Steve Johnson

My first step is to wipe the slate clean. Forget I own it. Forget the share price has fallen. And try and take the emotion out of it. It shouldn't matter whether a stock has fallen, risen, or not moved for the past few years. What matters is the opportunity that is in front of you today. Given all of the available information, do I want to own the stock at today's price? And, if so, how much of the portfolio do I want to have invested in it? The answer to that question determines whether I am buying the stock, selling part of our holding or selling the lot. As value investors, more often than not we end up buying a stock that has fallen because it is cheaper than it was. But it's important not to be blindly contrarian. Sometimes new information can materially change our estimate of a business's value.


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