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Wednesday, February 13, 2008 at 10:52 am
I consider this issue this morning because of the way it behaved yesterday. First it was elated by Warren Buffett’s offer to back up bond insurers. I was there with the most gaga of the bunch. Later on, as the NY Times reports, the market got queasy about the fact that getting bailed out of their mess might cost the bond insurance guys a premium, and that Mr. Buffett would benefit by taking that premium, and that wow, this wasn’t the modern equivalent of Mother Theresa helping the poor of Bombay, it was just Berkshire Hathaway (BRKA) making the most of a bad situation, which is what they do. And down the market went. This got me to thinking, and from thinking to musing, and from musing to dreaming, and when I woke up a few minutes ago that question was sauntering around in my head: If the stock market was a person, what kind of person would it be? Here’s my view. If the stock market was a person, it would be:
That’s about it for me. I guess some of you have learned to be friends with this entity, and to work with it to make a lot of money for yourselves, and I applaud that. For the rest of us, the only question is, I guess… Why in the world are we hanging around with this person? Add one, “Mr. Market”, Bing you should know this one from Ben Graham; The concept of Mr. Market goes something like this: imagine you are partners in a private business with a man named Mr. Market. Each day, he comes to your office or home and offers to buy your interest in the company or sell you his [the choice is yours]. The catch is, Mr. Market is an emotional wreck. At times, he suffers from excessive highs and at others, suicidal lows. When he is on one of his manic highs, his offering price for the business is high as well, because everything in his world at the time is cheery. His outlook for the company is wonderful, so he is only willing to sell you his stake in the company at a premium. At other times, his mood goes south and all he sees is a dismal future for the company. In fact, he is so concerned, he is willing to sell you his part of the company for far less than it is worth. All the while, the underlying value of the company may not have changed – just Mr. Market’s mood. The best part of this entire arrangement: you are free to ignore him if you don’t like his price. The next day, he’ll show up at your door with a new one. For your interest, the more manic-depressive he is, the more opportunity you will have to take advantage of him [don't worry, he doesn't have feelings or mind being taken advantage of.] As long as you have a strong conviction of what the company is really worth, you will be able to look at Mr. Market’s offers and reject or accept them… the choice is yours. Posted By Charlotte. NC : February 13, 2008 11:43 am
You don’t get it–the market IS a person. It is in fact MANY persons, most of whom ARE acting on their emotions, NOT on logic and sound business reasoning. And that’s why the market acts “psycho”, because buying and selling stock in companies based on your feelings instead of solid information about the companies’ performance is irrational. Posted By Cynthia Morgan, San Diego, CA : February 13, 2008 12:00 pm
… and it chases every hot little thing it sees. Posted By Leroy Jenkins, Orgrimmar, Azeroth : February 13, 2008 1:07 pm
We hang around with this person because… He’s unreliable in the short term, but stunningly reliable in the long term. Just because he missed your birthday doesn’t mean he won’t be around for your retirement party. There are a few people who think he’s fun and love working with him or just being around him. To be fair, most people think those few are crazy, jerks, or both. He makes numbers — lots of numbers — and numbers are a key nutrient of business and government. And he gives obsessive people one more thing to obsess about. Posted By Rebecca, Philadelphia, PA : February 13, 2008 1:23 pm
Mr Market is actually Mrs. Market: Moody, volatile, contrary, capable of bancrupting a person and yet cant do without! But seriously, I love the volatility and the speculators. Its the latter who give us buying and selling opportunities. Right now I am cheering the fall (in India)- wish it would fall more so that I could buy really cheap. Posted By Venkat Iyer, New Delhi, India : February 13, 2008 1:24 pm
Who would the better people to be hanging out with be? Posted By Jessica, St. Cloud MN : February 13, 2008 2:20 pm
Rich, anxious, irrational, ungrateful, moody, obnoxious when drunk and boring when sober, while never happy for very long? Oh my god, the Market is Britney Spears! Posted By Mary, Austin, TX : February 13, 2008 3:49 pm
Right on Bing! (and Leroy Jenkins) The market has to be female… I can say it… I am one. It is wishy-washy, and what is good enough for it one day, isn’t acceptable the next. It is irrational and completely insane. It doesn’t have to have a reason or explanation for anything it does, that’s just the way it is, and you have to accept it. Posted By Jessie, Northern MN : February 13, 2008 4:55 pm
This is a very good analysis, but you forgot one important characteristic in your personification of the market: age. It’s the market. It’s all about the market. Everything that happens in the world, happens because of the market. The market wants what it wants and it wants it right now. Dude, your dealing with a toddler. This kind of egocentric, narcissistic blather is hallmark of very young children that haven’t yet developed the maturity to realize that (1) the world is not just an extension of themselves and (2) the inability to delay its own gratification. Posted By Pedro, Washington, DC : February 13, 2008 5:35 pm
The market is infallible in my eyes. Those who do not agree are just short-sighted and do not see the inherent perfection that is the market. If the market is up, it is good. If the market is down, it is good. If the market is in the middle, it is good. People need to realize that the market knows all, sees all, has all of the power, and is above human rationalization. Posted By Yadgyu, Harkeyville, TX : February 13, 2008 8:08 pm
Well, I’ll be darned if the market doesn’t sound like every crazy boss who has ever been described in your column before, Bing. Hmmm… is this a coincidence? Posted By Jorge in Louisville, KY : February 13, 2008 10:16 pm
Hey Stan, Posted By joe, upstate : February 13, 2008 10:18 pm
Joe, you’re full of it. I at least know I’m not rational. But thanks for writing. See? I’m grateful. Another way I’m not like the Market! Posted By thebingblog : February 13, 2008 11:00 pm
In its origins the market could have a human identity; perhaps? Since the 1980s’ the stock market gave way to “program trading”. Programs are robotics in the service sector. A power failure or the hint of a power failure can cause “pms”–better known as the yo yo syndrome. Posted By Bob Shelby Twp. Mi. : February 14, 2008 8:45 am
Having lived in this world for the last few years, you couldn’t be more right, and the mkt is really just made up of a bunch of people who in aggregate have these traits you have described. Not all have all, but all have at least a few… One observation I might add, all of those characteristics except for 3 are required to be a good investor. The three you can live without are the gutless investors (those that sell when the stock is down, Bing, another one of your articles was disappointing to read on this), the irrational investors (though it does create more opportunity in the short run), and the obnoxious drunk (boy do I have stories). Rich, well if they weren’t they would suck! Nervous, you can’t trust anyone, because everyone when not being watched will do something to benefit themselves. Greedy, this one is touchy, but I do believe if the person investing for you gets paid when they do a good job for you, then you want someone who wants to make a lot of money. However, a note too all investors, do your homework and if someone isn’t performing too its benchmark (set a timeframe you are comfortable with) then dump them. It’s the only way investors will ever get the upper hand. Intelligent, agreed on the crazy part Ungrateful, you want me to be happy for you doing your job? Moody, you would be too if you can’t trust anyone and will get fired the minute you screw up. Plus, think about all the people you have to work with. Boring when sober – analysis is boring, so are the analysts. Vicious when disappointed – This again is sad but important. I have just had two very angry calls with management teams over their recent performance. One of them added to (I am not arrogant enough to think I caused it) the CEO resigning. When people are getting things done, you want someone being vicious taking care of your money. Never happy for long… I gotta get back to work… Posted By Steve : February 15, 2008 10:14 am
book abridged, pdf file. It sounds so simple. Posted By Bud Labitan, Chicago, Il. : March 25, 2008 12:30 am
Everyone needs to stop thinking about the “market” as if it were an independent aspect of nature like the weather.If all of humanity vanished right now there would still be weather, seismic activity, solar wind, etc., the “market” and “economy” however would vanish with us.We are the “market” and “economy” and we have complete control over it.If enough people decide to change their lifestyle or outlook the “market” and “economy” will also change. Posted By zqahtt, Philadelphia, PA : April 12, 2008 5:00 pm
We found your blog is very informative and nice about the market.We have more information related to this topic, we have a team of great professionals.After thorough research and examination, our research teams share their views, Our Chartists with best of their skills make analysis and give us faithful information.We would like to share it with users. Posted By cafestocks,Noida,(U.P) : September 17, 2008 7:17 am
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Stanley Bing
Stanley Bing is a Fortune columnist and best-selling author of business books noted for their wisdom as well as their sharp, slightly acrid sense of humor. He is also the only writer on business and the workplace who still puts on a suit and tie and goes to do battle with the dragons that breathe fire at corporate America every day. This blog captures what remains of his brain after it has exploded in all other directions.
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Why in the world are we hanging around with this person?
Because, on average, you must so that your nestegg can have any chance of keeping up with the bite inflation and the taxman take out of it every year. For most normal folks, the best answer is to just keep chunking the money into a balanced portfolio of mutual funds paycheck to paycheck and ignore it. Hopefully, when the day of reckoning comes, dollar-cost-averaging and actuarial prowess will have left you with just enough to pay the gravedigger with your last nickle.