Mr. Market is not your friend - how to navigate insane market swings.

in #crypto6 years ago

Well, the last 24 hours have been...CRAZY!.
I fired up Blockfolio in the morning and all hell broke lose. -30% over night. Everything in RED. So much red!! The only good thing was that I felt pretty awake almost instantly. Not that this jolt of adrenaline and cortisol is such a nice way to wake up, but awake I was.

After checking some blogs, some exchanges, talked with some friends, I calmed down a bit and tried to gain some perspective. I'm sure that a lot of you are railing over all this. Depending on your temperament, you might feel stressed out or chill.I hope this post will bring a little tranquility or at least, a little big picture thinking to our shortcut monkey minds.

Like as usually do, when I don't know what to think, I come back to the wisdom of Benjamin Graham. He was the "father of value investing" and one of his proteje was a guy that you might have heard of...Warren Buffet. If you invest, ever, in anything, for any reason, you probably need to read one or all of his books. Don't research about him at your own peril.
One of my favorite concepts that I learned from him and seen it echoed by countless other investors and fans is the "Mr.Market" concept.

Here, in Charlie Munger's word:

Of course, the best part of it all was his concept of "Mr. Market". Instead of thinking the market was efficient, he treated it as a manic-depressive who comes by every day. And some days he says, "I'll sell you some of my interest for way less than you think it's worth." And other days, "Mr. Market" comes by and says, "I'll buy your interest at a price that's way higher than you think it's worth." And you get the option of deciding whether you want to buy more, sell part of what you already have or do nothing at all.

To Graham, it was a blessing to be in business with a manic-depressive who gave you this series of options all the time. That was a very significant mental construct. And it's been very useful to Buffett, for instance, over his whole adult lifetime.

Munger is Buffett associate and a very fascinating character himself. He has a lot of talks and interviews and there's a LOT to learn from them if you can get through...they can be rather long. He likes to take his time with concepts.


Look at Mr.Market right here. He does look a bit deranged and today...He was out for blood. But here's the most important thing to remember. Quoting Graham, from the Intelligent Investor

“If you are a prudent investor or a sensible businessman, 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. But the rest of the time you will be wiser to form your own ideas of the value of your holdings[...]

The takeaway is that, you chose to interact with Mr.Market. You chose to trade with him. You chose your actions wise and Mr.Market can not touch you.
You decide to play with him..and you might just make yourself CRAZY!.

Price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market.

Today, we say "No, thanks, Mr. Market! and go on our jolly way through the weekend.
Tomorrow, who knows?

PS: I also want to recommend two very good articles: Wingz's take on btc mortaging. and Nanzo's advice on taking profit. Very good reads both!


Mr market....

This picture reminds me of monopoly :D

I'd avoid trading these days completely. It's pure roulette.

It's russian roulette. :D

I kid, you are being smart :)

Anything can happen at any given moment- agreed. I never traded before and I tried yesterday and I made a small 4 to 6 percent profit, not much. If i would of waited until this morning i would of gotten more, oh well. thats trading.

Lol he has unflriendly looking.

I hope he makes a re-appearance in my posts! ever meaner!

It's certainly a GAME!!

!! you got it right. though mr market has red pants :D

Good article thanks for the information.

glad you learned smth!

couldn't agree more. I am planning to make a post after this craziness ends to demonstrate how one can find bubble patterns in just about everything.

You know I can;t wait to read that!

Keep up the Great work


Latest market stats!

trading the last few days...

pam pam pam
good luck! and upvote for u....

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