As the year winds down — and we get this blog launched — we’ll be going back to a number of our favorites, a few oldies-but-goodies. Some will share fodder for investment-related and life-related pondering. Others will convey research methods and findings, but they’re all intended to help you (particularly if you’re new to Manifest Investing) to get to know us better. This was written after attending a Martina McBride concert this summer — and it’s clear that the stock market does behave very much like a teenage daughter, sometimes.
Benjamin Graham had it all wrong.
I’ll let that heresy sink in for a minute.
I ain’t complainin’, but I’m tired.
So I’m just sayin’ what I think.
And if we’re being honest,
Then honestly I think [we all] need a drink.
Graham — hailed as the father of fundamental analysis and value investing — often used a characterization for the stock market by referring to it as Mr. Market.
Graham’s favorite allegory is that of Mr. Market, a fellow who turns up every day at the stock holder’s door offering to buy or sell his shares at a different price. Rarely, the price quoted by Mr. Market seems plausible, but most of the time it is ridiculous. The investor is free to either agree with his quoted price and trade with him, or to ignore him completely. Mr. Market doesn’t mind this, and will be back the following day to quote another price. The point is that the investor should not regard the whims of Mr. Market as determining the value of the shares that the investor owns. He should profit from market folly rather than participate in it. The investor is best off concentrating on the real life performance of his companies and receiving dividends, rather than being too concerned with Mr. Market’s often irrational behavior. [Wikipedia]
That’s all well and good — but wrong. There’s nothing about the vagaries of following a “Mr. Market” and the peaks and valleys of a male-based gender emotional excursion that could fully explain overall market tendencies.
And that’s where Martina McBride has one over on Ben. Because the market is a teenage daughter.