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Stock investors have had a rough 2022 so far. The ETF VOO, which tracks the S&P 500, is down almost 14% since the beginning of the year. This could leave investors worried about purchasing stocks right now as they fear this trend continuing. That being said, no one actually has any idea what the stock market is going to do when it opens back up on Monday. No one has any idea how the market itself will end the year. To prove my point, I'll turn to one of the greatest investors the world has ever known, Warren Buffett.
Yesterday, at Berkshire's annual shareholders meeting, Warren Buffett said, "We haven't the faintest idea what the stock market is gonna do when it opens on Monday — we never have."
He then, while sitting next to his business partner Charlie Munger, stated, "I don't think we've ever made a decision where either one of us has either said or been thinking: 'We should buy or sell based on what the market is going to do."
If Warren Buffett doesn't know how the market is going to open Monday, I don't see how anyone can claim that they do. I have no idea how it will open Monday. Buffett might now know how the market will open Monday but that doesn't matter to him that much. He doesn't buy and sell based off what he thinks the market itself is going to do.
I might not know how the market will open Monday, but when looking at a company, I do know what its current p/e ratio is. I do know if sales have so far been increasing or if they are stagnant. I do know if the company is profitable or not. I do know the market cap of the company, and I know if that is a valuation that makes sense to me.
All of these things matter to me when I am deciding if I want to invest into a company or not. I feel like people forget that when they are buying a stock, they are buying a piece of a company. When people have that in mind, do the current market trends really matter? To me, they do not at all. What does matter to me is finding a company that is rightly valued that has a lot of growth potential.
To me, it does not matter what the market is going to do Monday. What matters to me is the business I am buying itself. If the company's stock happens to fall Monday, I should look at it with a smile on my face because now I get to buy the company at an even better price than before.
My goal is to never care what the overall market is doing and to just care about the businesses themselves that I am buying.
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