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A buffy quot on the matter
Graham's conviction rested on certain assumptions. First, he believed that the market frequently mispriced stocks. This mispricing was most often caused by human emotions of fear and greed At the height of optimism, greed moved stocks beyond their intrinsic value, creating an overpriced market. At other times, fear moved prices below intrinsic value, creating an undervalued market."

http://www.investorhome.com/psych.htm

Its the reason that value investing done well out performs growth investing.

Its what Graham, Buffet & my favourite Mamis all have in common the realisation that its human psychology that causes prices to move up or down.

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