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 extraordinarily 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.
A significant price decline is of importance to the investor.
- He would have been well advised to scrutinize the picture with some care, to see whether he had made any miscalculations.
- But if the results of his study were reassuring - as they should have been - he was entitled then to disregard the market decline as a temporary vagary of finance, unless he had the funds and the courage to take advantage of it by buying more on the bargain basis offered.