Jon Evans

Over spring break this year, my family took a trip to Disney’s Magic Kingdom.  It was truly magical, especially for our three young kids!  We saw characters and princesses, rode incredible rides, and experienced amazing performances and parades.  But, the most awe-inspiring element of the entire park was Cinderella’s castle.  As you walk toward the castle, you can’t help but be moved by the size of it.  It’s a beautiful, perfectly shaped outline towering above the courtyard below.  It’s an inspiring piece of art.

Out of curiosity, I looked into the finer details of how it was made and discovered some Disney ‘magic’ was used in the construction process.  Although the structure appears to be made of bricks, the support walls were built entirely out of steel framing and concrete.  There is no real gold on the structure at all, the ‘gold’ we see is actually anodized aluminum.  Also, I found the designers used a common set building technique known as “forced perspective.” This trick makes the structure appear much larger than it actually is by reducing the size of windows, doors, and stones at the higher portions of the castle.  This enhances the castle’s dramatic appearance.

It was interesting to learn about how this “magical” castle was made (even after learning the secrets, it’s still impressive) and it also reminds me of how easily we, as investors, can get caught up in the ‘magic’ of a new or hot investment.  The idea of a ‘sure thing’ investment is incredibly attractive, especially considering the market gyrations we’ve experienced over the past ten years.  But, taking a deeper look often reveals a different story – usually far less compelling.  Investment opportunities that sound like a fairytale, usually are.  As investors, we would be far better off avoiding the allure of chasing the next ‘magic’ investment – and instead focus on maintaining a well-diversified portfolio that cost-effectively captures market returns.

The quote, “Things are not always as they seem.” applies to both castles and investments.

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