Why Mr. Market Is Depressed
You’ve probably heard Warren Buffet or Benjamin Graham refer to the market as “Mr. Market.”
Sometimes Mr. Market is happy and doesn’t care what he pays for a stock. Other times, he is terrified of buying stocks. Of course, Mr. Market fluctuates between those extremes during the day and night. He also switches his opinion about asset classes pretty regularly, as well.
Over time, the theory goes, he gets the average price of assets right.
Right now, Mr. Market has been really depressed. And I have a theory for that.
Mr. Market is pretty sharp, but he isn’t really an innovative-type guy. He’s not a long-term thinker; he lives in the moment, or at least the next market tick. And he isn’t a problem solver.
So, when bad things are happening, Mr. Market becomes Mr. Ostrich and buries his head in the sand. Meanwhile, cool new trends are passing him by. By the time he pulls his head out of the… ummm… sand, the trend is gone and he has to run to catch up.
Right now, I think there are some positive developments that the market isn’t considering. Stem cell therapies are just starting to hit the market. Who cares, you may say, but better health can mean better productivity and longer lives. Boons to the economy.
The sticker shock of recent oil prices has generated innovation in new fuels and better efficiency. I think we’re just on the cusp of this curve. Lowering the cost of fuel and energy is not being discounted in today’s market.
Finally, I think traders and investors have been given a lesson in risk management. The smart traders will take these lessons and turn them into smart trading practices and technologies, and new financial innovation will follow. That’s what we’re counting on and working hard to develop.
OK, Mr. Market. You can pull your head up now.
Related posts:
- What Does The Market Measure?
- Are You Still Confident in the Market?
- Myth: Falling Markets Threaten Your Wealth
- Is the Market Really Recovering?
- The Little Book that Beats the Market
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is one of my favorite financial books of all time. It's an allegory about a guy who has a terrible job, and how he overcomes challenges to achieve his dreams.
