Investors today have instant access to minute by minute changes in the stock prices of their portfolio holdings in real time. Since stock prices tend to fluctuate wildly from one day to the next, I for one do not feel that this information overload is a good thing. What makes matters even worse is how wildly the value of a stock can change from one day to the next. It's not uncommon to see a stock rise or fall by 10% or more on any given trading day. Yet common sense would dictate that the intrinsic value of a large publicly traded company could not possibly change that much that quickly.

The world's leading investors have long understood that current stock price is not always the best indicator, and certainly not the only indicator of a company's True Worth™. These experienced investors acknowledge and understand that market prices can overvalue or undervalue a company at any given point in time. These astute investors will take advantage of overvaluation as an opportunity to sell, and conversely, exploit fear-based undervaluation as an opportunity to buy. Smart investment decisions are made based on the prudent practice of calculating a company's intrinsic value based on fundamentals, primarily earnings and cash flows.

Source: Safe Haven

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