Mr. Market
Mr. Market was first introduced by Ben Graham in his classic book “The intelligent investor”
Mr. Market is a manic-depressive with irrational behavior.
Unfortunately Mr. Market has many analyzers who analyze every irrational move of Mr. Market
“Biden might announce capital gains tax hike and as a result market dropped”. Never mind the fact that market bounced right next day. I wonder if those analysts write a follow up saying “We were wrong. We should not be analyzing Mr. Market’s every move. It is not right”. They didn’t write such follow up.
These analysts have a non-enviable job of writing reports of market (broadly) and individual company stock movements every single day. As a result they analyses are at best useless and at worst really (financially) harmful to readers and feeds Mr. Market’s irrational behavior.
These analysts surprisingly have a large number of devoted readers. Readers flock to analysis because they can’t handle uncertainty and will listen to anyone who offers a simple answer that changes every day (sometimes changes multiple times within a day). This problem is worse in political analysis and supports the fact that there is a lot of demand to consume simple (and inaccurate) analysis that sounds right.
Solution
If you are a (or want to be a) rational investor and are patient you can take advantage of this phenomenon.
You can take advantage of Mr. Market’s irrational moves and subsequent inaccurate analyses.
Ignore useless analyses. If you really want to look for an analyst look at their previous history and see how accurate their predictions are. Past predictions accuracy doesn’t always translate to future accuracy but it is the best metric we have.
Thinking for yourself is usually a good advice but ignoring unnecessary analyses and focusing on areas that are relevant and interesting is you is even better. This allows you to actively research and come up with your own opinions. When you read analysis of an industry that is foreign to you it is easy to fall for analysis that seems right.
If you feel down at your job remember that there are financial and political analysts (Example: See predictions on Biden’s presidential run) who write inaccurate analyses and still make decent money and they still feel good. That should give you confidence.
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