Benjamin Graham was Warren Buffett's mentor during his time at Columbia University, and Warren Buffett subsequently went to work for Graham as well. From time to time, Warren Buffett often references various aspects of investing that he learned while under the wings of Graham. According to Buffett himself, the one analogy he found to be the most useful from Graham's book - "The Intelligent Investor" is the concept of Mr. Market.
According to Graham, the stock market is a salesman that comes and offers you various quotes on the securities that you own. If he is feeling great that day, he might give you an amazing offer. If not, he might give you a lowball offer. The point is - you should never let the salesman's offer persuade you into thinking that your security is somehow more or less valuable. At the end of the day, the securities that you own have an intrinsic value and you should only do business with Mr. Market when it is favorable for you.
From Benjamin Graham himself:
“The intelligent investor shouldn’t ignore Mr. Market entirely. Instead, you should do business with him- but only to the extent that it serves your interests.”
In these turbulent times in the market, it is important to recognize that simply because the market is up or down doesn't mean that your company's intrinsic value somehow changed. It is simply what the salesman is offering you today. Instead, you should be looking deeper into your company's revenue growth, valuation multiples, and other fundamental factors and whether your thesis around that has changed.
The mood of Mr. Market will often open up amazing opportunities in the equity market. In 10 years from now, we will be looking at many companies and saying "wish we had bought it in 2022". Don't let Mr. Market fool you.
Best of Luck to All!
Submitted January 06, 2022 at 12:21AM by BenDoverR8Now https://ift.tt/3G1Rl9c
