Imagine the leader in a small, provincial village. He’s handsome, rugged, and the toast of the town. While a bit boastful, it’s justified by all his impressive accomplishments.
This leader is ambitious, too. He has shunned most of the women in town for the one he has found most attractive. Although she’s as much an outsider as a member of the village, she has a certain je ne sais quoi. In the era before the “me too” movement, this village leader see her shunning his advances as simply playing hard to get.
One day, however, she’s kidnapped. The leader rallies the townspeople to form a search party and set out to rescue her.
Finding the lair where she’s been held captive, this leader uncovers a shocking twist. She’s become a victim of Stockholm syndrome (in a time before it had a name). Now, she sympathizes with her captor, and the leader ends up plummeting to his death while trying to free her from her tormentor.
If that story sounds bizarrely familiar, that’s because it’s Gaston in Beauty and the Beast… from the point of view of just about everyone else.
I can do more. Like how Hans Gruber is the good guy in Die Hard. Or how the Empire in Star Wars was actually a pretty good idea… although that gets into a lot of expanded universe books from the 1990’s. And was James Bond really that good of a spy when he spends half of Goldfinger captured by the eponymous villain?
The point is, when we get a set of facts, we’re often also given a framing for those facts.
We’re told that the Empire in Star Wars are the bad guys in the opening scrawl. And we first see Gaston through the eyes of Belle.
It’s not just in our pop culture. That’s just a reflection of ourselves.
When it comes to investing, we often have to separate the facts from what else we’re being told to frame those facts. Behind most companies are a product, ideally one that makes a profit for the shareholders. If it isn’t profitable yet, there better be a great story behind it explaining why there will be a profit later.
Such a story appeals to us as investors because it follows a hero’s journey. Like Luke Skywalker in the original Star Wars trilogy, we see someone that could be ourselves—a simple farmer with ambitions—get thrown into an adventure of galactic proportions.
A company that starts as an idea in someone’s garage can become a trillion-dollar company in time. The journey from Apple (AAPL), from developing the first Mac to Steve Jobs getting fired from his own company, the struggling 1990’s years before the creation of new products like the ipod and iphone is exactly the kind of character arc for a company that resonates with us on a fundamental level.
It’s also why there’s so many movies about the company (my favorite being the made-for-tv Pirates of Silicon Valley). Just beware: in the real world, most journeys fail before a hero is born. Many of today’s companies going public are following a fast path, but many still can’t deliver on earnings or other value.
Another notion that appeals to investors is that of mystery. We’re all trying to crack the code of what future prices will be for a company. Whether we’re right or wrong, we want to put our brains to the work, outsmart Mr. Market, and win the day.
Our desire to know all has also led to huge jumps in algorithms and artificial intelligence specifically for trading the markets. Yet with such a focus on short-term, small-scale gains, there’s still plenty of room for individual investors with a longer-term outlook.
The black-and-white of the silver screen—the difference between heroes and villains—is far more blurred in the real world. Double Indemnity can teach you as much about human nature, and therefore investing, as Wall Street.
A great company, or a great idea, can be destroyed by a bad CEO. Does that make them the villain? For shareholders, yes. But like the best villains in our fiction, it’s the ones that think they’re doing right that become the most compelling. That’s why Elon Musk can snap a Tweet about taking Tesla Motors (TSLA) private at $420 and half the wealth disappears instead, Thanos-style.
And the once-heroic company can become a villain in time. Many of today’s tech giants are getting backlash for the very policies that helped them become so big in the first place. When people decide they want their privacy after all, things can’t be run as efficiently, but eventually, the customer will get what they want from somewhere.
Finally, fear and greed are powerful tools. From The Treasure of Sierra Madre to The Good, the Bad, and the Ugly, the allure of gold may be a bit more literal and on the mark. The real winners in those films seem to be the bartenders, innkeepers and shop keeps that keep both the heroes and the villains loaded out and comfortable.
Whenever there’s a rush in the market, figuring out the suppliers can often show you a better place to make profits. That’s why the best profits ahead may not be in one of the dozens of companies working on self-driving cars, but on companies that supply the parts like Micron Technology (MU).
Andrew Packer is a Senior Financial Editor with Newsmax Media. He currently writes the Insider Hotline investment advisory, serves as investment director for the Financial Braintrust, and writes the monthly newsletter Crisis Point Investor.
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