Once upon a time, there was a young investor.
He had a young wife, a young baby on the way, and a young dog.
Like anyone worried about the future and its choices, he wanted to find a safe and profitable way to invest.
What he really wanted to know was this: No matter what happened to him or his job, his family would have something to fall back on in the years to come.
The journey begins
Being a conscientious young fellow, he read everything he could get his hands on about investing. With time, he learned the important lessons that value investing and behavioral finance had to teach him.
He found that the best way to get rich through investing was to buy things when they were cheap. He also learned, through years of reading and experience, that psychology makes it really hard to buy things when the world is going crazy.
With his new found knowledge, he started to become scared when markets were rocketing into the stratosphere, and excited when they plummeted back toward earth.
It wasn’t easy, after all it hurt to see his hard earned money disappear in the blink of an eye when the fear swept through everyone around him. But eventually he really knew that these were the best times to invest, not the worst times.
Digging a little deeper
But our young investor wasn’t just satisfied to know how markets work, he wanted to know, in the same way that all wide-eyed children do, why.
Why did people suddenly go crazy and bubbles last much longer than any sane individual would believe? Why did they buy so much when everything was so expensive? And why did businesses go crazy and invest in so many things that turned out to be worth so little?
As he dug into this question, he began to find the answers, and they surprised him greatly.
There were reasons, beyond mass psychology, that bubbles come as if from nowhere and then pop back into thin air. While he would’ve just been satisfied knowing why bubbles formed, his new knowledge helped him fill in the gaps of what he learned about value investing and the madness of crowds.
Now, he had an even clearer idea on how a bubble formed, and he knew many reasons why they had to pop. He learned that every bubble contains the seeds of its own destruction, and like a successful virus, the larger the bubble grows, the more the seeds multiply. It was just like a real bubble, the more air you blow into it, the more violently it will pop.
Thanks to his investing journey, he knew exactly what he needed to do with his money to protect him and his family.
Time moves on
What he had learned he had long since put to good use. No matter the storms that had raged around him, his country, and the world, his investments had not only stayed safe, they’d grown larger than he had expected.
Thanks to his journey of learning early on, many more choices were open to him. As the years went on, he was able to choose a job that he loved to do, not the one that paid the most. He was able to travel more than before, and he never had to worry about what would happen if he lost his job or when he retired.
You see, he had reached his own happily ever after.
The question now is: Will you?
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