Stock Market: When Shoud You Care?

Should you care what the stock market is doing?

It depends!

If you're a trader, probably. I'm not a trader--usually.

If you're an investor, you should be more concerned with your company and industry and the price that YOU paid to own part of it, but you should NOT be too overly concerned.

Why not?


If you go to the store to buy some of your favorite cookies, and you see they're on sale, you'll probably buy some. Usually, they cost $2.50/package. Today, they cost $1.75. Okay, that sounds like a good deal.

If you go to the store the next day and see those same cookies for $1.25/package, did you get ripped? No. You just didn't take advantage of today's sale, which is even better than yesterday's sale. You still bought the cookies for less than their value.

It seems silly within this example, but I see this type of reaction from people with their stocks. They bought some stock, which was at a GREAT price yesterday. However, if the stock goes down today, they forget about the value they got yesterday. They just focus on today's loss relative to yesterday.

Now, it's good to check these cookies. Has there been anything in the news about people getting sick from eating these cookies? Is there a problem with the store? Is the store trying to squeeze out its competitors, only to raise your prices later? Is there an even better cookie available now?

You might see where I'm heading. You should always to keeping track of what is happening to your company, its products, its service, its costs, its competition, its industry, etc. There may be a VERY good reason that the price is dipping, and it's a really good idea to learn this before too many other people do.

Too often, though, there won't be any change to the company, only its stock price. People won't pay attention to the company, but they'll pay attention to its stock. They overlook that many other stock owners don't know anything about the company, either, but they're following their lead, anyway.

So when should you care about what the stock market is doing?

You should care if

• you're a trader
• the company is doing worse
• the industry is in trouble
• the product or service is suddenly inferrior
• the laws changed in the wrong direction for this company
• the price JUMPS HIGHER for no particular reason (You might want to sell!)
  

or if you just like following many other people who don't know what they're doing.

Otherwise, sit tight. You have your strategy. Let other people have their stress. You can just sit back, and enjoy the ride!