The Daily Return: Lessons from the Intelligent Investor
”The happiness of those who want to be popular depends on others; the happiness of those who seek pleasure fluctuates with moods outside their control; but the happiness of the wise grows out of their own free acts.” – Marcus Aurelius
In his magnum opus, The Intelligent Investor, Benjamin Graham coined the term Mr. Market. The concept describes how in a euphoric stock environment, Mr. Market is willing to pay more than the objective value for a stock, and when it is falling, he is desperate to unload that same stock for less than its true worth. Bucking the trend of Mr. Market, is the difficulty for the individual investor.
”In a series of remarkable experiments in the late 1980’s, a psychologist at Columbia and Harvard, Paul Andreassen, showed that investors who received frequent news updates on their stocks earned half the returns of the investors who got no news at all.” – Jason Zweig
As Marcus Aurelius calls it the happiness of our own free acts, I would venture to call it by another word, joy. The whiffs and whims of Mr. Market are sure to entice us, but swimming against the stream becomes a joyful experience when we invest the time to think.
It is not hard to earn a nice return, the challenge is thinking differently than the masses. Mr. Market, our broker, or the excitement of an article we read here on Steemit are always going to be seeking our attention, and influencing our decisions. Ignore the noise (this is especially hard in crypto world), because the success of your day is not determined by how many green numbers are in your portfolio.
As I read through this investment classic, it is continually apparent how a simple, consistent, and focused approach wins the game. As in life, practicing the same habit day in and day out builds the muscle memory to the 10,000 hour mastery level. The multiplication of our speculative money is no different.
...so you're saying get rich schemes are not the way to financial freedom!?
Haha, it is a shaky ride there, and a mess on the downside. 😄
That's a perfect quote to end the post superb
Thank you! I thought so too.
Amazing quote at the end @lydon.sipe! Very smart!
Yes, it is!
This presents us with the quandary.
"It is not hard to earn a nice return, the challenge is thinking differently than the masses. Mr. Market, our broker, or the excitement of an article we read here on Steemit are always going to be seeking our attention, and influencing our decisions. "
If everyone reads this book. How will anyone be thinking differently?
The herd mentality of markets is well documented and everyone knows it and yet we constantly see the knee jerk reactions in play?
Are far back as I can remember Warren Buffett has been promoting this book. No doubt, it is a good read.
As far as I know Buffett has made a career buying low and holding.
He keeps an eye on several markets looking for undervalued stocks using a simple P.E. ratio.
Works for him obviously.
It does work for him.
I don't know, maybe it is knowledge versus applied knowledge. The basics in the book seem well, basic. Sometimes that is hard, haha.
Like my old pop used to say. "Keep it simple, stupid" lol
He was right of course and he'd never heard of :-
""Occam's razor (or Ockham's razor) is a principle from philosophy. Suppose there exist two explanations for an occurrence. In this case the simpler one is usually better. Another way of saying it is that the more assumptions you have to make, the more unlikely an explanation is."
Source
I like that. Keeping that quote handy.
Also, lol, I just replied with K.I.S.S. the moment I saw this comment come through. Great minds! Simple even! :)
Works for me lol. This is now officially post ping pong lol
I'm off to the land of Nod.
Goodnight Lydon.
Lol, yes it is.
Have a great night my friend.
Its simply why the best and brightest gurus couldnt beat (net of fees) the SPX over a 10 year period. The Buffett Bet ends December 31, 2017. Last I heard its NOT a nail biter. $220K vs $854K profits on a million lol.
Lol. They still have a few months, but.......
Agreed 100%!!! I would much rather put the slow, dilligent thought out work in regarding all endeavors in life rather than ride the emotional roller coaster of impulsive decision making. There is so much joy to be found through the journey of trudging towards mastery, and your post wonderfully touched on that theme, awesome work my friend!😊
And there is so much hard truth, and simple wisdom in that statement. :)
Kipling suggests that a great virtue is the ability to keep your head when everyone about you is losing theirs...and probably blaming it on you!
It's hard to stay the course and trust your instincts. It's true in investing and it's true in writing. You'll never develop vision if you're constantly swaying with every wind of opinion.
The moment I read that, the story of Christ sleeping in the boat as the waters raged came to mind. I also think of generals in battle standing tall as bullets blaze by them.
Where there is no vision the people perish, and their minds are muddled by all the conflicting views presented to them. Thank you for the reminder of this truth, John. :)
you're very welcome, lydon ..and well-versed in Biblical truth
Being in just a short time trading, I must say that at least I am doing good. Must continue good habits for that future successful outcome that we all desired.
Exactly. Practice makes perfect.
the wisdom at the end of the post seems perfect for me
Good to hear. :)
This book has been on my reading list for a while. Thanks to your recommendation, I might move it up the queue! Great read. Thanks for sharing!
It is worth the time to read!
Have you read Thomas Stanley's "The Millionaire Next Door"? That's another great book on finances that I've enjoyed.
That one is on my reading list, lol.
Great! I'd love to hear what you think about it if you ever do read it!