Interview With Mr Market

by The Graham Investor on October 3, 2011

Exclusive! The Graham Investor has staged an amazing interview with Mr Market. Never before has anyone managed to interview this elusive fellow. The interview gives us a new insight into what goes on in the mind of one of the most enigmatic figures of history. Still going strong, and still beguiling investors, traders, and journalists, Mr Market pulls no punches in this amazing interview.

TGI: Thank you for agreeing to this interview. Benjamin Graham once attempted to explain your behavior in a nutshell, suggesting that you came along each day and set a ridiculously high price or a ridiculously low price for an equity or a group of equities, and that the average investor would be well-placed to ignore you and seek his own counsel regarding valuations. What do you feel about that?

Mr Market: <mumbling> <laughing> Yes, I heard about that. I can’t speak for Mr Graham – he is dead, after all – but I am still going strong. I’ve been doing this for a few centuries now….I mean, back in 1637 when people were pretty much gambling on tulip bulbs, they were trying to pin it on me even back then. It has been ever thus: every time some bubble/bust or other comes along, they say Mr Market is up to his usual crazy tricks again, setting ridiculous prices. I tell you, one of these days I need to get myself a teflon coat.

TGI: But you do appear to be the one setting prices. Are you denying this?

Mr Market: Actually, I’m not. I’ll set prices according to what most investors are willing to pay. And, believe it or not, they usually are willing to pay outrageous prices. You see, the human mind doesn’t want to miss what it thinks is a “good thing”. Whether or not the skewed prices I set are good or bad is neither here nor there, as long as there are buyers and sellers – and there always are. And the fact is, most of them just follow the herd and lose their shirt. I don’t cause the boom and bust, I just take advantage of it. It’s fun for me to watch, it never gets old <laughs manically>.

TGI: There are a number of investors who believe in a system called “reversion to the mean”. What is your opinion of this?

Mr Market: It’s funny, I mean – who are they to say what the mean is? I’m the one who sets the mean, and I can move it anywhere I damn well like. They should rename their system “reversion to a moving target” or something like that. Pshaw!

TGI: What about value investors? Those who focus on fundamentals of individual stocks and attempt to ignore what you are doing?

Mr Market: Ah, I see where you’re going with this. Back to Mr Graham again. I have to say I try to suck these guys in as well, but it doesn’t seem to work with a select few – Graham was one, Buffett another – Sometimes I manage to trap them by setting ridiculous prices on worthless stocks and it works, but in general these investors are somewhat harder to throw off course than the sheep.

TGI: In the last few months, you’ve been putting in a lot of overtime with the wild swings. Can you explain your thinking? Do you use the news to influence where you go on a daily basis?

Mr Market: Ha, that would be telling. Better to keep my cards close to my chest. Tomorrow is another day and I could go either way….I’m sure there’s a few pundits trying to predict what I’m going to do next! Truth be told, these people haven’t got a clue.  The news, nah – as you’ve probbly noticed I frequently go against what the news might suggest. I like to keep the element of surprise, stir things up and keep it fresh. So, while I do glance at the news, it really isn’t the be all and end all of where I decide to go with prices.

TGI: So those who espouse the “random walk theory” have a point?

Mr Market: Those people! They seem to be suggesting I am a drunkard or something. The gall! Nothing I do is ever random! Everything I do is totally premediated. It just looks random to these people. As usual they don’t have answers, so they come up with this elaborate theory to explain what I do. In the long run, I’ll disprove it of course – I am far smarter then they are. And you can print that I said that!

TGI: You look a bit tired, have you been getting enough sleep?

Mr Market: Sleep? Pah! I don’t need much of that. I can function fine on little sleep, I’m having too much fun, after all. Otherwise I wouldn’t still be doing this, would I?

TGI: Well, there have been suggestions you might be a manic depressive. Do you take these reports seriously?

Mr Market: Of course not! I mean, how dare you! There’s nothing wrong with me of course. I’m perfectly sane if that’s what you wanted to know; I just have a higher order thought process than most everyone else.

TGI: What about 1929. Aren’t you sorry for all the economic destruction you caused back then? Surely you must have some feeling for all the people who lost their livelihood for many years? How low can you go?

Mr Market: Remember, I just set the prices. I am not responsible for the welfare of anyone who buys and sells at those prices. It might seem callous to you, but that’s the way it is. It’s my business. It’s really no different from the way banks do business, is it? As for how low, I haven’t gotten to zero yet. Perhaps one day.

TGI: Please let me know when that day comes, in advance.

Mr Market: <Laughs>

TGI: Seriously. Lots of value investors might like to buy at zero.

Mr Market: <Snorts> I guess I should start thinking of negative numbers!

TGI: Thank you Mr Market, nice having you here. Goodnight.

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