It’s Oscar season in Hollywood. And while that may not usually have much to do with your finances, this year’s best picture nominees are chock full of money lessons that will prove valuable long after the awards are handed out next Sunday.
The Big Short
The Big Short is all about the why, what and (most importantly) how of the 2008 financial crisis. From my perspective, the real lesson for investors doesn’t come from watching a band of misfits leverage a highly unique opportunity into big profits. These were the (very) few who made big money from the housing crash.
The tragic stories of what happened are of regular people who lost their homes and their fortunes. As a financial advisor, this was one of the most difficult times in my career. My clients and friends were swept up in the real estate frenzy. So many people came to me asking, “How much house can we afford?” When I gave a true and honest answer—which included putting 20% down, staying away from adjustable rate mortgages, and looking at the long term—they thought I was a crazy, ignorant dinosaur. Sadly, some didn’t take my guidance and bought because they were caught up in the noise. “All of our friends are buying! We’d be nuts not to invest when it’s a buyer’s market!” The movie’s depiction of a Florida stripper with five homes may have been a dramatic illustration, but smart people believed that the market was different this time, and real estate was the quick fix.
Lesson learned: In any risky market, there will be big winners—and big losers. When you see an opportunity that sounds too good to be true, it probably is. Stay focused on your strategy, make decisions based on reality (not frenzy), and be a winner for the long term. Not sure you have enough to get by? Check out How much do we really need? A lesson from the Mayo brothers.
Matt Damon’s astronaut in The Martian was, above all, a survivor. Even when all seemed lost, he went back to the basics: his knowledge of science and rationing his resources. With no food or water on Mars and very limited supplies on hand, he leveraged every resource he had to create what he needed. To grow food, he used seeds from the potatoes he had (fertilized with excrement that was stored on board). To make water, he combined unused fuel from his vehicle with carbon dioxide from his own body (plus a lot of plastic tenting). He figured out how to use old technology to communicate with NASA. And, through it all, he analyzed how long he had to make his resources last, and he rationed what he had to make it happen.
Lesson learned: Planning for your future requires a lot of the same skills. Carefully build your financial resources, leverage the money you accumulate to build more wealth and, once you stop working, budget what you have to be sure it can support you through what is hopefully a nice, long retirement. Need a refresher on the basics of financial planning? See Getting back to basics in the New Year.
Bridge of Spies
Based on a true story, Bridge of Spies is my hands-down pick for best picture. Not only because it’s a wonderful, intriguing spy movie, but because it offers the most important financial (and life) wisdom of the year.
Tom Hanks is Jim Donovan, an unassuming and quiet lawyer who gets wrangled into defending an accused Russian spy at the height of the Cold War. The spy, Rudolf Abel (brilliantly played by Mark Rylance) is a painter with a deep, quiet soul. Even as he is accused, put to trial, and faces a potentially deadly return to his home country, his integrity and his unwaveringly calm and unworried demeanor remain. Multiple times in the film, Donovan asks him, “Do you never worry?” Abel’s consistent response: “Would it help?” The words struck me over and over again as I watched this man face a series of complex, frightening situations with the same quiet resolve. He was grounded in his own truth, knew that worrying would not change the outcome, and focused on living his life in the beauty of the moment.
Lesson learned: When it comes to money, it’s easy to worry, but if you have a careful, long-term strategy in place, you should be able to sit quietly and let your money work for you. Ignore the headlines, don’t focus on the short-term ups and down of the market, and don’t worry. After all, “Would it help?” Want to know why I’m not worried about the markets? Read my blog post Volatility, escalators, and yo-yos.
Of course, that’s only three, but every nominated film had some great lessons to offer. Here’s the quick rundown of the rest:
The Revenant, Room, and Mad Max: Fury Road were about as different as you can get, but they all focused on surviving…and thriving. Each of the main characters showed resiliency and a keen ability to adapt to any and every new circumstance that came their way. Lesson learned: Make a plan, adjust it as needed, and live happily ever after.
Brooklyn is a beautiful film about personal choices. Lesson learned: Whether you have few options or many, be sure to make the choices that support your financial life and your life as a whole. Here’s to finding true joy.
Spotlight tells a fascinating, real-life story about journalists who do what it takes to reveal the truth—even when they’re pressured to make headlines. Their goal was to do the right thing and serve the victims, rather than take the quick and easy route. Lesson learned: Too many journalists are paid to create stories that generate advertising revenue and miss the real story. When it comes to your money, ignore the headlines and focus on getting the facts.
If you have time, I highly recommend rolling out your own red carpet, popping some champagne, and taking in each of these great films—with at least a bit of an eye (of course!) to what they say about you, your money, and the choices you make that support a truly rich life in every way. Enjoy!
Want to share your personal insights from these—or other—films? Email me. I’d love to hear your thoughts and recommendations.