Mr. Market has Incurable Emotional Problems

In the short run, the market is a voting machine. In the long run, it is a weighing machine. — Ben Graham

Flashback to 1987. Warren Buffett’s shareholder letter tells the story of Mr. Market. Introduced to Warren by Ben Graham, Mr. Market is your partner in private business.

Every day he provides you with a price at which he’ll buy your interest or sell you his. Even though you may own a business with favorable, stable, economic characteristics, Mr. Market pesters you with a buy/sell decision on a daily basis.

Some days he’s in a good mood and names a very high price for his part of the business. Other days he’s depressed, pessimistic and sees nothing but gloom and doom for the business and the world. On these days Mr. Market will name a low price hoping you won’t unload your interest on him.

I guess you could say he’s sort of manic/depressive. But, you can ignore him. He doesn’t mind. Mr. Market will be back with a new offer tomorrow. Remember though, he is there to SERVE you not GUIDE you.

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