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Maintain the Courage of Your Convictions

6/8/2022

Don't let anxiety about the market derail your portfolio strategy.

Online stock message boards can be toxic to any investor’s mental well-being, with every suggestion met with an opposing recommendation.

During periods of market uncertainty, I am often distressed at the mounds of misinformation that get shoveled around in these forums. But the blame doesn’t fall entirely on those individuals who share their anxieties over the state of the stock market.

Behavioral finance research explains that human brains work differently when they are under stress, and a volatile market easily falls into the category of fear-inducing experiences. Emotion and intellect go their own separate ways during times of turmoil.

Shortly after the arrival of the pandemic in 2020, I adopted as my mantra for subscribers, “Stay the course.” This was intended as a reminder that, while the world might not be “normal,” in the end well-run companies and the market would resume their upward marches.

Now that the economy and the markets are facing different pressures, it is a good time for investors to take a moment to renew their vows to their personal investing approach. If you believe in the power of capitalism and American business, and if you believe in the strength of the stock market over the long-term, then there is no better time than right now to accumulate shares of well-run companies in your portfolio.

Yes, the market may go down from here, but no one—absolutely no one—can predict when or how much or for how long. But investors who use common sense and who understand history know that their portfolios will ultimately resume their skyward climb. There is no better time to be an investor than right now.

This issue features a number of well-managed companies with attractive total returns that could well fit into your portfolio, along with two focus stocks of particular interest that meet our standards for quality and valuation. Both of our highlighted companies have very strong prospects for fundamental growth, but have present valuations that have overly corrected and thus provide very good options for future total return for investors who act with the courage of their convictions.

And remember: Stay the course!

  • DOUGLAS GERLACH

Reprinted from the June 2022 issue of the SmallCap Informer.

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