SuperAPI AI Directory
Partner with us中文AI newsFavorites
Skillsmr-market

mr-market

Writing & research

View repository

Updated 10-15 23:44

About this skill

Mr. Market thinking (including voting machine vs weighing machine)

R — Original text (Reading)

"He said that you should imagine market quotations as coming from a remarkably accommodating fellow named Mr. Market who is your partner in a private business... Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that is useful to you."

— Warren Buffett, 1987 letter (quoting Benjamin Graham)

"In the short run, the market is a voting machine; in the long run, however, it becomes a weighing machine."

— Benjamin Graham, quoted in the 1987 letter and the 2017 letter

I — Methodological skeleton (Interpretation)

Mr. Market is a behavioral framework, with the core logic:

  1. Imagine the market price as a daily quote from an emotional business partner called "Mr. Market"
  2. Every day he quotes a buying price and a selling price — you can accept them or ignore them
  3. Sometimes he is extremely optimistic (quoting high prices), sometimes extremely pessimistic (quoting low prices) — his mood swings are your opportunity
  4. He provides a service for your decisions, but does not provide guidance— his quotes are not "signals", but "tools"
  5. In the short term, the market is a voting machine (whose story is more appealing); in the long term, the market is a weighing machine (the true value of the business will eventually be reflected in the price)
  6. You do not need to predict Mr. Market's mood — you only need to take advantage of it when he quotes absurd prices

A1 — Application in the book (Past Application)

Case 1: Washington Post 1973-74

  • Problem: The market crashed, and Washington Post's stock price fell from 1/4 of intrinsic value to less than 1/5
  • Use of the methodology: Mr. Market's extreme pessimism happened to provide a buying opportunity — he quoted an absurdly low price
  • Conclusion: Buy heavily
  • Result: Held for decades, with returns of dozens of times

Case 2: Internet bubble 1999-2000

  • Problem: All tech stocks soared, and value investors fell severely behind
  • Use of the methodology: Mr. Market was extremely optimistic — he was quoting high prices, but the "weight" of the businesses had not increased
  • Conclusion: Insist on not participating
  • Result: Successfully avoided the bursting of the bubble

A2 — Trigger scenarios (Future Trigger) ★

In what situations will users need this skill?

  1. The price of an asset they hold falls sharply, and they begin to panic
  2. The market keeps rising, creating anxiety of "if I don't buy, I'll miss out"
  3. Trying to infer business value from price trends
  4. Wanting to follow the crowd because "everyone is buying/selling"
  5. Struggling over whether they should "stop loss"

Language signals

  • "The market is falling, should I sell?"
  • "Everyone is buying this"
  • "This stock has risen a lot, there must be a reason"
  • "I've lost X%, should I cut my losses"
  • "Is this the bottom/top now?"

Distinction from adjacent skills

  • Difference from fear-and-greed : fear and greed are specific action principles (buy/sell), while Mr. Market is a more fundamental cognitive framework (how you view market prices)
  • Difference from business-picker Difference: Business analysis focuses on the enterprise, Mr. Market focuses on how to treat market quotations

E — Executable Steps (Execution)

  1. Identify Mr. Market's current mood

    • Completion criteria: Describe the market's current mood in 1-2 sentences (extremely optimistic/mildly optimistic/neutral/mildly pessimistic/extremely pessimistic), and provide the basis

  2. Separate "quotation" from "value"

    • Completion criteria: Write down the current price vs your estimate of intrinsic value, and note the size of the gap
    • Stop condition: If you cannot estimate intrinsic value → first use aesop-three-questions valuation

  3. Decide on action

    • If Mr. Market quotes a high price (> intrinsic value) → do not buy/consider selling
    • If Mr. Market quotes a low price (< intrinsic value) → consider buying/holding
    • If Mr. Market quotes a fair price → take no action
    • Completion criteria: Actions are based on the value-price comparison, not on market sentiment or price trends

B — Boundary

Do not use this skill in the following situations

  • When you need liquidity (must sell)—Mr. Market's quotation is the price you must accept
  • In assets in non-public markets (where there is no Mr. Market quotation)
  • When you lack the ability to independently assess intrinsic value—at that point you cannot judge whether Mr. Market's quotation is "absurd"

The author's blind spots / era limitations

  • As the largest shareholder, Buffett does not need to face redemption pressure—ordinary investors have liquidity constraints
  • "Ignoring Mr. Market" requires extremely strong psychological fortitude and long-term capital—retail investors find it very hard to do
  • In extreme situations (such as forced liquidation due to leverage), even if you know Mr. Market is wrong, you cannot avoid taking action

Adjacent methodologies that are easily confused

  • It is not a simple version of "contrarian investing"—contrarian investing is an action, Mr. Market is a cognitive framework
  • It is not "technical analysis"—Mr. Market does not focus on price trend patterns, only on the relationship between price and value

Related skills (to be filled in Phase 3)

  • depends-on: business-picker, aesop-three-questions
  • contrasts-with: (none)
  • composes-with: fear-and-greed, margin-of-safety

Audit information

  • Verification passed: V1 ✓ / V2 ✓ / V3 ✓
  • Test pass rate: To be verified in Phase 4
  • Distillation time: 2026-04-16