Benjamin Graham market mix teaches us that investors, myths and mind games mix in stock markets. Investors and traders, amateurs and pros all buy and sell. Their actions are like votes or weights for and against each investment.
Money strategies – planning & managing wealth, Lesson 12, discusses factors in the stock market taught by Benjamin Graham. Markets are a mix of investor behavior, myths, rumors and mind games. Links at the end guide you to related lessons if you want to learn more.
What’s in this lesson for me?
Knowing stock market and investor behavior, both actions and reactions helps us improve the management of our investments. Better money and investment management helps us improve our investing performance.
Value Investor Benjamin Graham and the market mix
The original value investor, Benjamin Graham, knew stock market and investor behavior. And he taught investors to be aware of stock market myths. Those myths can work to have bad affect on your wealth. Learning market myths helps you understand investing. Knowing the myths is part understanding the stock market. With that understanding you can be comfortable watching and investing in markets without worry.
Stock market volatility can worry investors and cause fear. To avoid fear, ignore any pundit saying, ‘small investor behavior causes market panics’. That nonsense is a market myth. It is an example of self appointed, self-righteous bullhorns broadcasting self-serving nonsense.
There are inside players thinking only pro money managers should access stock markets. They use fake self serving messages to spread fear and anxiety. Their foolish game is not news, brings no value and can be ignored. Such noise is nothing but arrogant grunts of old dinosaurs. Stock markets have no shortage of dinosaurs with outdated minds. We have to be wise enough to ignore that noise.
Investors vote and weigh
Benjamin Graham referred to the short-term market as a voting machine tracking popularity. In the long-term when the facts are in, he referred to the market as a weighing machine. That weight was the intrinsic value of the investment.
Benjamin Graham, investors, myths and mind games mix together in stock markets. Investors traders amateurs and pros vote, weigh, buy and sell in markets
Short term, emotions of a popularity contest are the biggest factor in pricing. Long-term the weight favors facts and real value. Thus the recognition of facts and real value only happens after the facts are known and clear. So it takes time to determines the real price.
Investors, real investors, want weight, not short-term popularity. To achieve that, choose the investing approach to build your portfolio. Because that will grow the most true value. That will grow a portfolio that tips the scales your way with a very nice heavy weight!
Traders and investors are different
Everyday in the stock market we can see the wisdom of Benjamin Graham and take value from what he taught. Daily stock markets show battles of emotions. Short term emotions voting for price movement while longer term value depends on the weight of stabilizing facts.
Short term, votes win and thus are very important to trading and traders. Traders play more short-term than investors. They seek profit from price swings and volatility.
Long term, weight wins and delivers value. Thus weight or value is most important to investors. That delivers the growth they want. Benjamin Graham, investors, myths and mind games are all in the mix.
Without doubt, amateurs including mom and pop investors, feel market emotions. Some can and do panic in market swings. However they are not alone. The professional herd, who control most market volume, keep them in good company. So called pros panic every bit as much.
Debating who panics first or has greater panic is silly. The point is markets, emotions including panic are parts of one scene. Plenty of so called pros panic and make emotional moves. This behavior gets displayed every market day.
People, emotions and facts make markets
To become a superior investor know the reality that is present in the stock market. To invest well and understand markets you must understand market behavior. That includes knowing how people behave in markets.
If you are investing, invest, don’t behave like a short-term trader. Traders don’t invest, they seek profit from market price changes. Done well, both are money making ways to use the stock market. Both are skills that you can learn.
Benjamin Graham, investors, myths and mind games help us develop that understanding. Because understanding market behavior depends on your perspective. Short term the market is a noisy emotion dominated cauldron of roiling action. Long term only the cold hard truth of facts and logic matter. You can choose to play or not to play, either game.
Amateurs and professionals
When we consider Benjamin Graham, investors, myths and mind games the market noise can distract us. Distraction can include loud braying of self serving insiders who claim small investors cause volatility. Before high frequency trading existed, amateurs were tagged the emotional market swing goat. All such nonsense is useless market noise.
Daily trading reflects some amateur behavior. In markets, bad moves are regular occurrences. Most bad moves get make by so called pros. Amateurs account for a small percentage of the total market volume. Most volume comes from the professional accounts and funds. According to market myth, those are the people that know what they are doing.
Experienced investors know otherwise. There will always be an endless supply of mistakes and bad trades. Both amateur and pro will be guilty. There are plenty of pro panics as well as bad trades. Everyone screws up, makes the ill-advised or bad trade. All market players, both profit and suffer losses from someone’s mistakes.
Know and accept these things as part of learning to use the market well. Doing that will help you make your money work and grow wealth. Learn for your and others mistakes. Know that your turn will come.
Market Mind Games educates traders
Knowing how the market works helped me avoid selling in a panic!
Market Mind Games is an excellent book. Astute author Denise Shull, has deep trading experience. She turned observations and trading psychology research into an applied neuroscience practice. She trains traders and decision makers in risk-taking prowess. Anyone serious about trading for a living must consider this powerful training.
If you want a deeper dive into Benjamin Graham, investors, myths and mind games, Denise Shull will open your mind.
Getting into her work is big league stuff that gives serious full-time professional traders a powerful edge. This is far beyond what a small investor needs. It is not a suggestion that the typical small investor should enroll in such training.
Trading drives short-term market action
Trading, not investing, drives the market short-term. Price movement, any price movement, drives trading. So the volatile trading behavior feeds on itself. You, I and millions of small investors have little to do with it.
Benjamin Graham, investors, myths and mind games operates across all time periods. Short term emotions carry the day, long term cold hard facts bring the weight. We know we are not immune from the effects of emotions displayed by volatile market behavior. Learning to manage our response becomes the challenge superior investors master.
However when we see volatility, it certainly affects us. So we need to know what it means and what to do about it. There is far more to life than money; but in the market there is only one thing – money! The pursuit of money drives all market behavior.
Big traders have big market influence
You give more attention to your biggest customer or client. And stock markets pay most attention to those who trade most. Accounts with thousands of trades get far more attention than an occasional trader.
Active traders generate far more fees and revenue for markets. So professional traders can and do get things their way. They do pay far more in fees for their high volumes of trading.
Knowing, thinking and a few calculations will help you base portfolio decisions on facts.
Don’t bother complaining that the playing field is not level. It tilts to favor traders. That is not going to change. Those who pay and profit most, like it the way it is. So get used to it.
This is nothing new. Just accept it and learn how to play in this environment and you will be fine.
Learn and play the small investor advantages
Don’t waste time and energy getting angry or put off about the tilted market table. Rather learn and play the huge advantages of the small investor!
Those are huge advantages discussed further in other lessons.
For today, your takeaway: know the market tilts to the big players. It is not an evil plot. Rather normal human behavior. Knowing this lets you avoid losses and can open the doors to profit. With investing giants like Benjamin Graham be confident leaning from Benjamin Graham market mix and other lessons to become a confident investor.
That knowledge makes you a more formidable investor. Knowing of Benjamin Graham, investors, myths and mind games adds to your ability. It helps you know and understand markets.
Used well it can make you a more profitable investor. Knowing turns common market behavior to your advantage. It also gives you one more way to grow financial security and retirement comfort.
Why this lesson matters
The lesson tells us of Benjamin Graham and his teachings about value investing. That disciplined approach to investing has grown into a following of many successful investors. Understanding his challenging work helps us grow as mature investors. That helps us produce better returns.
Takeaways from lesson 12, Benjamin Graham market mix, includes:
Benjamin Graham market mix teaches us that investors, myths and mind games mix in stock markets. Investors and traders, amateurs and pros all buy and sell. Their actions are like votes or weights for and against each investment.
- Become a better investor by knowing when to take profits.
- Let winners run when markets are rising.
- Don’t fall into the fear trap that makes you sell too soon.
- Think like the wise merchant the buys more winners.
- Sell your losers and buy more winners.
- Be exceptional – take the full ride with your winners.
- Trim the weeds, water the flowers.
- Take the lesson on portion control.
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Lesson links to:
Wealth Growing Money Strategies:
Introduction: Wealth Growing Money Strategies Lesson 1
Investors use many stock market strategies Lesson 2
8 Big money matters Lesson 3
Nelson Mandela touched investors Lesson 4
Market time grows money Lesson 5
Stock market dip opportunities Lesson 6
Investing strategies taking profits Lesson 7
5 Money making strategies Lesson 8
Investors can deposit and WAIT! Lesson 9
Change moves markets forward Lesson 10
ETF Revolution changes investing Lesson 11
Benjamin Graham market mix Lesson 12
Next suggested course: Market Mind of Superior Investors
Have a prosperous investor day!
Bryan
White Top Investor
[email protected] WhiteTopInvestor.com
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Lesson code 410.12.
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