- Rick Rule unpacks an important message and two key takeaways in Benjamin Graham’s, The Intelligent Investor
- Sir Isaac Newton lost E$22M (equivalent to E$3M to today) in the stock market due to ‘FOMO’
- The key lesson is to buy when others are fearful and sell when they’re overly enthusiastic
- Rule: The broader lesson is: “Feed the ducks when they’re quacking”—capitalize when the market is overly excited—and “eat the ducks when they quack,”
Watch the above video for an educational and motivating conversation with Rick Rule president and CEO of Rule Investment Media. In a previous interview, Rule discussed his book suggestions for Investors.
In this segment, Rule unpacks an important message and two key takeaways in Benjamin Graham’s, The Intelligent Investor.
Early in the book, Graham demonstrates that the one of the most intelligent minds of our time Sir Isaac Newton, mathematician, physicist, astronomer, alchemist, theologian, and author lost E$22M (equivalent to E$3M to today) in the stock market due to ‘FOMO’ (fear of missing out).
Rule also likes this example as a great teaching tool.
“Newton knew a lot about some things, but he didn’t pay any attention to the fact that the company that he was investing in had a lousy balance sheet.”
Rick Rule
Rule mentions that Newton put all of this eggs in one basket and didn’t realize that the market itself is ‘determinedly narrative oriented.’
Rule’s explanation is, in The Intelligent Investor, Benjamin Graham compares the stock market to a manic-depressive partner, Mr. Market, who swings between extreme optimism and pessimism. When Mr. Market is overly optimistic and willing to pay double for something, it’s your opportunity to sell; when he’s depressed and offers to sell at half the value, it’s your chance to buy.
The key lesson is to buy when others are fearful and sell when they’re overly enthusiastic. This principle is illustrated with the uranium market, where no one wanted to buy when prices were low, but later, when prices surged, everyone wanted to invest. The broader lesson is: “Feed the ducks when they’re quacking”—capitalize when the market is overly excited—and “eat the ducks when they quack,” meaning take advantage of market pessimism to buy undervalued assets.
Rule concludes, “There’s lots of reasons to read the book, but two key takeaways are margin of safety and Mr. Market.”
Rick Rule, CEO Rule Investment Media
Rule is a sought-after speaker at industry conferences, and a frequent contributor to numerous media outlets, including CNBC, Fox Business News and BNN Bloomberg. He is known for his straightforward style and investors shouldn’t miss his personal insights.
Want more from Rick Rule? Check out Rick’s expectations for precious metals and his advice on investment reads.
And be sure to check out Richardson Wealth’s Mathis Baumbach’s interview with The Market Online about how the U.S. elections will impact U.S. and Canadian markets.
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