Download and customize hundreds of business templates for free
The Intelligent Investor suggests dealing with market fluctuations by adopting the allegory of Mr. Market. This concept encourages investors not to rely on the market to understand the underlying value of their shareholding. Instead, they should take advantage of the market's irrational behavior. When the market quotes exuberantly high values, it's a good time to sell, and when it quotes absurdly low ones, it's an opportunity to buy. This approach helps to reduce risk, protect capital from loss, and generate sustainable returns over the long run.
Question was asked on:
Graham gives the allegory of Mr. Market to illustrate the investor's ideal attitude to the stock market. Imagine you paid $1000 to buy a small share in a private business. One of the partners, Mr. Market, tells you every day what your share is worth and offers to buy or sell additional interest in the business. Unlike a private buyer, Mr. Market often quotes exuberantly high values or absurdly low ones. Given this situation, there is no way a sensible investor will rely on Mr. Market to understand the underlying value of their shareholding. However, they would be more than happy to buy from Mr. Market when he quotes meager rates and sell to Mr. Market when he quotes relatively high rates.
Asked on the following book summary:
This book will not teach you how to beat the market. However, it will teach you how to reduce risk, protect your capital from loss and reliably genera...
Download and customize hundreds of business templates for free
Discover a new approach to wealth management and start with small steps that can eventually lead to substantial assets. Robert Kiyosaki, author of the viral book Rich Dad Poor Dad, explains how anyone can move to the lucrative side of the Cashflow Quadrant and flourish financially.
All-time best-seller that lays out the steps needed to unleash one's potential, focusing on building individual self-confidence and a clear set of goals. Each chapter addresses one of the author’s principles to leading a meaningful and productive life: desire, faith, autosuggestion, among others.
Need help with which companies or projects to invest in? As a key driver of value in business, ROIC measures how well the company deploys its capital. Use our ROIC & Investment Valuation spreadsheet to compare the efficiency of capital use between companies and make the right investment decisions.
Need to compare real estate investment opportunities? Use the Residential ProForma spreadsheet to quickly identify if a real estate investment opportunity will be profitable. The proforma shows a ten-year financial outlook, adjusted for inflation, and lets users experiment with different scenarios. The spreadsheet comes with a detailed proforma, amortization schedule, and charts that track investment metrics. Quickly view the cumulative profit of a property over the next ten years, along with the present value and other key metrics adjusted for inflation and rent increases. The spreadsheet lets users conduct detailed scenario plans and make informed investment decisions.
Real estate can be a great addition to an investment portfolio. But as with any investment, it has to be the right buy. This spreadsheet helps analyze multifamily properties via income, expenses, and debt service.
Are loan repayments confusing and complex to keep track of? Use our Ultimate Loan Spreadsheet to track and estimate how much principle of a loan is owed. Use this spreadsheet to analyze: home, car, student and commercial loans. Plus, analyze whether refinancing a loan is an advantage. As a bonus, loan amortization graphs illustrate the specific loan amortization schedule.
Financial statements do not always tell the entire story about a company. Accounting methods and financial reporting require an executive to decipher the red tape, look beyond what is on the printed page and make decisions that will affect the bottom line. Financial Intelligence gives non-financial managers the financial knowledge and confidence for their everyday work.