Mr. Market
The analogy of Mr. Market by Benjamin Graham is one of the cornerstone of value investing principles.
It was first introduced in his book Intelligent Investor.
It makes the grasping of value investing concepts effortless and very helpful in understanding the nature of Stock Market.
Normally, a rational person is expected to sell if the price is high and buy if the price is low.
He would not sell because the price has gone down or buy because the price has gone up.
Is there anybody who is known to behave opposite to this ?
Meet Mr. Market.
Mr. Market is known to possess following characteristics :
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Has wild mood swings
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Is often irrational
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Always gives you the final say in doing anything.
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Gives you a chance to buy low, and sell high.
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Is frequently efficient...but not always.
Assume that you are partner in a business with this crazy person Mr. Market.
Can you use these characteristics of Mr. Market for the profit ?
All these above characteristics makes Patience a very important trait to have when dealing with Mr. Market.
If handled correctly it can lead to fortunes.
And to disaster, if handled incorrectly.
"Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it."
―Warren Buffett
We'll explore more...Stay Tuned