The intelligent investor has done his homework. He knows the fundamental value of his interest. When Mr. Market wants to sell at prices far below intrinsic value the intelligent investor may choose to buy from him. When Mr. Market is willing to purchase an interest for more than its fundamental value the intelligent investor may choose to sell to him.
I love this story because it is simple and yet profound in its real life application. It’s a mindset of looking for opportunities based on value and price, not on emotion or timing. It’s the discipline of avoiding owning assets that are priced above their real value.
The intelligent investor will attempt to take advantage of Mr. Market by buying low and selling high. There is no need to feel guilty for ripping off Mr. Market; after all, he is setting the price. As an intelligent investor you are doing business with him only when it’s to your advantage; that’s all.
It is important to be prepared for the inevitable market fluctuations with your finances and your intellect. In other words, you should be prepared financially and emotionally to to benefit from prices that are disconnected from their real values.
As an investor you should stop comparing yourself to others. Intelligent investing is not whether you can beat the market or not. It’s about sticking with your discipline and meeting your own investing goals.
Avoid allowing Mr. Market to influence your behavior, but instead take advantage of his irrational behavior by buying when he is despondent and selling when he is euphoric. If you concentrate on owning sound businesses at reasonable prices the results will take care of themselves.