Ben Graham stated that "if you want to make money on Wall Street, you must have...

Ben Graham stated that "if you want to make money on Wall Street, you must have the proper psychological attitude." Quoting the philosopher, Spinoza, Graham said "you must look at things in the aspect of eternity". What does this mean? How did this change Warren Buffet's life and the trajectory of investor psychology? And does this investment guidance hold true given the unprecedented swings in the stock market today?

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Expert Solution

The psychology of investor is very important when he is investing into the share market because it is highly volatile and it can change the prospective of investment very quickly so the investors must be very disciplined and he must be aware about every events related to the market as well as his stocks so he can take decisions proactively and he can always follow the due course of action in order to maximize his overall rate of return into the market.

Warren Buffett is always known for sticking to his investment in adverse scenarios and not investing by following the herd and he is always sticking to his own fundamental analysis even at the time of adverse crisis and even if the company is losing bad, but he believes his strategy and he is investing in the long run to come out at the top.

His investment in various companies can be very good example of investor psychology as he had invested when there was complete pessimism in the market and blood on the street so he didn't lose his mind and infact focus on the due course of investment by buying the shares at the cheap price and holding it for the longer time frame to maximize his rate of return.

Investors should always be looking at cutting all the noise across him and he should always not get affected by others analysis and he should follow his due course of action and fundamental analysis to hold onto his investment through sceptical approach and maintain the the investor psychology.

jeff jeffy answered 1 year ago

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