Can you name five companies whose products or services you use almost daily? What top brands are your family members unable to live without? I’ll go first:
• Apple — Nine out of 10 in my extended family use an iPhone on the Verizon network.
• Google — I search for answers to just about everything, multiple times per day, usually in a Chrome web browser.
• Berkshire Hathaway — They’re the holding company behind Geico, Duracell, Burlington Railroad, and See’s Candy, which is a personal favorite.
• J.P. Morgan Chase — This is the biggest bank and the credit card provider (powered by Visa) we all use.
• Proctor & Gamble — For the “quicker picker upper” (Bounty), “the best a man can get” (Gillette), and “hair you can’t get enough of” (Head & Shoulders), we reach for P&G products. They make nearly everything under the sink and in the laundry room.
I’ll bet your list has some overlap with mine, and that we share even more than five in common. We consistently rely on — and budget for — these brands and businesses in our daily activities.
Now imagine that you could own part of these successful long-lasting businesses, and it wouldn’t require boardroom visits or restroom cleanings. Instead, you can purchase shares. Warren Buffett would agree: Buying what you know is a wise investing principle.
When you log into your investment account, do you see a list of stocks and their prices or a list of real companies you rely on every day? Imagine: no ticker symbols. No flashing red or green arrows. Just some of the businesses that influence your daily life.
Now ask yourself: If the price of these companies were to drop 50%, would you stop using their products or services?
This isn’t a trick question. Understanding that you’re the partial owner of real companies, not a speculator in abstract stock tickers, shifts everything. Far too often, people meld the concept of “the market” with the economy or their financial future. But in reality, the market is simply a collection of daily prices driven largely by headlines and emotions.
Businesses, on the other hand, are real. They hire people. They make things, solve problems and serve customers. The best ones innovate relentlessly, grow shareholder value, increase earning and improve efficiency.
If “the market” were to drop 50% in price, I bet you’d still buy shampoo. You’d still pay your phone bill. You’d still hop on Netflix tonight to find a new show. The distinction between “stocks” and “businesses” may sound subtle, but it’s fundamental — and it becomes clear when you develop an ownership mentality. Prices can swing wildly based on moods and news. But a well-managed company still serves its customers, earns profits, and reinvests in its future.
Earlier this year, the S&P 500 was dominated by a handful of high-flying tech names priced at record-high valuations. Then, within just a few weeks, the market dropped nearly 22% from its peak. Did those businesses suddenly become less innovative? Did people stop using their products? Did their long-term earning power collapse overnight?
Of course not.
What collapsed was sentiment. The “tariff tantrum” reared its head, fear took the wheel, investors got spooked and prices fell. This quick emotional reaction was driven largely by unexpected news.
The stock market is often like a funhouse mirror, distorting reality in both directions. When times are great and things feel good, it’s easy to fall into greed and chase high prices. Conversely, when things get scary and uncertain, it’s easy to panic.
Resisting those urges, no matter how “logical” they may seem, is good investment behavior. The temptation to react will always exist, but panicking and selling great companies has never been a winning strategy. What separates successful investors isn’t their ability to predict the market, but their good investment behavior when it matters most.
Buinesses like those I’ve listed have delivered something remarkable over decades: the slow, steady, relentless compounding of value. Their stock prices may be volatile, but their results trend upward. Earnings rise, dividends grow and shareholders who stay invested are typically rewarded.
I believe the greatest returns don’t come from picking the fastest growing stocks but instead from fostering good investment behavior and sticking to a long-term perspective. To invest requires optimism, believing that no matter what happens day-to-day, our future will be brighter. Markets may consist of numbers and headlines, but investing is ultimately human.
When you’re tempted to check your portfolio five times a day, remember you’re not just holding stocks; you’re part-owner in businesses you rely on and understand. That little shift in thinking can improve investor behavior and make all the difference in your financial success.
Then, the next time volatility strikes and people are running for the exits, take a breath. Your job is to stay focused on long-term ownership of those quality companies you’ve chosen — the ones that improve lives and create lasting value.
Steve Booren is the founder of Prosperion Financial Advisors in Greenwood Village. He is the author of “Blind Spots: The Mental Mistakes Investors Make” and “Intelligent Investing: Your Guide to a Growing Retirement Income” He was named by Forbes as a 2024 Best-in-State Wealth Advisor, and a Barron’s 2024 Top Advisor by State.