Graham said no one could predict where markets would head. So, if he was right, why do so many people try? - bright, articulate and analytical people?
Most people do it for the fun of it. Others do it for ego. Those that actually base their trading on it lose their money and their ego.
Uh.....I'll be the first to ask.....Who is this "Graham". What makes him an authority? Far as I know, he never did anything but sing with Crosby, Stills and Young. (Not that they aren't great.) ;-)
T-Boone pickens was able to predict where the markets would go and was rewarded handsomely for his efforts.
Long ago the market tradingand investment philosphies got started by people who were interested in improvement. Since then there were several forks in the road. One of those forks took most people away from the basics and onto another path. Entropy has prevailed as one would expect. One of the major compensators for this sad state of afairs is the "fix" put in when people lost sight of Graham's cited principle. Money Management doesn't fix the mistake of prediction and betting on the prediction. What fixes prediction is stopping the practice and returning to the principles in the first place. That is not going to happen, however and traders get the consequences in the form of the current failure rate. Graham was correct and what he said continues to be correct. Is a substitute needed for prediction. No, predictin is not necessary. What about money management? Google: profit factor, Sharpe ratios and risk/reward. Examine how they work in the absence of prediction and betting. What makes trading successful is the trader and the market in a partnership where each party does his job and does not ursurp the other's responsibilities. No one trades in the fture and the only pace trading takes place is in the NOW. All that is required is to do your job and listen to the market in the present.
Graham's thoughts in this regard are of paramount importance. Graham would correctly state that the highest probability of profit is derived from the purchase of securities at a price below their intrinsic or "book" value. In todays bull market there's little sense looking for values. But in a bear they abound. Further however, Graham recognizes that just because you spot an obvious bargain does not mean that the market will move immediately in your favor. There's times when liquidation is so great and investment dollars so few that a "great buy" may be rewarded with sluggish or non-existent gains for a prolonged period of time. A far cry from this pumped ultra-liqidity driven environment. This euphoria too will pass and sometime in the future a new generation will be forced to learn the wisdom of Graham.