Check Your Emotion At The Door

Yesterday afternoon as I was doing a couple of errands after the close I heard Gene Hensler on the Kudlow show.

Mr. Hensler gave a few picks including Bank Of America (BAC). Apparently Tom Brown had been on the Kudlow show recently with some negative things to say about BAC. I know about a report Mr. Brown wrote about BAC a while back saying that it was a big hedge fund, the actual bank business was struggling badly and if the trading fortunes turn, the stock would be in trouble.

All Kudlow said was that Brown thought the bank would be better off without Ken Lewis as CEO. I do not know if Brown's other reasoning has changed or not but that isn't really the point. Hensler sounded like he got very worked up about Brown's comments saying the Lewis was his (Hensler's) former student and that he took personal offense to Brown's comments (I only heard this on the radio, anyone see it and thinks Hensler was not emotional please post a comment).

I own BAC for most clients as a core domestic, financial holding. Brown's hedge fund comments were a concern back when I read the report. I did a little more reading and thinking and decided to keep the stock. My decision was based on some research and will either be right or wrong. After hearing Mr. Hensler's defense of the company it would be reasonable to wonder if he can remain emotionally detached and objectively assess the company.

I don't know Hensler and maybe he can handle BAC just fine. The point of this post is about emotion. I am not a fan of letting emotion be part of the investment process. Earlier today I mentioned being lucky enough to sell half my Dell a few weeks ago. I like Dell, I have one of their computers, I don't think there is anything big that can happen in the industry without Dell but I wanted to reduce domestic tech. As I looked at what I owned, Dell seemed better to sell.

Hopefully I write well enough to convey the lack of emotion that went into this decision. From the standpoint of this is how the market works, some good stocks will go bad, you will get some wrong and so on. Knowing that a good stock might eventually turn (maybe this is happening now with Dell) makes selling easier. Fannie Mae is a great example. Was there a stock more popular a few years ago?

In trying to muster some introspection I know I do a better job without emotional involvement.