If you liked IBM at $199 then...

By Dian Vujovich

An old-time stockbroker once told me that if you liked a stock after it had reached a new high, then you’ve got to love it after its price falls. There is a lot of truth to that provided you’ve done your due diligence and researched the companies you have an interest in before investing.
Heck, word is Warren Buffett, Mr. Research, lost $2 billion in a couple of days and he’s holding on to the two biggest reasons for the drop. What about you?

Depending upon your age and your investment goals, you either are a long-term stock market investor or you are not. There’s really no kinda sorta in between. Have years to go before the money invested in stocks will need to be used or withdrawn, and the bouncy-bouncy actions in the markets are just part of the deal.

If it’s day trading or very short-term bets that captivate your investment style, researching a company is also imperative but volatility becomes a more serious in-your-face reality that needs to be addressed and held consciously in the forefront your mind.

To be fair, 99.99 percent of us aren’t billionaire investors like Buffett nor do we manage millions for others. The two holdings that dropped in value in Buffett’s Berkshire Hathaway Inc. (BRKB) were Coca-Cola (KO) and IBM (IBM), according to Money.CNN.com. Even after their drop in value BBKB held its own closing up $1.74 at $138.97 today, Tuesday, Oct. 20th.

I’m not pushing Coke or IBM as investments for you. IBM, for instance, has been as high as $199.21 within the past 52-weeks and closed today at $163.23. Coke’s high was $44.87 and it closed at $40.68.

The point I’m hoping to make is that stock prices rise and fall (doh!) and companies go in and out of favor—many times for no reason at all. Other times for good reason. So the best any investor can do is understand the ins and outs of the companies they choose to invest in, decide why they are going to buy the stock, for how long they intend to hold it, review the holdings and reasons for the purchase occasionally and then let the chips fall where they may.

For the record, BTN Research reports that the S&P 500 has not had a 10 percent correction in three years, since October 3, 2011. Corrections are normal. The only thing surprising and always unusual about a correction is what triggers it.