Analogies abound in investing because they relate something familiar to the unknown, they simplify the complex. I can expound on how the markets work or I can retell Ben Graham’s story of Mr. Market. The later does a better job of explaining the basics to anybody then my detailed explanation ever would.
I was reminded of a similar analogy this week. It’s one I’ve read several times before and thought it was worth sharing. Ralph Wanger relayed how markets work to Bill Berstein:
He likens the market to an excitable dog on a very long leash in New York City, darting randomly in every direction. The dog’s owner is walking from Columbus Circle, through Central Park, to the Metropolitan Museum. At any one moment, there is no predicting which way the pooch will lurch. But in the long run, you know he’s heading northeast at an average speed of three miles per hour. What is astonishing is that almost all of the market players, big and small, seem to have their eye on the dog, and not the owner. – The Four Pillars of Investing
Last Call
- The Power of Stories – Latticework
- The 3 Most Important Words in Investing – Pension Partners
- Overconfident Enemy In Mirror – L. Swedroe
- The World’s Largest Momentum Strategy- A Wealth of Common Sense
- Dave Packard on How to Operate a Company – Farnam Street
- What Was the Greatest Era for Innovation? – NY Times
- The Unbelievable Reality of the Impossible Hyperloop – MIT Tech Review
- How Growth Became the Enemy of Prosperity – Medium
- The Wisdom of the Aging Brain – Nautilus
- 5 Books to Read This Summer – B. Gates
