So why do many investors sell companies that have good long-term earnings prospects?
They keep thinking that there is some magic formula that justifies dumping stocks that are still very good companies, he said.
Robbins urged “investors to hold on tight” to companies that have good fundamentals, but whose stock prices are not good.
He cited Flextronics as an example of a company in which the short-term prospects seem rocky, but which over the long term is set up to win.
“They have just exited some low-volume businesses, which depressed earnings,” Robbins noted, adding that the changes will make the company stronger over the long-term. The short-term movement of the stock is spooking investors, but its long term fundamentals are good, Robbins said.
Robbins contended that fundamental investing trumps business cycles and that the best companies will provide long-term growth even if the economy tanks.
“Why is the price down? We don’t know,” Robbins said. But, he said, the lesson is clear: Hang onto companies with good fundamentals.