Listen to the Market!

There is a belief that you should respond to and take advantage of every twist and turn that the market gives you.

Traders are thought to be rational and their decisions are thought to be in response to quality information provided by the management and board of directors to the investing public at large.

The typical question against this belief is the question against what is commonly known as the efficient market hypothesis. In the said hypothesis, the belief is that every piece of information required by the investing public is known to the market participants - share prices reflect all available information.

This is not the case, for if it were, it would not be possible to beat the market consistently over a long period of time. It is only possible to beat the market consistently, if one acknowledges that the market is not rational. It is filled with emotions - mania, fear, greed, and the like.

Patience, Discipline and Dispassion

The market, is in fact, there to serve you and not instruct you with what to do with your money.

You do not respond to every whims and fancies trending in the market.

Rather, the market simply comes to you and tells you what the current price of the stocks and shares you are eyeing or holding is currently worth.

You are the one making the decision on whether to buy, hold or sell.

The market should not be telling you what to do. You should be making that decision on the basis of your analysis of the valuation and business analysis of the company in question, instead.

Ground Rules

For a copy of the book that will elaborate further about this distinction, regarding what is commonly known as Mr Market, please click here.

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