Who’s "Mr. Market?" He’s an imaginary business partner the great value investor Ben Graham uses to tell his story.
Say you own a piece of a private business. One of the other owners, Mr. Market, approaches you daily to tell you what he thinks your share of the business is worth. He either offers to buy your share of the business or sell you an additional share of the business.
Every day, the price he quotes is different.
Sometimes it seems high, sometimes it’s low, and sometimes it sounds fair.
Warren Buffett's Obscure Strategy to ‘Retirement Prosperity’ — Click Here
“If you are a prudent investor or a sensible businessman,” Graham writes, “will you let Mr. Market’s daily communication determine your view of the value of a $1,000 interest in the enterprise? Only in case you agree with him, or in case you want to trade with him.”
“You may be happy to sell out to him when he quotes you a ridiculously high price, and equally happy to buy from him when his price is low,” Graham continues.
“But the rest of the time, you will be wiser to form your own ideas of the value of your holdings, based on full reports from the company about its operations and financial position.”
The reason that 100 percent of my conservative portfolio selections have been profitable and my Dividend Machine subscribers have earned fantastic returns is because I have never forgotten Graham’s words.
Never heard of Graham? Maybe you have heard of his most famous pupil and the only person to earn more than $200 billion for himself and his investors: Warren Buffett, the Oracle of Omaha and the greatest investor of all time.
If you want to start investing like him, you need to follow one of his disciples with a good track record.
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About the Author: Bill Spetrino
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