mind trick

Here is something really simple that I would like to share with you guys that may help calm the nerves and help you sleep with what is happening to the SP.

Being well aware of the major difference between PRICE and VALUE, I try to always think of my portfolio in terms of what it is worth now, not what someone is paying for it today. To do this, I simply add up the number of shares and multiply by a conservative valuation. For CCC I have used the latest one of 14c as I feel personally comfortable that this is a fair price for where things stand right now. This gives me the true value of the stock (more than double the current price).

I do this for all of my stocks and that gives me the true value of my portfolio. This will not change unless something happens to the fundamental situation either way.

I actually try to ignore what the final figure on my trade account says. To me it is not an accurate reflection. Believe me, my portfolio is now WORTH alot more than it shows on my eTrade account.

You may say "but a stock is only worth what someone is prepared to pay for it" or something like that.

The important thing to remember is that a broker account valuation will only give you the last trade. This of course usually will not resemble the true value of the business due to usually very low volume.

If three people decided to sell CCC for 6c tomorrow it would not at all give a true reflection of the value, any more than three people buying it at 20c would. If somebody wanted to buy CCC right now outright, they would need to be paying well in excess of 6c and possibly even more than 14c a share as the business as a whole is worth more than that now.

You may think this trick is just lulling me into a false sense of security, but believe me it gives a far more accurate view of where my investments stand than following the day to day movements of a small amount of traders and basing the sum of it on that.

Anyway, I know this is simple but I hope that helps someone.


"Price is what you pay, value is what you get"