In the more than 60 years that James Bond has graced cinema screens, there are a few near guarantees – Bond will drive a flashy car, get the girl, possibly sip on a shaken Martini, and ultimately save the day.
In the world of investing, however, there are no guarantees. It is a lesson your clients could benefit from learning.
It is one of many lessons that 007’s various adventures can teach them. Over the years, Bond’s stable of villains have come up with all kinds of baffling and convoluted plans to achieve financial gain and world dominance.
The one constant being they are all eventually foiled or fall apart.
There are various iterations of the old proverb “one man’s failure is another’s success” or “one man’s mistake is another’s lesson”.
Read on to discover four investing lessons your clients can learn from some of 007’s villains’ most insane, poorly thought-out schemes.
1. Don’t invest without a smart, evidence-supported plan in place
One mistake your clients might make is to invest before having a proper, evidence-based plan in place. It is important for them to know the answers to key questions such as:
- How much growth and what level of investment will be needed to reach their goals?
- How have markets or potential investments performed in the past?
- What outcomes, risks, and possible scenarios do they need to prepare for?
A carefully constructed financial plan can help your clients ensure they have the funds in place for crucial areas such as savings, pension contributions, investments — and protection.
In 1985’s A View to a Kill, Max Zorin, an ex-KGB agent turned entrepreneur, plans to monopolise the American microchip market by destroying Silicon Valley through triggering massive earthquakes along the San Andreas Faultline.
However, Zorin’s plan doesn’t account for the fact that:
- A vast majority of the companies that would make up his microchip customers exist in Silicon Valley
- Silicon Valley firms don’t produce microchips on-site and their manufacturing typically takes place elsewhere.
Suppose Zorin had spent time carefully considering the pros and cons of his plan, and doing the necessary research. In that case he might have made changes that would have led to greater success and reduced the possibility of failure.
2. Don’t invest before considering the essentials
In 1977’s The Spy Who Loved Me, the industrialist Karl Stromberg comes up with the deranged plan to trick the US and the Soviet Union into starting a world-ending nuclear war, which would leave his underwater city, Atlantis, as the only safe haven for mankind.
Stromberg’s plan is riddled with problems as he fails to consider essential points such as:
- How nuclear fallout and radiation could contaminate the world’s oceans, where his underwater city is based
- What would happen if his city suffered technical problems or sprung a leak and a return to the radioactive surface world was necessary?
- Where he’d source food, drinkable water, oxygen, and medicine should any issues arise in the future.
It isn’t wise to make major decisions without contingencies in place. It is an oversight that would surely have caused Stromberg problems down the road even if he had managed to best 007.
If your clients are considering investing surplus funds, it could be a smart move to set up an emergency fund in the form of at least three months’ worth of essential bills:
- Rent
- Utilities
- Taxes
- Groceries
This would ensure they have funds in place should anything unexpected occur.
3. Don’t let emotions influence decisions
The theory of “loss aversion” posits that people feel the pain of losses twice as intensely as the joys of gains. So, during periods of economic instability, it can be easy for your clients to become overly concerned about the short-term performance of their portfolios.
This can drive them towards making emotional decisions, influenced by psychological bias, that can hinder your clients’ progress towards their long-term goals.
In 1995’s GoldenEye, MI6 agent turned supervillain, Alex Trevelyan, learns this lesson the hard way.
Trevelyan aims to use a space-based electromagnetic pulse weapon, codenamed “GoldenEye”, to cover up the theft of billions of pounds from the Bank of England by devastating London, wiping out the Stock Exchange, and erasing all financial records in the moments following the heist.
Trevelyan’s plan is fuelled by a desire to avenge his parents, who he feels were betrayed by the British government during the second world war.
His emotions cloud his judgement and stop him from seeing a glaring flaw in his plan. The destruction of London and the wiping out of the UK’s financial sector will probably render the pound worthless.
For investors, acting impulsively or emotionally can have long-term financial repercussions.
For example, selling shares in a declining market means a client converts a paper loss into a definite one, removing the possibility for an upturn in value if or when the market eventually recovers.
4. Don’t take too much (or too little) risk
Your clients are likely to benefit from considering their tolerance to risk before making any investments. Too much risk could expose them to the potential for losses that they aren’t equipped to handle. Too little risk might see their investments fail to achieve the level of growth needed to reach their goals.
It is a lesson that media mogul Elliot Carver would have benefited from heeding in 1997’s Tomorrow Never Dies. Carver aims to boost his media empire by facilitating the outbreak of war between the UK and China in the South China Sea.
The plan would see Carver’s company capitalise on the news cycle coverage and, through faking a British attack on the Chinese government, help install a new Chinese leader who would gift his firm exclusive media rights in the company for the next century.
It is an insane gamble for Carver to make, considering all the dominos that would need to fall his way and the fact he puts his already multi-billion-pound media empire at risk.
If your clients are considering risky ventures, they could benefit from seeking professional advice to, first, determine whether it is the right move for their long-term plans, and second whether they have the right safety nets in place — such as key cover —should the worst occur.
Get in touch
It is essential that whatever approach your clients decide upon for their investments, they don’t go it alone. As many a Bond villain fatally discovered, a lack of advice, can potentially lead to costly decisions.
If your clients are considering investing their surplus capital, they should seek advice first, either by email at info@grey-parrot.co.uk or by calling us at 02039 871782.
Please note
This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
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