A Capital Frame of Reference differs from the mainstream frame of reference that is espoused by the financial media, often at the behest of Wall Street-associated advisers, brokers, dealers, planners, commentators, television personalities, and the like.  Among the most significant factors that build a Capital Frame of Reference are those that treat investment asset holdings as inherently volatile, retirement accounts as simple, but effective tax devices that may be leveraged for advantage, wealth and income as two demonstrably different concepts that are often mistreated as synonymous, and the markets' securities prices as sometimes irrational.

Here are some points that speak to these issues:

Every dollar earned contains the same latent potential for either squandering or significant compounding gains.  

Seek out businesses that continually demonstrate "inherent permanence of earning power", or "durable competitive advantage", as Benjamin Graham and Warren Buffett, respectively, would say.

Earning Power must lead to a conclusion; that is, earnings are a means to an end ... not an end itself. Before executive-employees of an enterprise can be appraised as worthy of their salaries, business earnings must be paid out in the form of cash dividends to owners, transferred to shareholder equity, or rationally reinvested in the enterprise for growth of future earnings.  The last of the three is by far the most susceptible to executive-employee manipulation, chacanery, obfuscation, and outright fraud.  In fact, the "reinvestment" option is so ripe for misrepresentation that it is better for the aspiring capitalist to treat "reinvested earnings" as a blanket for manipulation until such time that you can be satisified by reasearch/study that manipulation has not occurred.

Much of Stock Market volatiliy may be attributed to a combination of the structure of the Pending Trades Book, and boolean-type rules that are automatically implemented through Programmed Trading.  Add to the mix a significant number of actors who interpret mere volatility as real changes in the value of assets, and the fundamental ingredients are put into place for occasional significant mis-pricing of publicly traded businesses on a securities exchange.

If your actions reflect an assumption that a particular stock's Market Price always reflects its per share business value, then you have lost the war before the battle ever begins.   

As a result of the United States having abandoned the Gold Standard, money has no inherent value; it merely provides a convenient method to exchange goods and services.  To this end, the U.S. Dollar typically loses value each year (save the rare moment when an economy is on the verge of depression); and if cash is held for more than a very short time, loss of purchasing power invariably results.

Retirement account holdings are not retirement savings, unless a person always keeps 100 percent of invested assets in U.S. Government obligations.  And thinking of an account that holds investment assets as if it were a savings account is an unmitigated recipe for disaster, once the invariable fluctuations in quoted price occur during volatile times. The disaster is not the fluctuation in quoted values; the disaster is in how people react to asset value fluctuations where they thought that they had "savings".   

As Charley Munger of Berkshire Hathaway will tell you, "invert all financial opportunities" and examine:
   -- what if my business were that of making the investment mortgage loans?  (mortgage lender's perspective)
   -- what if my business were that of borrowing to lend at higher rates (banker's view)
   -- if a corporation announces an IPO, what do the selling owners expect to receive?
   -- if a corporation announces a "bond float", why didn't it raise capital through sale of additional equity shares?