I read an article this morning discussing the fact that we can nurture both negative and positive motivation.

We nurture negative motivation when we figure, after eating a Hersheys kiss, that we've gone off our diet anyway so we may as well finish the whole bag.

We nurture positive motivation when we enjoy the one kiss as a treat and continue on during the day eating healthy food.

It's similar with investing.

We can nurture negative motivation by obsessing, in markets like this, about stock prices. This feeds our fear and encourages us to do things to make the fear go away. Unfortunately things like selling in a panic or not buying when a company is "on sale" might not be in our best interests.

Or, we can nurture positive motivation and focus on being investors. We can take the time, energy and worry we are giving to stock prices and redirect it into something useful like taking the time to learn more about the fundamentals of the companies we have invested in. If we understand their businesses, and we focus on fundamental business results such as growth in sales and profit margins that we expected when we chose them as an investment, the hour to hour madness of the price setters trading in the stock market will become less important.

I'd recommend you take some time in your investment club meetings getting to know the companies you've invested in better and less time looking at how much you've gained or lost on each stock you own. Here's some questions you might work on answering.

1. What businesses are your companies in? What percentage of their profits come from each?
2. Where do they sell their products?
3. Who is their CEO? What do you know about him/her?
4. What were your expectations for sales growth and profit margin when you purchased this company?
5. When was their last/next earnings report?
6. Did they give any guidance about future growth in sales and earnings in their most recent earnings conference call or earnings report?
7. Where did they say it was going to come from?
8. Do you believe them or do you think it is wishful thinking on their part?
9. Are they meeting the sales and profit margin expectations you had when you purchased them as an investment?
10. What external factors are affecting their stock price? Are they creating an opportunity to invest in a good company at a good price or are they factors which will make it hard for the company to achieve the sales growth and profitability you anticipated?

You don't have to work on answering all of these at once. Pick one or two for your investment club meeting and have everyone answer it for the stock they are following. Most important is to keep your focus on the goal. You want to grow as investors by focusing your energies on learning to answer questions like these.

In my experience, if you focus on understanding and following the fundamental business results of your companies, the stock prices fall in line. On the "bad" days, the price of the stock of fundamentally sound companies doesn't fall nearly as much as others and on "good" days, they get rewarded more than their less fundamentally sound counterparts.

You might find that the "bad" days become your favorites because they mean there's a big sale going on!

--
Laurie Frederiksen
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