Investor vs. Speculator
The Intelligent Investor is a classic in the financial realms. Unfortunately, in the homes of most Americans, its philosophies are hugely ignored.
Considering the state of our nation's economy and financial markets I found this chapter of particular interest: Chp. 8 - The Investor and Market Fluctuations. It addresses the psychology of investing and what to do when the market goes up/down.
The author is a little tricky in his wording and you have to follow closely or you'll tangle in a web of semantics. The big takeaway is Graham's distinction of investors vs. speculators.
A few key quotes (emphasis mine):
"The most realistic distinction between the investor and the speculator is found in their attitude toward stock-market movements. The speculator's primary interest lies in anticipating and profiting from market fluctuations. The investor's primary interest lies in acquiring and holding suitable securities at suitable prices."
"Timing is of great psychological importance to the speculator because he wants to make his profit in a hurry. The idea of waiting a year before his stock moves up is repugnant to him. But a waiting period, is of no consequence to the investor. ...What this means is that timing is of no real value to the investor unless it coincides with pricing..."
"If you, the reader, expect to get rich over the years by following some system or leadership in market forecasting, you must be expecting to try to do what countless others are aiming at, and to be able to do it better than your numerous competitors in the market. There is no basis in logic or in experience for assuming that the typical or average investor can anticipate market movements more successfully than the general public, of which he is himself a part."
"The investor can scarcely take seriously the innumerable predictions which appear almost daily and are his for the asking. Yet in many cases he pays attention to them and even acts upon them. Why? Because he has been persuaded that it is important for him to form some opinion of the future course of the stock market..."
"The investor with a portfolio of sound stocks should expect their prices to fluctuate and should neither be concerned by sizable declines nor become excited by sizable advances."