Mr. Market

The Benjamin Graham allegory underlying the core lesson of Buffett — The Biography: “The stock market is a crowd, consisting of whoever is following prices at any given moment. This amorphous assemblage revalues prices every day, even every hour. Yet the outlook for a given business … changes far more slowly.” The biography illustrates with Walt Disney — the public’s ardor for Mary Poppins won’t change from Tuesday to Wednesday, so most of a stock’s fluctuation reflects shifts in perception, not in the underlying business. This separation of price from value is what Graham gave Warren Buffett: the “proper temperamental set,” the margin-of-safety conservatism, and “the attitude of detachment from the daily market gyrations.” As Graham put it, “You are neither right nor wrong because the crowd disagrees with you” — picking a stock depends “not on the whim of the crowd, but on the facts.” It is the foundation of Buffett’s Value Investing and his crediting “It all comes from Graham.”

Context: “Mr. Market” is Benjamin Graham’s allegory from The Intelligent Investor: imagine a manic-depressive business partner who each day offers to buy or sell your share at a wildly varying price. The investor’s edge comes from treating his quotes as opportunities to exploit, not as a verdict on value — the conceptual bridge to the margin-of-safety principle.

Where this appears

• Buffett — The Biography — the Graham allegory grounding the book’s lesson that markets revalue prices daily while business value changes slowly; the source of Buffett’s detachment from market gyrations.