All the gurus say it. Buffett, Lynch, Pabrai. Invest in the stock market to become rich. But looking at my portfolio recently, I sure don't feel rich, and, frankly, the market's not helping.
Look at Washington Mutual (NYSE: WM ) -- down 43% in three months because of questionable home appraisals. Then there's American Eagle Outfitters (NYSE: AEO ) , down nearly 10% on general worries about weakness in the retail sector.
One of the few bright spots in the market is Expeditors International of Washington (Nasdaq: EXPD ) . But even that fell 12% in one day, thanks to an analyst downgrade. Heck, last August, it fell almost 20% along with everything else, it seems, and it really isn't tied into the housing or subprime woes at all.
What's an investor to do?
A brief anatomy lesson
My favorite quote, among the thousands that deal with investing, is this one: "When in danger or in doubt, run in circles, scream and shout."
Wait, wait. Wrong one.
Here we go: "The key to good investing is not the brain, it's having the stomach."
While that might not be a word-for-word quote of Peter Lynch, it certainly is a paraphrase of what he taught. And he's not the only one who's expressed that sentiment either. Remember this one?
"Be fearful when others are greedy and greedy when others are fearful." Warren Buffett has lots of great advice, but that one just begs to be framed.
There's always something to worry about
What Peter Lynch meant is that worries always abound. The successful investor knows to mostly ignore them.
Right now, the big bugaboo is the credit markets turmoil. Two years ago, it was avian flu. At the beginning of the millennium, the dot-com crash.
Before that, we feared that Americans couldn't keep up with the Japanese. Remember when "they" bought Rockefeller Center?
The 1970s had inflation and an oil crisis. The 1950s had fears of nuclear winter.
Do you see a pattern here?
Although the market always has something to worry about, the worry du jour has never meant the end of the investing world.
Instead, strong businesses survive and keep growing -- taking the market along for the ride.
Less worry, more money
Now, not every company survives, and people do lose money investing. That's why you'll do well to focus on strong operators and superior management teams.
Why did eBay (Nasdaq: EBAY ) survive the dot-com crash? It had a viable business model and the right people in place to make it great.
Although Asian manufacturers did end up gaining an edge in many markets, American entrepreneurs responded with businesses such as Google (Nasdaq: GOOG ) and Electronic Arts (Nasdaq: ERTS ) that have kept our capital markets strong.
Coca-Cola (NYSE: KO ) has been a company that's been affected by every one of these worries -- and lived to tell the tale. It's a blue-chip brand that's always worth considering for purchase when the market dips.
Consider: Coke has returned more than 13% annually over the past two decades!
Something for everyone
Which kind of investor are you: A Chicken Little or one who will take advantage of market panic to profit?
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Jim Mueller hasn't lost his head (last time he checked), but he has been hit by a low flying cloud once or twice. He owns shares of American Eagle, Washington Mutual, Coke, and Expeditors. The Motley Fool also owns shares of American Eagle. American Eagle, eBay, and Electronic Arts are Stock Advisor selections. Coca-Cola is an Inside Value pick. Washington Mutual is an Income Investor selection. The Fool's disclosure policy is always calm, cool, and collected.