The Intelligent Investor's Almanac
Your Bi-Weekly Guide to Markets, Movements, & Money.
Presented By Ken Majmudar & Ridgewood Investments
Issue 22 • February 02 to February 15, 2026
Never miss another valuable edition of The Intelligent Investor's Almanac again.
The Value Investor
Ken Majmudar, CFA & Founder of Ridgewood Investments
“The stock market is a device for transferring money from the impatient to the patient.”
– Warren Buffett
Periods of market uncertainty tend to shorten decision horizons. Investment decisions that are typically evaluated over long periods are increasingly assessed through near-term price movements, as markets adjust more quickly than underlying fundamentals evolve. During such periods, market valuations may disconnect significantly from intrinsic value, in both directions.
Because the intrinsic value of a business evolves gradually, these disconnects often reflect shifts in investor sentiment rather than changes in long-term economics. Adopting a structured decision-making process and revisiting underlying assumptions can help ensure that short-term market dynamics do not interfere with long-term performance.
The Decision Investors Regret During Market Declines
Market downturns are often remembered not only for the magnitude of the decline, but for the context in which decisions were made. If you visualize periods like August 2007 or March 2020, investors made decisions under severe pressure, fear and uncertainty.
During such times, emotions play a larger role in guiding investment decisions as investors evaluate risk-return tradeoffs.
In this section we examine the choices investors most often regret in hindsight, and why those decisions, rather than the market decline itself, tend to impact long-term outcomes.
The Mistakes Investors Most Regret
Investors usually worry about buying and selling investments at the wrong time, or not having enough information.
Common assumptions include:
“I didn’t time the market correctly.”
“I picked the wrong investment.”
“I didn’t react fast enough.”
“I should have paid closer attention to those warning signs.”
These concerns are rarely the true source of long-term regret. Markets are inherently unpredictable, and no investor can consistently time short-term market movements (even Warren Buffett himself).
Even well-researched and high-quality investments are subject to severe short-term drawdowns even as underlying fundamentals largely remain unchanged.
The bigger challenge is not a lack of analysis, but the emotional pressures that drive us to “do something”. This urge to act can override logic or analysis.
Why Investor Temperament Is Challenged During Market Declines
Market downturns are challenging to stomach because enhanced volatility and heightened uncertainty changes how we as investors make decisions.
This chart illustrates the S&P 500 alongside the VIX, a measure of expected market volatility. It highlights periods where volatility increased representing periods of heightened market uncertainty and drawdowns, even as equity markets have increased over time.
When a company misses earnings estimates, a negative headline or significant single-day stock price change can assume disproportionate importance for investors, even when it conveys limited information about long-term fundamentals.
Instead of evaluating whether the underlying economics of a business remain fundamentally strong, investors focus on whether existing market conditions can be mitigated or “better managed” by taking actions that are perceived to reduce near-term uncertainty.
The Decisions Investors Most Regret
In practice, this is reflected in the following decisions:
Selling high-quality businesses during periods of increased volatility
Reducing instead of increasing exposure as valuations become attractive
Selling investments at the bottom and moving to “safer” assets only after markets have already fallen
Treating temporary uncertainty as a permanent decline
These decisions are influenced by how investors perceive loss. During market declines, the impact of declining portfolio value becomes immediate and personal and most importantly painful.
Behavioral research shows that investors feel the pain of losing $1 more intensely than the pleasure of gaining $1, a tendency known as loss aversion.
Panic selling during market declines reflects a natural human response to temporary losses, not an analytical error.
The challenge is that market recoveries often begin before investor confidence returns.
So how do we at Ridgewood Investments maintain equanimity when others are panicking? We rely on experience, train our minds and follow a process including the checklist below.
Decision Checklist During Market Declines:
A process makes it easier for investors to remain equanimous during market declines.
Having a Business-Owner’s Mindset Helps
An owner mindset is grounded in a different perspective on what market volatility represents. Rather than viewing short-term price fluctuations as signals that require an immediate response, business owners focus on whether the underlying economics of the business have changed.
Temporary share-price declines are interpreted as part of normal market fluctuations, rather than signals of a structural change in the business.
As Buffett has often mentioned, individuals do not think about selling a farm or their real estate property during recessions or market declines because they inherently think about these assets with a long-term mindset.
The only difference between investing in those assets and investing in stocks is that stock prices are quoted in real-time prices. What is actually a feature becomes a bug and turns into a disadvantage. Investors should hold stocks with the same long-term mindset with which they hold their real estate investments.
The time horizon, or ownership period, plays a central role in this mindset. Business owners evaluate outcomes over years and decades, not weeks. They expect earnings to compound through business cycles, and accept volatility and uncertainty as part of the process over long periods.
Warren Buffett has also illustrated this idea using the example of someone who plans to buy hamburgers over many years. When prices fall temporarily, the buyer benefits from lower prices.
From this perspective, a business-owner mindset should actually cause one to feel happy if stock prices decline.
How Ridgewood Helps Clients Stay Aligned During Downturns
Market declines generally do not require any new strategies; they only challenge investors’ ability to remain committed to their long-term objectives. During these periods, Ridgewood’s role is to help clients maintain a structured and long-term framework, rather than reacting to short-term market movements.
During periods of increased volatility, Ridgewood helps clients focus on the following process:
Assess whether price movements reflect changes in underlying fundamentals
Distinguish short-term market noise from information that affects long-term outcomes
Assess whether portfolio decisions maintain flexibility and remain aligned with long-term goals
By focusing on process over prediction, we at Ridgewood Investments help clients avoid emotionally driven decisions during periods of market uncertainty.
When the plan and assumptions remain intact, discipline often means avoiding unnecessary portfolio changes and continuing their alignment with long-term financial goals.
Here’s to building lasting wealth,
Ken Majmudar, CFA
Founder & Chief Investment Officer Ridgewood Investments
P.S. If you’re ready to explore how our institutional-grade investment approach can work for your portfolio, let’s schedule a time to talk below.
Gain Industry – Level Intelligence For Your Investment Strategy
Transform your approach to wealth building with institutional-grade insights. Schedule a private discovery call with Ken and the Ridgewood team to:
- Analyze your current portfolio positioning
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- Design your personalized wealth architecture
Building generational wealth requires institutional-grade thinking. Let’s discuss how our sophisticated approach can work for your family’s future.
Important Disclosure: Ridgewood Investments is a registered investment adviser. This newsletter is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results.