How to Think Like Benjamin Graham and Invest Like Warren Buffett

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3 Chapter1. Mr. Market’s Bipolar Disorder T he patient exhibits classic manic depression—or bipolar disor- der—combining episode ...

4 ATaleofTwoMarkets Exchange monitor the extremes, imposing “circuit breakers” that shut the market down when it threatens to sl ...

Mr.Market’sBipolarDisorder 5 pose oneself to the contagion. Instead, use Mr. Market to your ad- vantage. Neither Graham’s Mr. Ma ...

6 ATaleofTwoMarkets Table1-1. Dow Busts DateClose Point Change Percent Change October 27, 1997 7,161.15
554.26
7.18 August 4, ...

Mr.Market’sBipolarDisorder 7 Table1-2.Dow Bursts DateClose Point Change Percent Change September 2, 1997 7,879.78 257.36 3.38 Oc ...

8 ATaleofTwoMarkets On September 4, 1987, the Federal Reserve Board raised the dis- count rate. On October 13, 1987, the House ...

Mr.Market’sBipolarDisorder 9 public offerings (IPOs) of Internet stocks were launched, many in the same industry where it is goi ...

10 ATaleofTwoMarkets But the excitement of “getting in” on these deals got out of hand, more and more money was allocated to fut ...

Mr.Market’sBipolarDisorder 11 BE AN ANOMALY EMT also cannot explain many other things about how market prices operate apart from ...

12 ATaleofTwoMarkets Windsor Fund (Vanguard); Mario Gabelli; David Schafer; William Ruane and Richard Cuniff of the Sequoia Fund ...

Mr.Market’sBipolarDisorder 13 his keys every day for decades, much as a day trader would have to clic khis mouse every day for d ...

14 ATaleofTwoMarkets are not important, but the quality of their analysis and the indepen- dence of their thought and judgment a ...

Mr.Market’sBipolarDisorder 15 companies which consistently maximize the full potential of a busi- ness, wisely allocate capital, ...

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17 Chapter2. Prozac Market A long and interesting story lies behind the ever-popular efficient market theory, a story every inve ...

18 ATaleofTwoMarkets Bachelier’s wor kwas not widely noticed when it was published, perhaps because the mathematical parts of it ...

ProzacMarket 19 puters. Using those new technologies in the early 1960s, stoc kmar- ket researchers went to work with a vengeanc ...

20 ATaleofTwoMarkets various series of actual stoc kmar ket data were indistinguishable from various series of numbers generated ...

ProzacMarket 21 casionally expressed the fear that the interrelationships of stoc kprice changes are so complex that standard to ...