You should imagine the market quotations coming from a remarkably accomodating fellow named Mr. Market, who is your partner in a private business. Without fail, he appears daily and names a price at which he will either buy your interest or sell your interest.
Even though the business that you two own may have economic characterestics that are stable, Mr. market's quotations are not. The poor fellow has incurable emotional problems. At times he feels euphoric and can see only favorable conditions affecting the business. WHen in that mood he names a very high buy price because he fears you will rob him of his interest. At other times, he feels nothing but trouble ahead and sees the end of the world. On those accations, he names a very low sell price since he is afraid you will unload your interest on him.
Mr. Market has another characterestic. He does not ming being ignored. He will come back again and again if you are not interested in his quote today.
Here is the advice.
In those conditions, the more depressed and maniacal Mr. market is, the beter for you. Mr. Market is there TO SERVE YOU AND NOT TO GUIDE YOU. Its is good to take advantage of him when he is in a foolish mood, but it will be DISASTROUS IF YOU FALL UNDER HIS INFLUENCE.
As they say in poker - "if you've been in the game for 30 mins and you dont know who the patsy is, YOU ARE the patsy.
Thanks to Ben Graham for this.
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