Written by Alan Haft
Where do you go for investment
A financial advisor? CPA? Jim Cramer? Suze Orman?
Maybe the retired guy down at the pool?
What about Yoda? Ever consider him?
As surprising it may sound, when it comes to
getting good advice on investing, for a moment, forget The Wall Street
Journal and everything else out there. That two-foot, nine-hundred year
old creature surprisingly offers some decent advice on investing. In fact, as
crazy as it sounds, the entire Star Wars series itself offers some
fantastic suggestions to get us on the right path towards success. Only
problem is, few people have taken the time to do something as ridiculous as I
have: ponder how the classic tale can teach us a few things about making
Mind you, this wasn?t exactly done on purpose. A
couple of nights ago, in the deep, dark hours of a California night, I found
myself out on the couch flicking through channels for something to lull me to
sleep. After watching the Met highlights on ESPN (total disappointment), a
re-run of Mad Money, then surfing past Happy Days and Charles
In Charge, I landed on Star Wars only to soon realize the classic
movie and all those that followed really can teach us a few important things
about prudent investing.
Here?s a few examples:
Investing: I recently took a moment to
do something most normal people would never do: search through a stack of
magazines to analyze the financial ads. Between Fortune, Money Magazine,
Smart Money, BusinessWeek and a handful of others, the results were
undeniably clear: in my brief study, when it came to ads for financial
products, by a long-shot, it was the costly, managed mutual funds that
advertised far more than anyone else.
What relevance does this have? ? Let?s continue
Wars: Imagine being Luke. You just
crashed in a dark, musty swamp where a two-foot tall
creature named Yoda revealed himself to be
the Jedi master. If that wasn?t
enough, a little while later the thing tells you to start lifting rocks with
your mind. Having little choice but to go with it, you heroically manage to
satisfy master, but when he tells you to lift an x-wing fighter with your
head, that?s a different story:
Master, moving stones around is one thing. This is totally
No! No different! Only different in your mind. You must unlearn what you
I totally agree with Yoda. After all, who
wouldn?t? The creature not only managed to live nine-hundred years, but he
beat the pants off an Evil Emperor four times his size.
When it comes to learning a few things about
successful investing, the first place many folks should start is not by
learning complicated investment formulas that ultimately few wind up
remembering, but with a willingness to do what Luke was basically forced to
do: unlearn some of the things you perhaps already know.
What baggage are you reading this article with? Is
it scores of ads from costly mutual funds trying to get your hard earned
dollars into their pockets? You know, the ads showing happy people who all
seem to be putting Bill Gates to shame? Based on the vast number of ads out
there from the costly fund companies, chances are your sub-conscience is
carrying a few of those fancy advertisements in your head and you may not even
to begin with, start by listening to Yoda. Being a successful investor often
means willing to unlearn some of what you know. While your mind may not wind
up lifting an x-wing fighter from a dark, musty swamp, you just might be able
to open a window to a few new interesting concepts about successful
Here?s the first example that comes to
Investing: Some of the more interesting
investment concepts can either be traditional in nature or somewhat unique.
Although they?ve been around for ten years or so, a low-cost investment
product such as Exchange Traded Funds are relatively new and are just starting
to explode with popularity. On the more unique side of the spectrum, who would
ever think something as bland, boring and unappealing as Life Insurance would
provide some retirees with better returns than their stocks have ever
produced? In today?s marketplace, investors selling their life insurance
policies are experiencing some of the greatest profits I have ever seen. Who?s
doing these things? It?s not sophisticated actuaries nor is it Noble Laureates
that have figured out how to beat the system; it?s main street retirees that
opened their minds to one of today?s hottest concepts, that of something
called ?Life Settlements.?
Wars: In real time it took a few months
but in movie-time it took just under two hours for Luke to
open his mind to new concepts. By fully opening his mind and entrusting The
Force, he turned a targeting computer off
and wound up landing one right into the Death Star?s exhaust port. ? End
result? Death to the Star and birth to inter-galactic celebrations across the
universe that changed our movie-going lives forever.
Learned: Whether it?s the willingness
to turn off a computer tracking system or explore innovative concepts such as
Life Settlements, it?s those with open, educated minds that often find the
success they seek.
LESSON 3: STAY AWAY FROM THE HYPE
Investing: Who would you rather be? A
sock puppet on national TV promising those that own its stock boatloads of
money or a cup of coffee that costs 3 bucks? While at first being a puppet
seemed like the way to go, it was just a matter of time before Starbucks
double-Frapps put the Pets.com mascot to shame. As most people that
experienced the .com bust can attest to, investing into hype often leads to
nothing but regret.
Wars: Who would you rather be? A seven
foot master with a deep voice, impressive ship and a mind that melts men or a
farmhouse kid chugging around the galaxy in a worn out jalopy? While at first
glance sporting a cool black helmet and long cape could seem like the way to
go, Star Wars proved to us that in the end, staying away from the hype
can wind up saving you from the dark side of things.
Learned: Save the sock puppets for your
kid?s next birthday. Flashy ads, slick brochures and fast-talking salesmen
isn?t what counts, it?s what?s behind the window-dressing that does. Next time
you?re confronted with a hyped-up investment that seems a bit ?too good to be
true,? keep in mind Han Solo?s classic line, ?I got a bad feeling about this.?
Think smart, double-check the hype and remember: this is your hard-earned
money we?re talking about.
Investing: Some of the most successful
investors I?ve ever met started out with nothing. Thinking back to these
people, those with the most often started out with the least. Somehow, some
way, fearless persistence, dedication and that occasionally annoying thing
called ?time? steadily built them their success. While diversifying your
investments, reducing fees, minimizing taxes and budgeting yourself to save a
few dollars every month may sound painful, dreadfully boring and slow paced,
remember: when it comes to trying to get rich quick, the longer you
play the game, the less chance you typically win. On the flip side, when
investing smart, the longer you play the game, the greater the odds
you?ll come up a success.
Wars: Have a good idea for a movie?
George Lucas did. To follow in his footsteps, first lock yourself in a room
with a legal pad and for the next year or so, do nothing but write an outline
to a science fiction
Then, over the next year or so, expand the outline into a screenplay, and once
that?s done, spend the next year re-writing it. With the script finally
complete, spend another year raising money to produce it. With financing in
place, spend another year filming it, the year after that editing it and once
that?s all finally done, take a deep breath, sit back and make a billion
Learned: Don?t think success could
happen to you? That could be your first problem. Whether it?s building wealth
or creating the second most successful movie ever made (behind Gone With The
Wind when inflation is factored in), remember: the journey to riches rarely
happens overnight. Take, for example, Henry the Electrician, a friend of mine
who once made $4 dollars an hour fixing fuse boxes. Tired, worn out and
wanting a better life, he one day had the guts to scrape together a few
dollars, purchase an apartment on the dark side of town and rent it out. Half
a lifetime later, with hundreds of apartments to his name, his personal
Star Wars is now a reality, and with a little time and dedication, I?d
bet anything one day yours will one day be as well.
Investing: There?s nano-tech, bio-tech
and gen-tech. Derivatives, floaters, collars, straddles and a long list of
many other complex investments. While some of these might be all well and
good, it?s probably best you listened to Warren Buffet who once wisely told us
mere mortals to stay away from things we can?t understand.
Wars: There?s tall creatures, short
creatures and monsters buried beneath the trash. Blubber-filled giants,
underground slugs, women
thin heads and a long list of other bizarre things. While some of these
might be all well and good, it?s probably
best you listened to Yoda who once wisely told Anakin to stay away
from things he can?t understand.
Learned: Who knew Warren Buffet and
Yoda would be so alike? Until this moment, I for one never did. Whether your
journey is about destroying an evil empire or building wealth, staying away
from things you can?t understand is often a first rule of success.
Investing: Want to outperform most
mutual fund money managers? I do. That?s why when it comes to investing my own
money, I often stick with index investing and put my money into things
such as the S&P 500. Somewhat sad but irrefutably true, over time, you?ll
most likely make more money investing into the simple and mindless S&P
than most mutual funds. And if returns aren?t enough to inspire you, what
about fees and taxes? Fees in most indicies are typically around two
tenths of a percent and investing in indicies rarely causes capital gain
taxes until you decide to pay them, not someone else. How good is
Wars: Legendary effects, wild robots,
fantastic chases and places that few people could ever imagine made my popcorn
dance, but when stripping away all that cool stuff, what do you really have? A
simple and familiar storyline that follows Joseph Campell?s classic thesis
that proved all timeless stories can be
down to the same, simple storyline that?s been re-hashed a thousand times
through heroes wearing many different
Learned: Forget phone books of
investments many investment accounts contain. Who has the time to keep track
of those things anyway? Whether it?s creating a movie few will ever forget or
making money, remember: it rarely has to be complicated for it to be
I had fun pondering how Star Wars can teach
us a few things about our money, and in fact, there were a handful of other
?lessons? I wound up editing out. But who knows? Given the examples above,
next time you see Star Wars, perhaps you too will realize some of the
valuable lessons the classic tale teaches us not only about money, but about
May The Force be with you.