There once was a hedge fund manager, a friend of Chris Mayers, who was about to retire. He was fairly successful and decided to invest in art and bought a painting for $150k. His wife thought he fool to invest in the art at this price.
After he moved to his new retirement home the hedge fund manager decided to sell the painting. So he got the painting appraised and to his surprise the appraised value was $850k. He & his family thought they got a jackpot.
So he decided to auction the painting and reserve was $850k. Auction started and within a few minutes the bid was at $850k and he thought finally he will make money on this painting. What happened in next 30 minutes made him even richer.
The bid quickly went to $1m then $1.5m >> $1.8m and then $2m, finally the painting was sold at $2.6m. The painting bought at $150k was sold for $2.6m. Why is that he could sell the painting for such a high price?
Some will say it was auction, anything can happen. Some will say it was an art so it was obvious. The real reason was that nobody offered him a quote everyday. Had someone offered him quote daily, he would have sold off cheap.
The story is exactly what happens to investors who get quotes every second for the stock they hold. The moment stock gets doubled, investors get tempted to sell off. Over 10-15 yr time the same stock delivers 100x
This is the real reason why so few investors make wealth over their lifetime (not money, money everyone eventually makes in the market). Not saying every stock is worth holding for that long, but this needs a mindset not to get tempted by price every second.
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