Hello friends, in today’s article we see chapter 8 of the intelligent investor. Investor and market fluctuations, this chapter explains how investors behave and also the market. Warren Buffet(the world’s greatest investor of all time says) ” In intelligent investor book, teach me the two lessons, in chapters 8 and 20.” So chapter 8 of intelligent investors is the most important chapter of all time in Value investing.
previous chapter: Click here
In this chapter, the author says there are two ways to make a profit in the market.
When you make money, you buy a cheap price of stock with a great company. It is the only way you can make money with our value investing philosophy.
When you make money, you time the market.
This job is horrible because you make a little profit of 100 times but you lose a single profit more than the value of 200 times.
So most of the time when you try to time the market,
you go to the speculation side, and the most interesting thing is that you think, you are doing the investment instead of speculation.
This is also called fooling yourself. (Intelligent Investor: Chapter 8)
the author gives us some pointers to remember about the market, they are as follows
When the market is going up, you are very happy and in that flow of happiness you lose control over yourself,
so the author gives us three important points to ask ourselves about the stock, they are as follows
This type of question asks you yourself if you get the right answer this answer depends on your behavior and your philosophy.
In my opinion, when you try to sell this stock ask yourself if it’s important now to sell for your financial circumstances, and also the company’s financial circumstances and management.
After this Benjamin gram gives us the famous concept called the Mr. market, let’s see it in detail.
The author gives us the market is a living thing, and they have human behavior. Considering this concept author gives us some pointers to handle the Mr. market, which are as follows.
So dealing with Mr. market you have to control the following things
Value investing means controlling your own behavior, If you can’t control the above point you have to the Index fund Investing daily month on month.
this also gives you the best return in the long run. (Intelligent Investor: Chapter 8)
So the author gives us the same point on controlling their own behavior, they are as follows
Following this advice you can understand how the market fluctuates and what to do with investors, and also you have to understand the Mr. market.
This is all about chapter 8 of the intelligent investor.
to visit the book summary of one up on wall street book: Click here
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