Behaviour
Mr Market
A parable describing the market as a moody business partner who quotes a different price every day.
How it works
Benjamin Graham imagined a partner who offers each day to buy your share or sell you his, at wildly varying prices depending on his mood. You are free to trade with him or ignore him.
The point is that the quote is an offer, not a verdict. It is information about the market’s mood, and only sometimes about the business.
Related terms
- Intrinsic valueWhat an asset is actually worth based on the cash it will produce, regardless of its market price.
- Value investingBuying assets for less than an estimate of their intrinsic worth, with a margin of safety.
- Margin of safetyThe gap between what you pay and what you think something is worth, sized to absorb being wrong.
- VolatilityHow much an investment’s returns bounce around their average — the standard measure of risk.
More in Behaviour
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.