Investing has become the cornerstone of the modern world economy, serving as a common pathway to financial gain. The process involves buying assets and receiving income from them over time. This can be achieved through dividends, shares, or rental income. It’s crucial to distinguish investing from speculation. While an investor buys shares to get a profit in the future, a speculator seeks quick returns.

To maximize profits through investing, you need to master this craft. One reason investing is quite difficult is the unpredictability of events. Attempts to analyze the statistics of past years or turn to experts who provide short-term forecasts may be futile. Nevertheless, there are several theories that have already helped many people become rich. Familiarizing yourself with these theories and applying them can lead to successful outcomes.

The first one is called *the firm foundation theory*. According to this, every asset has an intrinsic value beyond its market price. By evaluating current conditions and future prospects, one can determine this intrinsic value. If the market price of an asset is lower than its intrinsic value, this is a signal to buy. Over time, the market is expected to correct this discrepancy. This approach helped famous investors Warren Buffett and Charlie Munger create their company, Berkshire Hathaway.

The second theory is the *castle in the sky theory*, which is based on the psychological value of assets. According to this theory, an asset’s worth is determined by what others are willing to pay for it. An investor buys an asset with the hope of selling it at a higher price in the future. You can also know this technique as the "bigger fool" because the investor relies on someone willing to pay more. This method carries significant risks as it depends on mass psychology and speculation.

Understanding these two theories is essential for making informed investment decisions. The choice between them depends on your investment style and readiness to take risks. Ideally, you should thoroughly understand both theories and choose the one that suits you better.