A Path to Financial Freedom posted an article on Psychology in Crisis and Herd Investing. Worth a read.
I pretty much prefer to buy a share of a company if I have a reasonable idea why the company will likely be viable as a business for the longer term. For instance, it sells essential products (or products with a brand) that are consumed at an increasing rate as the world (its customers) develops.
One such company I was watching was Target. Wifey and I have personally visited their stores and have always preferred to shop at Target than most other retail stores. Many of the rest tends to feel messy, disorganised.
But Target was having a really bad time at one point. Its credit card business was hacked into and created a huge problem with its customers. Its expansion into Canada was running into trouble. It seems there are significant differences in the shopping habit of Canadians compares to the Americans, and likewise with the supply chain. It didn't help that Walmart had already set foot on Canadian soil much earlier and had established its presence.
I kind of felt that the credit card thing was really a transient problem. It would eventually blow over. The Canadian thing was something else. It would continue to bleed unless Target found a way to turn things around. The alternative of course was what eventually happened. They exited from the pains. That's when I decided it was the right point to buy.
Over the past months, the shares in Target has risen several tens of percentage points. It has been a good buy.
Is this a Cigar Butt situation that Warren Buffet speaks of? I don't think so. There is life beyond that one puff. Target remains as my midfielder in My US Team of Growth/Dividend Stocks.