From Cat Rock Capital at Graham & Doddsville:

Panic, fear and market psychology all play an important role in driving stocks during periods like this one. Markets become less efficient because investors are not behaving like rational calculators of long-term intrinsic value. Managers panic and "de-gross" to avoid larger losses. They make assumptions about how other managers will react to the news and try to react more quickly. A large stock price decline itself can scare investors into exaggerating the severity of a company’s problems. We need to remain rational and intellectually honest to decide whether to buy, hold or sell after a stock price decline...

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