Mr. Market is an emotional wreck! His hair is unkempt. His nails are chewed to the quick. He endlessly taps his fingers on the desktop. He rushes from one crisis to the next, and if he has to sit for any length of time, his knee twitches compulsively. How does he keep his job on Wall Street? He is Wall Street.
Think of Mr. Market as a confused and changeable business partner, Graham told his students. Warren Buffett described Mr. Market’s business tactics. “Even though the business that the two of you own may have economic characteristics that are stable,” wrote Buffett, “Mr. Market’s quotations will be anything but. For, sad to say, the poor fellow has incurable emotional problems.”
Mr. Market is compulsive. He shows up every day and makes an offer for your part of the business. If you ignore him he is neither offended nor deterred. He will be there again the next day, and the next, and the next.
Also manic depressive, Mr. Market sometimes becomes euphoric. During these spells he can see only blue skies ahead and endless climbing profits. During those times he rushes in and offers an unrealistically high price for your shares. At the slightest negative news, Mr. Market’s spirits dive. His price then is ridiculously low.
But pay no attention to the mood swings. “Mr. Market is there to serve you, not to guide you,” Buffet explained.
If his offer meets your needs as an investor, you can accept it. If it does not, you may ignore it. If you take advantage of him, Mr. Market never remembers. Crazy as he is, Mr. Market is a convenient business partner.
THRIVING IN EVERY MARKET
Value Investing Made Easy (Janet Lowe):
- THRIVING IN EVERY MARKET
- MR. MARKET
- SUITABLE SECURITIES AT SUITABLE PRICES
- PAYING RESPECT TO THE MARKET
- TIMING VERSUS PRICING
- BELIEVING A BULL MARKET
- THE PAUSE AT THE TOP OF THE ROLLER COASTER
- MAKING FRIENDS WITH A BEAR
- BARGAINS AT THE BOTTOM
- SIGNS AT THE BOTTOM
- BUYING TIME
- IF YOU ABSOLUTELY MUST PLAY THE HORSES
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