📖Benjamin Graham
The Mr. Market Parable
The market is your servant, not your master.
Imagine having a partner named Mr. Market who offers to buy or sell shares at a different price every day. Sometimes his price is reasonable, but often it is absurdly high or low. You are free to ignore him.
🏠 Everyday Analogy
📖 Core Interpretation
In The Mr. Market Parable, Benjamin Graham focuses on the gap between price and value. Returns come from paying less than what a business is worth, not from guessing short-term market moves.
💎 Key Insight：Market prices are offers to be evaluated, not commands to follow.
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❓ Why It Matters
Ignoring valuation turns even good companies into poor investments. Overpaying compresses future returns and leaves little margin when assumptions are wrong.
🎯 How to Practice
Estimate intrinsic value with conservative assumptions, set clear buy ranges, and act only when price offers a meaningful discount with acceptable downside.
⚠️ Common Pitfalls
Confusing a low price with true cheapness
Using one metric without business context
Overly optimistic assumptions that erase margin of safety
📚 Case Studies
1
Washington Post Investment (1973)
Warren Buffett, influenced by Graham, buys undervalued Washington Post shares far below intrinsic value during a bear market.
✨ Outcome：Long-term investment multiplies in value many times over decades, illustrating Graham’s investment principles of margin of safety and business analysis.
2
Dot-com Bubble Speculation (1999)
Investors pile into unprofitable internet stocks based on hype, price momentum, and projected eyeballs rather than earnings or assets.
✨ Outcome：Bubble bursts in 2000–2002; many stocks fall over 80% or go bankrupt, highlighting the dangers of speculation without fundamental analysis.
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