As I mentioned in my post about the purchase, the stock's price has been declining this year (despite no bad news or change in the company's fundamentals), so I felt compelled to take advantage of it being "on sale." Little did I know that the very next day (today) the market would see its biggest one-day loss thus far in 2012 and NSC would go down another 2.6%.
It is easy to get upset when this happens and I'll admit that I was a bit frustrated. However, at times like this I find it helpful to remind myself of the following points:
- Short-term price fluctuations are essentially impossible to predict, which is why market timing rarely works. I could not have predicted that the price would drop 2.6% today, so there is little sense in getting frustrated about it.
- My purchase price was a price at which I deemed I was getting a good stock at a good value, and that remains true. How would I have felt if the price had shot up and I had missed the opportunity to buy the stock when it was on sale? Indeed, I missed plenty of great buying opportunities last fall that would have led to double-digit gains by this time.
- If the price continues to fall, then I will have the opportunity to buy the stock at an even greater discount. (Whether I do will depend on the availability of cash and how much larger I am willing to make my position.)
- The purchase is intended as a long-term investment, so years from now I will not care about a price difference of a few percentage points.
- The price difference amounts to about $30, which is trivial relative to the size of my position and the rest of my portfolio. Moreover, I've spent $30 countless times on far less important things in my life -- and none of those things paid dividends.
- My primary investing goal is to create a sustainable, rising stream of dividend income, and my purchase is entirely consistent with that goal.