By focusing on the earnings, assets, future prospects, and so forth, one could arrive at a notion of a company’s “intrinsic value” that was independent of its market price. The market, they argued, was not a “weighing machine” that determined value precisely. Rather, it was a “voting machine,” in which countless people registered choices that were the product partly of reason and partly of emotion.18 At times, these choices would be out of line with rational valuations. The trick was to invest when prices were far below intrinsic value, and to trust in the market’s tendency to correct.
