Warren Buffett Way : Turn off stock market

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According to legendary investor Warren Buffett this first step is the most difficult step to take by the investor, So try understanding it in minute detail and one should understand it very deeply. It reads : TURN OFF STOCK MARKET. reading it one might think this is weird how can a stock market investor turn the stock market news/movements off....but it is the most essential requirement while purchasing a business. I think once you read this full post you will definitely agree with this step and would feel that it is not that difficult to implement but requires sheer analytic ability.

Remember that stock market is manic-depressive, Sometimes it is wildly excited about future prospects and sometimes it is unresonably depressed(like 1929 and 2008-2011), Such times are best for grabbing the oppurtunity to invest in shares of outstanding businesses which are probably undervalued in these depression times, But as you would not take direction from an advisor who has manic-depressive tendencies, you should also allow stock market to dictate you actions to take. The stock market is not a preceptor, it exists merely to assist you with the mechanics of buying or selling shares of stock. If you believe that stock market is smarter then you are, give it your hard-earned money by investing in index funds. If you have a sound understanding about the business you want to invest in then TURN THE STOCK MARKET OFF.

If a potential investor plans to own shares of an outstanding business for long term then what happens in stock market on daily basis is rather inconsequential. You will rather be surprised that in this way your portfolio weathers nicely without constantly looking at the market. You can give a test to trust this way of investing. Turn off the stock market for 48 hours, don't check newspaper, business channels or any other business media related to stock market. If after 48 hours your investments are holding good then turn off the market for 3 days than for a week and gradually you would feel that looking stock market daily is a fools game. The bottom line is that Stock market should not dictate price of your stocks. The same holds for institutional investors and individual investors also. You need to see stock market only when you are ready for next investment and want to know "Has anybody done anything foolish lately that allows you an oppurtunity to buy another good business at great price".

Step 1 : Turn off stock market
Step 2 : Don't worry about the economy
Step 3 : Buy a business, not a stock
Step 4 : manage a portfolio of businesses