Since the long-term performance of stocks—which are simply shares of company ownership—will necessarily be determined by each company’s operational results (earnings, cash flow, dividends, asset values, etc.), our focus on long-term operational performance makes sense. Over the shorter term, however, stock prices can and do respond to a wide variety of temporary factors—giving rise to more stock price volatility than operational performance would seem to call for. We like this! That’s because temporarily underpriced or overpriced investments provide us the opportunity to increase or decrease our investments accordingly and thereby pursue above-average returns.