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!
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.