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Eric Houssels
Eric Houssels

The Bears Came Out – a Pep Talk

August 02, 2007

The bears are out, this is a time of fear. Anything and everything financial is set to crumble into bankruptcy and, in so doing, rip the US and then global economies into recess/depression. The house of cards is collapsing – every man, woman and child for himself. How – oh, how – are we going to get through this?

While purposefully dramatic for entertainment effect, the above sentiments have had to have been felt to some degree by some, if not all, of us since last Thursday. I found myself checking stock prices twice as frequently as normal (especially the big droppers), fretting and cheering over daily portfolio balance changes, and caring far too much about what some sell-side schema was blabbering about on CNBC. After being up and down emotionally too many times last Thursday and Friday, I finally found my ground on Saturday morning. This is not a time to fear, to panic; this is not a time for greed, either (although this is arguable). My ground is simple – this is a time to get to work.

A plethora of good businesses have gotten significantly less expensive over the last five days. I believe that I own and have been owning a number of these for quite some time. Of some of these, I have been desiring to buy more. And now I am. Contrary to the way it feels, the business valuations for honest and capable operating businesses that take their balance sheets seriously really have not changed much in the last five days. Yet, our ‘ol friend Mr. Market is in one of his moods, itching to put his savings in the mattress. Well, let’s indulge him.

Editor: Co-founder and managing member of Houssels Capital Management Eric Houssels shares his thoughts on the current stock market.

I said that I do not believe it is a time for greed, although it may very well be. Personally, I do not believe myself to be experienced enough to declare a “greed time” with a high degree of confidence, so I won’t. What I will say, what I do believe in, what my “getting to work” phrase really means is that we all must stay rational. In low volatility, upwardly drifting times, staying rational is not too, too difficult. But, in these times, it is a true challenge. We must continue to do what makes sense to us, to focus on the quiet interpretation of fact and tune out the currently deafening noise. Honor our theses and the fundamentals – this has always been and remains our core advantage.

About the author:

Eric Houssels
Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

Rating: 3.0/5 (13 votes)


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