HOW OUR MARKET WORKS

HOW OUR STOCK MARKET WORKS
By Graham
πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅
Imagine that
you are partners in the ownership of a business with a
crazy guy named Mr. Market.

Mr. Market is subject to
wild mood swings. Each day he offers to buy your share
of the business or sell you his share of the business at a
particular price.

πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅
Mr. Market always leaves the decision
completely to you, and every day you have three choices.
You can sell your shares to Mr. Market at his stated
price,

you can buy Mr. Market’s shares at that same
price, or you can do nothing.
Sometimes Mr. Market is in such a good mood that
he names a price that is much higher than the true worth
of the business.

On those days, it would probably make
sense for you to sell Mr. Market your share of the busi-
ness.
πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅
On other days, he is in such a poor mood that he
names a very low price for the business. On those days,
you might want to take advantage of Mr. Market’s crazy
offer to sell you shares at such a low price and to buy Mr.
Market’s share of the business.

If the price named by Mr.
Market is neither very high nor extraordinarily low rela-
tive to the value of the business,

you might very logically
choose to do nothing.
πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅

EXAMPLE

Stock market is Mr Market

If ALUFLORIDE is trading 100 per share

You have 3 choices

Either you can buy @100 or sell @100
Or do nothing.
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If You think ALUFLORIDE is 150 worth stock
Then you could consider to buy it from Mr market @100.

Thats because of MARGIN OF SAFETY

If you think ALUFLORIDE is really worth Only 80 per share
You might decide to sell to mr market@100.

πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅πŸ’΅
If you think each share of Alufluoride is worth between 105 t0 110
You may decide to do nothing.

YOU Only comes into action when prices looks either extremely high or extremely low.

Author: Atul Singh Stock Market Analyst

Disclaimer: This Blog, its owner, creator / contributor is not a research analyst and expressing opinion only as an individual investor in Indian equities. He/She is not responsible for any loss arising out of any information, post or opinion appearing on this blog. Investors are advised to consult financial consultant before acting on any such information. All information in this blog is posted for personal study, All information posted on blog is as available in public domain.