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Mr. Market
Mr. Market is an allegory created by investor Benjamin Graham to describe what he believed were the irrational or contradictory traits of the stock market and the risks of following groupthink. Mr. Market was first introduced in his 1949 book, '' The Intelligent Investor''. Allegory Character Graham asks the reader to imagine that they are one of the two owners of a business, along with a partner called Mr. Market. The partner frequently offers to sell their share of the business or to buy the reader's share. This partner is what today would be called manic-depressive, with their estimate of the business's value going from very pessimistic to wildly optimistic. The reader is always free to decline the partner's offer, since they will soon come back with an entirely different offer. Traits Mr. Market is often identified as having human behavioral manic-depressive characteristics, he: # Is emotional, euphoric, moody # Is often irrational # Offers that transactions are strictly at y ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Benjamin Graham (1894-1976) Portrait On 23 March 1950
Benjamin Graham (; né Grossbaum; May 9, 1894 – September 21, 1976) was a British-born American economist, professor and investor. He is widely known as the "father of value investing", and wrote two of the founding texts in neoclassical investing: ''Security Analysis'' (1934) with David Dodd, and ''The Intelligent Investor'' (1949). His investment philosophy stressed investor psychology, minimal debt, buy-and-hold investing, fundamental analysis, concentrated diversification, buying within the margin of safety, activist investing, and contrarian mindsets. After graduating from Columbia University at age 20, he started his career on Wall Street, eventually founding the Graham–Newman Partnership. After employing his former student Warren Buffett, he took up teaching positions at his '' alma mater,'' and later at UCLA Anderson School of Management at the University of California, Los Angeles. His work in managerial economics and investing has led to a modern wave of value ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Fundamental Analysis
Fundamental analysis, in accounting and finance, is the analysis of a business's financial statements (usually to analyze the business's assets, liabilities, and earnings); health; and competitors and markets. It also considers the overall state of the economy and factors including interest rates, production, earnings, employment, GDP, housing, manufacturing and management. There are two basic approaches that can be used: bottom up analysis and top down analysis. These terms are used to distinguish such analysis from other types of investment analysis, such as quantitative and technical. Fundamental analysis is performed on historical and present data, but with the goal of making financial forecasts. There are several possible objectives: * to conduct a company stock valuation and predict its probable price evolution; * to make a projection on its business performance; * to evaluate its management and make internal business decisions and/or to calculate its credit risk; * to fin ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Value Investing
Value investing is an investment paradigm that involves buying securities that appear underpriced by some form of fundamental analysis. The various forms of value investing derive from the investment philosophy first taught by Benjamin Graham and David Dodd at Columbia Business School in 1928, and subsequently developed in their 1934 text ''Security Analysis''. The early value opportunities identified by Graham and Dodd included stock in public companies trading at discounts to book value or tangible book value, those with high dividend yields, and those having low price-to-earning multiples, or low price-to-book ratios. High-profile proponents of value investing, including Berkshire Hathaway chairman Warren Buffett, have argued that the essence of value investing is buying stocks at less than their intrinsic value. The discount of the market price to the intrinsic value is what Benjamin Graham called the " margin of safety". For the last 25 years, under the influence of ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Margin Of Safety (financial)
A margin of safety (or safety margin) is the difference between the intrinsic value of a stock and its market price. Another definition: In break-even analysis, from the discipline of accounting, margin of safety is how much output or sales level can fall before a business reaches its break-even point. Break-even point is a no-profit, no-loss scenario. History Benjamin Graham and David Dodd, founders of value investing, coined the term margin of safety in their seminal 1934 book, ''Security Analysis''. The term is also described in Graham's ''The Intelligent Investor''. Graham said that "the margin of safety is always dependent on the price paid". Application to investing Using margin of safety, one should buy a stock when it is worth more than its price in the market. This is the central thesis of value investing philosophy which espouses preservation of capital as its first rule of investing. Benjamin Graham suggested to look at unpopular or neglected companies with low P/E ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Hindsight Bias
Hindsight bias, also known as the knew-it-all-along phenomenon or creeping determinism, is the common tendency for people to perceive past events as having been more predictable than they actually were. People often believe that after an event has occurred, they would have predicted or perhaps even would have known with a high degree of certainty what the outcome of the event would have been before the event occurred. Hindsight bias may cause distortions of memories of what was known or believed before an event occurred, and is a significant source of overconfidence regarding an individual's ability to predict the outcomes of future events. Examples of hindsight bias can be seen in the writings of historians describing outcomes of battles, physicians recalling clinical trials, and in judicial systems as individuals attribute responsibility on the basis of the supposed predictability of accidents. History The hindsight bias, although it was not yet named, was not a new concept w ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Emotional Bias
An emotional bias is a distortion in cognition and decision making due to emotional factors. For example, a person might be inclined: * to attribute negative judgements to neutral events or objects; * to believe something that has a positive emotional effect, that gives a pleasant feeling, even if there is evidence to the contrary; * to be reluctant to accept hard facts that are unpleasant and give mental suffering. Effect of dispositional emotionality Emotional bias is often the effect of dispositional emotionality that an individual has before the occurrence of events that could cause these emotions. These states were linked to the dysregulation in opioid receptor systems and are commonly known as temperament traits The examples are dispositional dysphoria, irritability, withdrawal, or dispositional good and relaxed moods. These dispositions create emotional biases in cognition. Studies of meaning attribution in 24 groups contrasted by various temperament traits showed that p ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Behavioral Economics
Behavioral economics studies the effects of psychological, cognitive, emotional, cultural and social factors on the decisions of individuals or institutions, such as how those decisions vary from those implied by classical economic theory. Behavioral economics is primarily concerned with the bounds of rationality of economic agents. Behavioral models typically integrate insights from psychology, neuroscience and microeconomic theory. The study of behavioral economics includes how market decisions are made and the mechanisms that drive public opinion. The concepts used in behavioral economics today can be traced back to 18th-century economists, such as Adam Smith, who deliberated how the economic behavior of individuals could be influenced by their desires. The status of behavioral economics as a subfield of economics is a fairly recent development; the breakthroughs that laid the foundation for it were published through the last three decades of the 20th century. Behavio ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Warren Boroson
Warren Boroson (born January 22, 1935) is an American author and journalist. He has written over 20 books, including ''How to Pick Stocks Like Warren Buffett'', ''Keys to Investing in Mutual Funds'' and ''How to Buy a House for Nothing (or Little) Down''. His most recent book is "Scandalous Stories About Famous Singers & Composers," a book self-published through Amazon. He is also the author of ''The Reverse Mortgage Advantage: The Tax-Free, House Rich Way to Retire Wealthy!'' He has also written for numerous magazines, such as ''New York Times Magazine'', '' Woman's Day'', ''TV Guide'', '' Better Homes and Gardens'', '' Reader's Digest'', ''Consumer Reports'', '' Family Circle'', and '' Cosmopolitan Magazine''. His play, ''Blasphemy'', is about the 1697 prosecution and execution of Thomas Aikenhead for blasphemy. Early life Warren Boroson grew up on Boulevard East in West New York, New Jersey, where he attended P.S. No. 6 and graduated from Memorial High School in January 1952. ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
James Grant (finance)
James "Jim" Grant (born 26 July 1946) is an American writer and publisher. He founded ''Grant's Interest Rate Observer'', a twice-monthly journal of the financial markets published since 1983. He has also written several books on finance and history. Personal life Grant served as a Navy Gunner's mate, graduated from Indiana University, and received a master's degree in International relations from Columbia University. He is married to Patricia Kavanagh, M.D., a neurologist, and lives in Brooklyn Heights, Brooklyn. They have four children. Journalism He began his journalistic career at the Baltimore Sun in 1972 and joined the staff of Barron's in 1975. He founded ''Grant's'' in 1983. Success was slow. "A critic complained that Money of the Mind, my ... history of American finance, was like an account of the interstate highway system written from the point of view of the accidents", Grant wrote in ''Minding Mr. Market'' (1993). "The same might be said, both fairly and unfairly, o ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Janet Lowe
Janet Celesta Lowe (May 15, 1940 – December 31, 2019) was an American author, university lecturer and business writer. Biography Lowe was born May 15, 1940 in Santa Rosa, California to Celesta Lowe, Celesta and Deke Lowe. She worked as production assistant or producer for several television stations, usually in their news departments. She then positioned herself as a marketing resource for television stations, preparing regular newsletters, providing web pages and web content, and holding workshops for station workers. University experience Lowe has taught in the University of California (San Diego) as an Investments and Journalism Professor. Published works Lowe has been business editor of the ''San Diego Union-Tribune, San Diego Tribune'' and editor of the ''San Diego Daily Transcript''. She has been published in ''Newsweek'', ''Los Angeles Times'', ''Dallas Morning News'', ''San Jose Mercury News'', ''Modern Maturity'' and other national magazines. She specializes in writin ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Berkshire Hathaway
Berkshire Hathaway Inc. () is an American Multinational corporation, multinational conglomerate (company), conglomerate holding company headquartered in Omaha, Nebraska, United States. Its main business and source of capital is insurance, from which it invests the float (the retained premiums) in a broad portfolio of subsidiaries, equity positions and other securities. The company has been overseen since 1965 by its chairman and CEO Warren Buffett and (since 1978) vice chairman Charlie Munger, who are known for their advocacy of value investing principles. Under their direction, the company's book value has grown at an average rate of 20%, compared to about 10% from the S&P 500 index with dividends included over the same period, while employing large amounts of capital and minimal debt. The company's insurance brands include auto insurer GEICO and reinsurance firm General Re. Its non-insurance subsidiaries operate in diverse sectors such as confectionery, retail, Rail transport, ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Warren Buffett
Warren Edward Buffett ( ; born August 30, 1930) is an American business magnate, investor, and philanthropist. He is currently the chairman and CEO of Berkshire Hathaway. He is one of the most successful investors in the world and has a net worth of over $100 billion as of November 2022, making him the world's sixth-wealthiest person. Buffett was born in Omaha, Nebraska. He developed an interest in business and investing in his youth, eventually entering the Wharton School of the University of Pennsylvania in 1947 before transferring to and graduating from the University of Nebraska at 19. He went on to graduate from Columbia Business School, where he molded his investment philosophy around the concept of value investing pioneered by Benjamin Graham. He attended New York Institute of Finance to focus his economics background and soon after began various business partnerships, including one with Graham. He created Buffett Partnership, Ltd in 1956 and his firm eventually acqui ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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