Lessons in Finance from Iconic Movies

By Zoheb Sirguroh

Note: Contains few potential spoilers

Arguably, movies are ultimately an escape from reality. Then again, apart from emotional utility, some movies have the power to plant the germ of an idea in the moviegoer’s mind. As Dom Cobb famously quotes in Inception (2010),

“An idea is like a virus, resilient, highly contagious. The smallest seed of an idea can grow. It can grow to define or destroy you.”

This article lists down lessons in finance that can be learnt from some iconic movies:

The Shawshank Redemption (1994)

Warren Buffet is a living embodiment of Andy Dufresne. Andy’s action of digging through the walls every day for many years for achieving freedom is a powerful metaphor for achieving long-term financial freedom through the power of compounding in stock markets. If there ever were the most powerful and important book on economic cycles, trading strategies, and sector bets, it would have to be titled ‘Shut Up and Wait’. Good investing is about returns that you can stick with and which can be repeated consistently for a long period of time. It’s a glorious sight to behold when compounding runs wild after years of patience and perseverance.

The Godfather (1972)

The iconic line “It’s not personal. It’s strictly business.” encourages one to take financial decisions in a dispassionate manner. At times, investors incur losses as they get ‘attached’ to their investments – bet it stocks or cryptos – that fail to deliver in the hope of ‘getting even’. An investment is simply a means to an end. Exiting the investment at an opportune price and time is as crucial as holding on to it.

Fight Club (1999)

As Tyler Durden says, “To make soap, first we render fat.” All the fancy investing techniques and career advances won’t get one anywhere if one is not cutting their cloth according to their size and is constantly plagued by lifestyle inflation.  Despite high levels of income, the basics like creating a liquid emergency fund, sticking to that budget, and avoiding impulse purchases (as far as possible) are essential.  Fundamentals first. Most of us know them. The key is to implement them.

Whiplash (2014)

It is essential to get our priorities straight and stick to them. Day-in and day-out. Only actions last. There are only two short-cuts to becoming a millionaire: either you inherit wealth or you win a lottery. There are no short-cuts to excelling in terms of personal finance. Hard and smart work coupled with passion never goes out of fashion for building wealth and legacy.

Good Will Hunting (1997)

Of what use is an inheritance or a winning lottery if one merely sits on it and does nothing about it? Will Hunting was scared to break away from his protective little bubble. Will Hunting wasn’t implementing his talent/skills to generate value. He eventually learnt his lessons, albeit through his friend and a counsellor. Better late than never, whether you learn it yourself or through someone else.

Dangal (2016)

“Gold toh gold hota hai, chhora lave ya chhori (A gold medal is a gold medal, whether won by a man or a woman).” Similarly, returns are returns, whether gotten through a large-cap stock, mid-cap stock, or a small-cap stock. Opportunities are everywhere.

The Pursuit of Happyness (2006)

“Maybe happiness is something that we can only pursue. And maybe we can actually never have it, no matter what.” But then Chris Gardener, self-admittedly, did eventually experience ‘happyness’. The joy is in the journey of building wealth while not losing focus of the goal. Maybe, the perfect portfolio of stocks or cryptos is something that we can only pursue – the portfolio that generates the highest possible alphas or CAGRs.

Baazigar (1993)

“Kabhi kabhi kuch jeetne ke liye kuch harna bhi padta hai, aur haar kar jeetnay wale ko baazigar kehte hain.” There are bound to be losses in the journey of wealth creation. Be brave and be realistic to accept losses in the bumpy journey of wealth creation. Markets go up and then they come down and up back again. Reaching the destination matters in long-term investing – the net profit matters.

Wall Street (1987)

“Money’s only something you need in case you don’t die tomorrow.” Money is arguably the most important means of survival and adding value to life. However, it is not the end. Let money be your servant and not your master.

The Wolf of Wall Street (2013)

“Number one rule of Wall Street. Nobody, I don’t care if you’re Warren Buffett or if you’re Jimmy Buffett, nobody knows if a stock is gonna go up, down, sideways or in f—ing circles, least of all stock brokers, right?”

Brutal honesty at its best, stock markets are full of irrational exuberance. No one has an unblemished crystal ball. Allocate your finances appropriately keeping your risk tolerance levels and life goals in mind.

The Truman Show (1998)

Every Truman – the economist, fund managers, traders, market pundits – must know that the environment we operate in is not what it seems on the surface.  The Fed, the Treasury, and regulators across the world are the ‘Christof’ of our Truman Show. But the zeitgeist of our Truman Show is so sweet and pleasant, our days are so resplendent, our mood is so euphoric, the prospect of returns is so irresistible, that no one wants it to end. Not everyone is a Truman Burbank who has the courage to exit the dome. And exiting doesn’t necessarily mean being the monk who sells his Ferrari. It’s good to have an ‘enough’. Above that is merely all play and bonus.