually become a Super Hen.

There’s only one time you care if one of your shares is down: on the day you sell it. And as a wise lifetime buyer of only low-fee index funds, this day is sometime well into your retirement, only after you’ve spent your dividend income and drained down any other cash reserves you might have sitting around.

… actual Dividend Eggs show up in your account every 3 months. You can use them to buy more shares, or to buy edible eggs or other groceries.

…Interestingly enough, when I wrote the basic text of this article a month ago, my dividend was the same while stocks were 10% lower, thus making my investment yield 10% higher !

So What Have We Learned?

If you’re still earning money and investing it, these are good times. The more the stock market drops, the happier you should be. Just keep your primary life stable (reasonable spending, no consumer debt, good healthy habits), and pour the rest into those investments.