How to Outsmart a Drunken Psycho Named Mr. Market
Beating Mr. Market at his own game
Dear Investor,
Zee here. Most of us are used to feedback loops. They’re how we get better at almost everything in life.
If you’re missing basketball shots, you adjust your shooting form and test again.
If your exam results aren’t up to scratch, you hit your weak subjects harder before the next test.
In most areas of life, you get pretty fast feedback. You act, reality responds, you adjust. Over time, you get better.
But investing? Ah, that’s a whole different animal.
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Mr. Market won’t teach you anything
The market is not like your teacher or even your school exams. You can’t rely on it to give you consistent, rational feedback.
Benjamin Graham famously described “Mr. Market” as a manic-depressive business partner. One day he’s euphoric, overpaying for everything in sight. The next, he’s sulking in a corner, slashing prices on perfectly fine businesses as if they were rotten fruit.
And here’s the key lesson:
Mr. Market isn’t there to instruct you, he’s there to offer you a deal.
Meet Mr. Market
Every day, Mr. Market knocks on your door with an offer.
When he’s in a good mood, he’ll quote you a sky-high price for your shares.
When he’s in a bad mood, he’ll sell cheaply discounted.
But here’s the trick: those prices are just offers. They don’t tell you the true value of the business.
Your job is to harness Mr. Market’s mood swings instead of getting swept up in them. Buy when he’s depressed. Sell when he’s greedy.
As Warren Buffett once put it:
“Mr. Market is kind of a drunken psycho. Some days he gets very enthused, some days he gets very depressed. When he gets really enthused you sell to him, and if he gets depressed, you buy from him.”
That’s the game. Don’t let him teach you, take advantage of him.
The Long Feedback Loop of Investing
The challenge is that investing feedback loops stretch across years, not weeks.
Think back to 2020 and 2021. Meme stocks soared. Portfolios doubled. Everyone felt like a genius. That’s Mr. Market in his manic phase, feeding you a false positive.
Then came 2022. Even strong businesses saw their stock prices collapse. If you started investing in late 2021, you probably felt like the market was punishing you for even trying. That’s Mr. Market in his depressive phase, handing you a false negative.
And that’s why the market makes such a lousy teacher. The feedback is slow, inconsistent, and often misleading. It usually takes five years or more for reality to catch up.
So instead of depending on Mr. Market’s mood swings to sharpen your skills, you need a better strategy.
So, How Do You Actually Hone Your Craft?
Since you can’t accelerate the feedback loop, the next best thing is to borrow from the masters and refine your process deliberately. Here are three practical ways to do exactly that:
1. Apprentice Yourself to Warren Buffett
There’s no better investor to learn from than Buffett. He has the track record, the discipline, and—best of all—he shares his thinking openly.
Study his shareholder letters. Watch his AGMs. Look at his past investments and ask yourself: What was he seeing that others missed?
Think of this as your investing apprenticeship.
2. Return to First Principle of Value
Many investors look for shortcuts, valuation formulas, rules of thumb, quick hacks.
But the real skill is understanding what actually drives value in a business. What makes cash flow durable? How does growth translate into compounding? What risks could destroy value?
When you return to first principles, valuation stops being a formula game and starts becoming a way of seeing the world. This is the bedrock of long-term investing skill.
Need a hand? At Kintsugi, we teach valuation methods that are simple to apply yet incredibly powerful. These strategies have a proven 15-year track record of delivering consistent profits and we continue to use them successfully today.
3. Keep an Investing Journal and Run Pre-Mortems
Here’s an underrated secret: writing is thinking.
When you force yourself to write down your investment thesis, the fuzzy parts become obvious. You’ll quickly notice when you’re hand-waving, when you don’t really understand the business, or when you’re relying on hope instead of analysis.
And here’s a twist: don’t just write why you’re bullish, write why you might be wrong. Run a “pre-mortem.” Imagine your investment has failed. What killed it? Competition? Regulation? Management missteps?
This habit builds discipline. It forces you to confront your blind spots before the market does.
The Big Picture
Investing is one of the few crafts where the scoreboard doesn’t teach you much in the short run. In fact, it can actively mislead you.
So here’s the mindset shift:
Mr. Market isn’t your teacher, he’s just your emotional, unreliable business partner.
Don’t let his mood swings guide your decisions; use them to your advantage.
Build your craft by studying grandmasters, thinking in first principles, and recording your decisions.
Because in the end, investing isn’t about looking like a genius during the next bull run. It’s about compounding quietly and wisely—so that when the dust settles five, ten, or twenty years later, you’re the one still standing tall.
That’s how you win the game.
Disclaimer:
All information here is for educational purposes only. This is not financial advice. Please do your own research and speak with a licensed advisor before making any investment decisions. Past performance is not indicative of future returns.