Warren Buffett said the best advice he ever got from Graham was to think independently.
Just as you ignore Mr. Market's daily communications (unless, of course, he gives you an interesting quote), you should also derive no comfort in either standing with or against the crowd.
As Graham wrote, "You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right."
If you have reached a rational conclusion about a stock based on sound judgement, you should act even though others around you may hesitate or differ.
Showing posts with label think for yourself. Show all posts
Showing posts with label think for yourself. Show all posts
Wednesday, 17 April 2013
Friday, 31 July 2009
Think for Yourself
In 1999, when Mr. Market was squealing with delight, American employees directed an average of 8.6% of their paychecks into their 401(k) retirement plans.
By 2002, after Mr. Market had spent three years stuffing stocks into black garbage bags, the average contribution rate had dropped by nearly one-quarter, to just 7%.
Lessons:
The cheaper stocks got, the less eager people became to buy them - because they were imitating Mr. Market, instead of thinking for themselves.
Would you willingly allow a certifiable lunatic to come by at least five times a week to tell you that you should feel exactly the way he feels?
Would you ever agree to be euphoric just because he is - or miserable just because he thinks you should be?
Of course not. You'd insist on your right to control of your own emotional life, based on your experiences and your beliefs.
But, when it comes to their financial lives, millions of people let Mr. Market tell them how to feel and what to do - despite the obvious fact that, from time to time, he can get nuttier than a fruitcake.
One of Graham's most powerful insights is this: "The investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage."
The intelligent investor has the full freedom to choose whether or not to follow Mr. Market. You have the luxury of being able to think for yourself.
Ref: cc Intelligent Investor by Benjamin Graham
By 2002, after Mr. Market had spent three years stuffing stocks into black garbage bags, the average contribution rate had dropped by nearly one-quarter, to just 7%.
Lessons:
The cheaper stocks got, the less eager people became to buy them - because they were imitating Mr. Market, instead of thinking for themselves.
Would you willingly allow a certifiable lunatic to come by at least five times a week to tell you that you should feel exactly the way he feels?
Would you ever agree to be euphoric just because he is - or miserable just because he thinks you should be?
Of course not. You'd insist on your right to control of your own emotional life, based on your experiences and your beliefs.
But, when it comes to their financial lives, millions of people let Mr. Market tell them how to feel and what to do - despite the obvious fact that, from time to time, he can get nuttier than a fruitcake.
One of Graham's most powerful insights is this: "The investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage."
The intelligent investor has the full freedom to choose whether or not to follow Mr. Market. You have the luxury of being able to think for yourself.
Ref: cc Intelligent Investor by Benjamin Graham
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