Anytime volatility picks up or the market makes a big move higher or lower, investors should remember that the market sets prices based off of the collective wisdom and stupidity from millions of decisions.

But as is often the case, many investors rely heavily on the direction of prices to decide how they should act (eventually, leading them to look for “expert” opinions or forecasts to confirm their actions).

When price direction alone dictates your actions, then it’s a good time to remind yourself that stocks are not pieces of paper, but pieces of a business. As Graham’s parable of Mr. Market likes to point out, the price being offered on any given day doesn’t always reflect the real value of the business. Continue Reading…