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“I shall impersonate a man! Come, enter into my imagination, and see him.”

Those are the first two lines of the first song of the iconic Broadway musical “Man of La Mancha.”

And in my imagination, I can see Benjamin Graham – the father of value investing and mentor of Warren Buffett - replacing Miguel de Cervantes’ character, Don Quixote, and writing a Broadway musical about an equally intriguing character - Mr. Market.

I feel confident that no matter what year you read this article, if I said, “Wow, what a volatile year this has been,” you would likely say, “Yes, it has!”

How do I know that?

Because of Benjamin Graham’s Mr. Market.

Let me show you why.

The Ageless 75-year-old Mr. Market

In his classic book - "The Intelligent Investor" - published in 1949, Benjamin Graham introduced Mr. Market as a fictional character to illustrate the erratic nature of the stock market.

And this idea is as relevant today as it was when Graham first introduced it, as it reminds us that the market can often be unpredictable and irrational. (1)

He described Mr. Market as a business partner who offers to buy or sell stocks daily at various prices. Sometimes, Mr. Market is exuberant and buys stocks at unreasonable prices, representing optimism, while at other times, he is despondent and sells the same stock at low prices, expressing pessimism.

Graham's key insight into Mr. Market is that while his buying and selling may be irrational and influenced by emotion, investors need not react similarly. Investors then should view Mr. Market's offers as opportunities to buy or sell stocks based on their intrinsic value analysis.

·         Simply put, Graham advises investors to capitalize on Mr. Market's irrationality by buying when he is pessimistic and offering low prices. And vice versa by selling when he is optimistic and offering high prices.

The Mentor-Protégé Dynamics of Graham and Buffett

While Benjamin Graham’s ideas have influenced many successful investors, his impact is most evident through his association with the Oracle of Omaha - Warren Buffett.

Graham's teachings significantly shaped Buffett's investment philosophy.

In fact, Warren Buffett regarded Benjamin Graham not only as a teacher but also as a mentor and a close friend.

·         The profound influence of Benjamin Graham on Warren Buffett is unmistakable, with Mr. Market's imprint being particularly evident.(2)

Warren Buffett's renowned adage, "Be fearful when others are greedy and greedy when others are fearful,”(3) emphasizes the lessons he learned from Mr. Market.

The wisdom in this statement is that it challenges conventional market behavior.

For instance, on the one hand, when Buffett says to “be fearful when others are greedy," he implies caution when stocks and Mr. Market are exhibiting - what Alan Greenspan once called - “Irrational Exuberance.”

It is at this stage that investors may find it ideal to sell as Mr. Market pushes stock prices higher and higher - driven by euphoria instead of underlying value.

And on the other hand, Warren Buffett's advice to "be greedy when others are fearful," highlights the potential opportunities that arise during market downturns.

Because when fear dominates the market, Mr. Market typically sells stock, and prices sink, often leading to undervalued assets. This is when Warren Buffett suggests buying equities from Mr. Market.

Further Influencer of Graham’s Mr. Market

You can also see Mr. Market’s influence on Warren Buffett through quotes like:

"Remember that the stock market is a manic depressive," (3) and "The stock market is a device for transferring money from the impatient to the patient."(3)

These quotes encapsulate the essence of Benjamin Graham’s investment philosophy brought to life by his character - Mr. Market.

Buffett's ability to detach from short-term market fluctuations and focus on the intrinsic value of investments is a testament to the enduring principles inherited from Graham. This disciplined approach has become a hallmark of Buffett's investment philosophy, contributing significantly to his remarkable success.

The Key Take Away of Mr. Market and What You Need to Know

The allegory of Mr. Market serves as a reminder of the emotional and irrational facets intrinsic to financial markets.

The mentorship legacy of Benjamin Graham reverberates through the investment philosophy of Warren Buffett, offering what I consider a template for investors seeking to make market volatility work for them - not against them.

Understanding this may help you create an investment strategy that seeks to buy stocks when Mr. Market is fearful, selling his stocks below their intrinsic value. And then selling the same basket of stocks back to Mr. Market as he becomes exuberant and pays more than the stocks are fundamentally worth.

Owning Less Stock at Market Cycle Highs

I believe the systematic approach in dealing with Mr. Market offers two key benefits.

1. It results in owning fewer equities when markets reach their cycle highs in a bull market. This reduced exposure can help mitigate sequence risk(4) for retirees who rely on income from their investment portfolio.

2. Conversely, investing as the market declines means owning more equities at market lows. This heightened exposure may expedite the recovery period when the bear market hits its bottom, and a new bull market begins.

Closing Thoughts

Developing an investment strategy that incorporates discipline and an unemotional approach, guided by the principles of Benjamin Graham and Warren Buffett, can result in a unique approach not commonly used in today's investment strategies.

Thus, Mr. Market still offers valuable lessons worth considering.


(1)   On Mr. Market, by Chris Gilbert, Yahoo Finance, March 9, 2016,

(2)   Ben Graham & Warren Buffett’s Bond, By Ben’s Granddaughter, N/D,

(3)   Warren Buffett Quotes on Life, Success, & More, Phil Town, December 21, 2022,

(4)   Sequence Risk, What it Is, And Why It Matters In A Bear Market, by Sal Capizzi, Dunham, January 16, 2024,


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