One of the quotes that really stood out to me when investing has been associated with a number of different figures throughout history. Some sources suggest that it was a biblical reference while others suggest it was the White Rabbit from Alice in Wonderland (1951) that first coined the phrase: "Don't just do something, stand there."
While short and simple, it really does play an important role in investing! It certainly came to my mind quite regularly through January which saw the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) plunge 3% – its worst January since 2010. Significant gains that had been realised in the market's rally in 2013 were largely reversed over the course of the month as poor Chinese manufacturing data played on Australian investors' minds.
Of course, the losses were not just experienced locally, but were felt all around the world as the US Federal Reserve also continued to taper its bond-buying program (which has fuelled global liquidity in recent years) by a further US$10 billion a month.
It has to be said, when watching the value of your portfolio fall, it is certainly tempting to sell stocks and lock-in-profits (or, at the very least, limit the losses!)
However, investors are urged to not sell their shares in a state of panic. After all, while you are selling stocks at heavily discounted prices, someone else is picking them up at a great discount. It is also vital to remember that when you buy stocks, you are actually buying a part of the company. Investors should ask themselves, although shares are falling in price, have the business' fundamentals changed? Are its growth prospects any different?
Take The Motley Fool's co-founder and CEO David Gardner as a perfect example. He recently celebrated his very first 100-bagger after having held onto his stocks through the good times and the bad. Yes, that's right, his investment gained over 10,000%! It should be noted that during the time that he held the stock, his shares plunged over 90% during the dot-come crash as investors feared for the company's future.
By holding on for the long-term, enormous gains were recognised (and, believe it or not, the company is still growing at an alarming rate!). The company that I speak of is online retail behemoth Amazon.com, Inc. (NASDAQ: AMZN).
Fools, even though the stock market might not be your best friend at the minute, it is important that you assess whether or not your investment thesis has changed. Has any news been released which could affect the company's future? Has a highly valued CEO left the company? If not, then ride the market's moods out and hold for the long-term. Don't just do something, stand there.
Foolish takeaway
Some of the companies which have fallen over the last month which investors could consider adding to their portfolio include Telstra Corporation Ltd (ASX: TLS) (which currently boasts a fully franked 5.6% dividend yield), NIB Holdings Limited (ASX: NHF) or Nearmap Ltd (ASX: NEA).
