Daily Archives: April 2, 2020

Lesson 8 – What Determines The Rate Of Return On A Stock?

“In the Short-Run, the Market Is a Voting Machine, But in the Long-Run, the Market Is a Weighing Machine”   This is a phrase originally attributed to Ben Graham but made famous by Warren Buffet. It has a deep and profound meaning for those who actually understand it.   So what does it mean?   It simply means that in the short term, the stock market behaves like a popularity contest. Stock prices change rapidly based on the environment, while the underlying value of the business doesn’t change. People could chase fads and there could be various ways a stock might be manipulated in the short term. In the short term, a stock could move for any number of reasons – […]