A price decline is of no real importance to the bona fide…
“A price decline is of no real importance to the bona fide investor unless it is either very substantial say, more than a third from cost or unless it reflects a known deterioration of consequence in the company's position. In a well-defined bear market many sound common stocks sell temporarily at extraordinary low prices. It is possible that the investor may then have a paper loss of fully 50 per cent on some of his holdings, without any convincing indication that the underlying values have been permanently affected.”
About This Quote
This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation.
A price drop matters only if it’s large or signals a real decline in the company’s fundamentals; otherwise it may be a temporary market dip.
In simple terms: Only big drops or real problems matter.
Key Takeaway
Ignore small dips; focus on fundamentals.
Themes
investment
valuation
risk management
Mood
cautious
analytical
Type
advisory
analytical
When to use this quote
- portfolio review
- stock selection
- risk assessment
Key Concepts
fundamental analysis
market cycles
Questions to Reflect On
- Is the decline due to market sentiment or company health?
- How much loss is tolerable before acting?
A Different Perspective
A small decline can still be a warning sign if the cause is unknown.