MR Market

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     Ben Graham, my friend and teacher, long ago described the 
mental attitude toward market fluctuations that I believe to be 
most conducive to investment success.  He said that you should 
imagine market quotations as coming from a remarkably 
accommodating fellow named Mr. Market who is your partner in a 
private business.  Without fail, Mr. Market appears daily and 
names a price at which he will either buy your interest or sell 
you his. 

     Even though the business that the two of you own may have 
economic characteristics that are stable, Mr. Market's quotations 
will be anything but.  For, sad to say, the poor fellow has 
incurable emotional problems.  At times he feels euphoric and can 
see only the favorable factors affecting the business.  When in 
that mood, he names a very high buy-sell price because he fears 
that you will snap up his interest and rob him of imminent gains.  
At other times he is depressed and can see nothing but trouble 
ahead for both the business and the world.  On these occasions he 
will name a very low price, since he is terrified that you will 
unload your interest on him. 

     Mr. Market has another endearing characteristic: He doesn't 
mind being ignored.  If his quotation is uninteresting to you 
today, he will be back with a new one tomorrow.  Transactions are 
strictly at your option.  Under these conditions, the more manic-
depressive his behavior, the better for you. 

     But, like Cinderella at the ball, you must heed one warning 
or everything will turn into pumpkins and mice: Mr. Market is 
there to serve you, not to guide you.  It is his pocketbook, not 
his wisdom, that you will find useful.  If he shows up some day 
in a particularly foolish mood, you are free to either ignore him 
or to take advantage of him, but it will be disastrous if you 
fall under his influence.  Indeed, if you aren't certain that you 
understand and can value your business far better than Mr. 
Market, you don't belong in the game.  As they say in poker, "If 
you've been in the game 30 minutes and you don't know who the 
patsy is, you're the patsy."