I love Christopher Nolan. Being a movie enthusiast (technically also), I just admire and cherish his masterful work. His masterful work in 2006 brought us ‘The Prestige’ and WOW!!! It was impressive.
Yesterday, sitting at a coffee shop I was reading a book on Investing (The New money Masters by John Train) and a thought struck me about how similar Magic is to Investing.
The idea is simple: If you want to learn magic, pick up something written by Houdini or Copperfield, read what they say, dissect their every move and you may be on your path to be something. Similarly, you wanna be a great investor, read about Buffett, Soros, Klarman and other renowned and smart winners, see what they are saying, reverse engineer their deals and apply their tenets.
But here is what is more interesting and common with magic. Just like magic, when you get to ‘know’ the ‘secret’, it is so very obvious. Not only obvious, they are so simple that you become so sure that it’s not only possible but perhaps easy to replicate them. But the moment the magician (great investor) comes up with a new magic trick (great investment); you start looking for a new secret/trick and forget the old tenets. Even if you are in the same profession, you stop believing that it can be so simple and start looking for another secret.
And you become like Robert Angier in the movie, chasing something that isn’t there. There will always be somebody with the right advice, a wise person like ‘Cutter’ in the movie who kept on telling Angier that the secret to Bowdon’s trick is simple ( that he use a double for the transported man trick) but then … you are looking for THE Secret !!!
But you won’t find it because of course, you’re not really looking. You don’t really want to work it out. You want to be fooled. You don’t want to believe that it can be so simple because it takes away the fun/glamour/ curiosity that attracted you towards it at the first place. The real love for magic and investing comes ‘after’ you know the tricks. You will stick to them with a discipline only if you really like the profession and are not solely attracted to the glamour of magic and impressing others, equivalent of this in investing will be the glamour of stock markets, widely published rags to riches stories and Gordon Gekko’s lifestyle.
NOW… Once you know the tricks, once you know the tenets of investing that have been mentioned in books, repeated in magazines and practiced by renowned investors, what next? Are you the next Buffett in making?
Of course not!!! You can know all the tricks of Houdini but to practice it needs enormous discipline. Reading a book doesn’t make you a great magician like Houdini, but to disappear an elephant in the middle of the theatre filled with people, does. Houdini used a simple but powerful concept of Misdirection and applied it to real life. Years and Years of dedication to master the art!!!
So my dear investors, the secret is out. The Secret is that there are no secrets. Successful investors are disciplined and talented (in that order), knowing that success come from doing the necessary thing day in day out with discipline.
If you are in for the glamour, you may be disappointed because there is no glamour in discipline. But I assure you this, “The pain of discipline is far less than the pain of failure”