10. Stock Market Crash and Market Bubbles
Preston Pysh is the #1 selling Amazon author of two books on Warren Buffett. The books can be found at the following location:
In Unit 3, Lesson 2, we learned about psychology of the stock market and how most traders rely on instincts opposed to value in order to conduct trading. We learned a very important quote from Benjamin Graham that states, ìThe stock Market behaves like a voting machine, but in the long term it acts like a weighing machine.î This idea is important for value investors to understand as they remain confident in their valuation of any asset during emotional times.
During this lesson, we provided a demonstration of an emotional trader and a value trader. As you could see in the video, the value trader almost always had the opposite opinion of the emotional trader. This is important to remember as you move into the second course of this website. Determining the intrinsic value of a stock will help provide a peace of mind and ability to make clear decisions.