The Mr. Market Strategy

If you’re familiar with the stock market and/or the various stock market strategies that come up from time to time, then there’s a good chance that you have heard of the Mr. Market strategy. Whether you have heard of this strategy or not, the fact remains that if you use it correctly you can increase your investment returns big time.   

    

The Mr. Market strategy starts, really, with a metaphor. It asks you to think of Mr. Market as a private business partner. He shows up to your home every day and asks to buy your interest in the company or sell you his. Sometimes, when he comes by, he’s super happy and feeling good about the future so his costs are high. Other days, he’s gloomy and negative and will sell you his shares for next to nothing. The goal is to think of the stock market as Mr. Market. It’s your job to take advantage of his “down days” and to profit from them...but only if you know for certain that the “down” is just temporary and if you feel reasonably certain your purchase will pay off in the long-run.

The lesson learned from the Mr. Market metaphor is basically to think of stock price as quotes from someone who is wishy-washy and changes his mind often. If a quote is more than you want to pay, don’t panic or give in and pay the too high price. Instead, just wait for that “bad day” when you can get a great deal.

This strategy may seem simple or even a little silly, but the only thing that matters is that it works! For more great strategies and advice, consider working with an investment adviser, one who is skilled and experienced at helping you deal with “Mr.Market.”