Focus on Net Worth

In my investment fund I tell my shareholders what they should be focusing on:

Our focus is on Net Worth not Profit or Loss. If we sell a share that has capital gain, the gain will show up as profit. We may have given up, however, the future potential of the company. There are times we must sell the share and perhaps precipitate a loss. The future potential of the company has changed and it can go to zero or a mistake was made. There are times when selling one share and buying another is a sensible thing to do. The shareholder should look pass the noise and focus on the long term Net Worth of the company.

This is also true of the individual investor.