Investing and Magic!

Yesterday, I watched (again!) one of my all time favourite movies The Prestige, a masterpiece by Nolan. Hence this post!
Think about it, investing is indeed like magic. We make money out of virtually nothing, there are a lot of things about investing we do not understand/cannot logically reason.. and its so much fun..everything just like magic! :-) 
So lets try and see how investing is like magic!

Every great magic trick consists of 3 parts or acts: (no prizes for guessing where these lines come from!)
The first part is known as The Pledge. Here, the magician shows you something ordinary like a 'normal' deck of cards, etc. He might ask you to inspect it and ensure that is just an ordinary piece.
The second part is known as The Turn. Here, the magician takes the ordinary something and makes it do something extraordinary. Now you are stunned and are thinking 'how did that happen'. But you still wont be clapping. Making something disappear is not enough. You have to bring it back.
Thats why every magic trick has the third and hardest part, called The Prestige. What disappeared now appears back in the most unlikely place! Thats where the applause starts! 
Every great investment consists of 3 parts too:
The first part is The Research. A thorough and comprehensive research to determine the true value of something. Something which might look like an ordinary company, but may, actually, be extraordinary.
The second part is The Buying. Proper research and proper conviction results in proper buying! Buying and tracking its performance and various other developments is most important. Keep tabs on it patiently as the ordinary starts becoming the extraordinary. Stock price goes through the roof. However, that is not enough. Applauding notional profits is just like explaining the importance of capitalism to communists. Its useless!
Thats why every great investment has the third and the hardest part, The Selling. Its not until you have sold have you made profits!
See, just like magic! :-)


Every magician takes advantage of the obvious. The most complex illusion is based on the most simplest of 'tricks'. Like a trap-door in the stage to make the magician 'disappear'. If you learn how that trick was performed, you will say 'o that should have been so obvious'. But while watching the trick, you never realised it!

An investor does the same thing. He tries to catch the obvious, which others have missed. The market misprices stocks; an intelligent investor recognises and grabs it. After some time, the market starts valuing in properly, resulting in increase in price. And other people say..o that was so obvious..why didnt we buy that time?

Magic indeed!

Magic is fun! Sad magician..or boring magician..just doesn't sound right huh! When a magician performs his tricks, he too seems to have as much fun as his audience. The best part is..its fun even when a trick fails and a magic act becomes a comedy act.

Investing is fun too, believe me! Its a constant circus happening all around us 24x7. And just like magic, its fun whenever it fails too.. its hard to admit mistakes and laugh at one's own stupidity, but believe me, its fun! And most importantly, you get to learn sooo much from the mistakes.

Magical eh!

Magic is dangerous. Magicians have died trying to do the impossible. Trying to take unwarranted risks. Trying to do illusions without having proper checks and controls in place. Magic can become suicidal very fast if the magician does not know what he is doing.

Investing is dangerous too. People lose their money, their house, their happiness and peace of mind. It happens when they take unwarranted risks. When they speculate and punt without having proper checks and controls in place. The stock market is the best and surest place to incur losses if the investor does not know what he is doing.

Be careful with magic!

So, what say? Investing and magic go hand in hand huh! Hope you had fun reading, coz I had real good fun writing!


Abracadabra!!


Cheers and happy investing!




P.S. This is meant to be a light, fun read. If you think I am going bonkers, thats quite ok! Relating diverse disciplines is something I honestly enjoy doing. But if you liked reading this, you might also like reading another post of mine.