Say Hello To Mr Market

I thought that with Cheltenham nearly upon us, now would be an ideal time to introduce you to Mr. Market.

Mr. Market was first introduced to the world by the famous value investor (and mentor to Warren Buffett) Benjamin Graham.

Benjamin Graham uses the analogy of Mr. Market being a paranoid investor that will one day be euphoric pushing prices up, another day he could be in the midst of a massive depression causing prices to drop and other days Mr. Market might even appear uninterested in buying any stock.

Benjamin Graham said that intelligent investors could take advantage of the violent mood swings that Mr. Market is prone to.

Warren Buffet uses a slightly different analogy of Mr. Market, that of him being a pitcher in baseball who will always pitch, sometimes fast, sometimes slow, sometimes a curve ball etc. The point Warren makes is that we as investors do not have to swing the bat until we feel that everything is in our favor.

He put it this way:

“You can wait for the right pitch all day and there is no penalty other than lost opportunity. So, when the fielders are asleep, step up and hit the pitch.”

You may be asking what all of the above has got to do with sports investing and especially what has it got to do with Cheltenham?

Well Mr. Market is alive and well in sports investing and will be especially active and paranoid during the Cheltenham festival, causing huge fluctuations in price on which ever selections are in or out of favor with the racing press and general public.

So I believe it is our job as sports investors to notice when Mr. Market is active and presenting us with the ideal opportunities (pitches) to lock in some value.

Good luck to everyone with your sports investing at the festival

I hope you enjoyed this post.

As usual any comments or questions appreciated.

Mark