Mr. Market

Mr. Market is the name given by Warren Buffett's mentor, Benjamin Graham, one of the greatest investors, to the stock market. In my not too long experience in the stock market, I have come to agree with his characteristics of how the market behaves, which is a bit schizophrenic. One thing is for sure and that is you can never predict the market and that is why I cannot understand those who subscribe to day trading which is simply trying to predict how a stock will behave during the day trading session.

Last year the stock market was bullish, meaning that the value of stocks rose and in some cases reached record highs, but this year the market is bearish, meaning that stocks are falling. Last year, the " Magnificent 7 ", which is the name given to the top most active stocks, accounted for most of the gains in the American stock market. They are Amazon, Meta (Facebook), Tesla, Nvidia, Alphabet (Google), Microsoft and Apple. What do they have in common? They are all tech stocks, and the reason is the AI hype.

The goal of every investor is to make a profit, and this is achieved by buying shares at a lower price and selling them at a higher price. This sounds logical, but it is not always the case. You may buy a stock expecting it to go up in value and the opposite happens. This is where emotional intelligence comes in because you have to manage your emotions when you see the stock you bought lose double digits in value. Let me give you a personal example. As I mentioned, last year the stock market was dominated by the magnificent 7, and out of those 7, one stock stood out and that was Nvidia. It grew exponentially. My trading style is value investing and that means that I buy a stock because of the value of the company and I believe that the value of the company will grow in the long term, which is the opposite of day trading where the trader is interested in making profits during the daily fluctuation of the stock or in the short term.

I was tempted to speculate and make a quick profit, and I wanted to do that with Nvidia. Because I felt that the stock would continue to be in demand since we are in the age of AI. That was me trying to predict the market, boy was I wrong. The moment I bought the stock, which was at a high, was when the news of Deepseek, a Chinese company that was making a similar AI model for a cheaper price, broke the Internet, and that hit Nvidia's stock value hard. Nvidia stock now holds the record for the largest single loss in value of a stock in a single day, which shows you the magnitude of the loss, and that is why I am at a loss right now, although I hope the stock will one day increase in value.

This is a reminder and personal experience that the market cannot be predicted. One should buy a stock because of the company and that is why I still hold Nvidia stock, I believe the company will be a player in future technology, but making a quick profit did not happen because Mr. Market did not go my direction.

Thanks for stopping by.

JaySays