"Mr. Market"
To understand the irrationality of stock prices, imagine you and Mr. Market are partners in a private business. Each day without fail, Mr. Market quotes a price at which he is willing to buy your interest or sell you his. The business that you own is economically stable, however, Mr. Market has incurable emotional problems. At times he feels euphoric and names a very high buy-sell price because he fears that you will snap up his interest and rob him of imminent gains. On other occasions he will name a very low price, terrified that you will unload your interest on him and saddle him with unimaginable losses.
Mr. Market has an endearing characteristic: he doesn't mind being snubbed. If you ignore him today, he will show up with a new offer tomorrow. Transactions are strictly at your option, 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 to pumpkins and mice: Mr. Market is there to serve you, not 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 take advantage of him, but it will be disastrous if you fall completely under his spell.
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