All of the gurus say it, from Buffett to Lynch to 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 Merrill Lynch
One of the few bright spots in the market is Vale
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
Peter Lynch meant that worries always abound. The successful investor knows to mostly ignore them.
Right now, the big bugaboo is the credit-market turmoil and housing. Two years ago, it was avian flu. At the beginning of the millennium, it was 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 war.
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 -- and they take 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 Netflix
Although Asian manufacturers did end up gaining an edge in many markets, American entrepreneurs responded with businesses such as Intel
Procter & Gamble
Consider: P&G has returned more than 16% 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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This article was first published on Dec. 7, 2007. It has been updated.
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 Netflix, which is a Stock Advisor selection. Home Depot and Intel are both Inside Value selections. The Fool's disclosure policy is always calm, cool, and collected.