Month: March 2017

March Madness

As financial advisors, it’s our job to provide our clients with sound, qualified investment advice. We trust that most of the time our advice makes sense. However, there may be occasions, like today, where our advice makes people blink. Ready?

Don’t let the ball control you.

We know, that’s pretty cryptic. But take a look at your calendar and things will start to become clear. What month is it? That’s right, it’s March. And we all know what happens in March.

Madness.

March Madness, to be exact, the annual NCAA basketball tournament to crown a national champion. It’s a three-week event that, allegedly at least, leads to higher gambling1 and lower productivity.2 But, the real danger, to you at least, is the impact that it has on investing.

What’s the correlation between March Madness and investing? While there’s no direct link between basketball and the markets, one can impact the other. Specifically, we’re speaking about the effect March Madness has on people’s emotions. We all know that following sports often involves emotional commitment. We don’t just watch teams play, we root for them. Whether it’s our local school, our alma mater, the schools our children go to, or just because we like their mascot, many of us tend to favor one team over the other. We’re ecstatic when they win; we’re depressed when they lose.

Some people might not be quite so affected by the way the ball bounces. But for those who are, it’s crucial that you remember not to make emotional investment decisions. This is never truer than during the month of March. Some people are more likely to make impulsive decisions based solely on how they are feeling. So if you’re emotionally invested in the tournament, try to resist making any meaningful decisions until it’s over. If your team loses, you might be so depressed or angry that you end up doing things you regret. Especially when it comes to your portfolio.3

One study4 done in 2005 looked at the effect of countries’ stock markets after their national teams lose in the World Cup. They found in many cases that if a country’s team lost, their stock market would drop 38 points. And that’s just the average—imagine what the number might be for individuals. The only explanation for this is that the loss influenced investors’ moods to a startling degree.

When it comes to our finances, we can’t afford to let our emotions get the better of us. The wisest investing is done with our heads, not with our hearts. So if you find yourself sitting on the couch, watching a game, remember: don’t let the ball control you. Instead, give us a call. We’d be happy to discuss your portfolio with you if you’re a client. If you’re not a client, give us a call anyways. We’d welcome the opportunity to talk about how we may be able to help you.

Sources:
1 One expert estimates that more than 7 billion dollars are wagered illegally. http://tinyurl.com/7zy2xgm 2 http://tinyurl.com/8ykvtw9
3 http://www.marketwatch.com/story/march-madness-and-your-portfolio-2011-03-11
4 http://tinyurl.com/dar9y

Overcoming the Odds: George Lucas

No matter who you are or where you come from, you have goals in life. But no matter who you are or where you come from, there will come a time when you encounter obstacles to your goals. There will be times when the odds are stacked against you.

Fortunately, for those times we have heroes and legends to turn to.

We enjoy reading about the men and women of history who did great things despite the enormous barriers they faced. We find it gives us the inspiration we need to work toward our own goals.

“Wait a minute,” you’re probably saying. “George Lucas? The guy who made Star Wars? That George

Lucas?”

Yep. That one.

Come back with me to the early 1970s when Lucas was a young, up-and-coming filmmaker fresh off a new blockbuster hit called American Graffiti. A low budget movie about teens and cars, American Graffiti cost less than $1 million to make, but it earned $50 million in the theaters. At that point, Lucas’s destiny seemed bright. All he had to do was continue on the path he had laid for himself and everything would be fine.

But for his next project, Lucas had something much bigger in mind.

As a kid, Lucas had loved watching campy science-fiction serials like Flash Gordon. He longed to create his own space adventure, but one much grander in scale. In his mind, Lucas envisioned something closer to an opera in space (and indeed, the term “space opera” is now a real thing).

But shooting for the stars isn’t easy. After all, the stars are a long ways away.

Still, Lucas decided to give it a try. Very soon, the obstacles started piling up, and they were formidable indeed. The first thing he had to do was write a story. Easy enough—or so it seemed. In fact, it took Lucas multiple drafts across four years to write what would eventually become Star Wars. Through it all, he struggled over everything from characters to dialogue (some would argue he never quite got this one right) to the basic mythology that underpinned his fictional galaxy. At one point, the character of Han Solo was a green frog. You get the idea.

All this at a time when Hollywood expected him to keep making small-scope, small-budget films like American Graffiti. Even many of Lucas’s fellow directors wondered just what in the world he was thinking.

Lucas persevered, though, and eventually finished his script. But the next step was even more daunting. In order to make the movie, he’d have to convince a studio to back it.

Once again, the odds were against him. First, United Artists turned him down. Then, Universal. Other studios followed suit. No one wanted to take a chance on an outlandish story about a farm boy and a princess battling an evil empire in a galaxy far, far away. It seems impossible to believe now, but at the time, no one thought a film like Star Wars would ever resonate with audiences … or make any money.

Well, almost no one. Eventually, a studio executive at 20th Century Fox agreed to take a chance. Star Wars got the green light, but Lucas still had obstacles to overcome. For one thing, his budget was only $7.5 million, when he was sure he needed at least $18. And then came the actual shooting. Much of the film was shot on location in the brutally sweltering Tunisian desert. Equipment kept breaking down. Crew members kept fainting. It didn’t take long to exhaust their budget and overrun their schedule. Even many of the cast and crew expressed doubts as to whether the movie would be any good.

But Lucas persevered. He believed in himself and in his movie.

More challenges. The studio, anxious about how long and expensive the project was becoming, started pressuring him. But he persevered. His cinematographer quit, and his editor, too. But he persevered. The responsibility was becoming unbearable, and things only got worse when Lucas started experiencing alarming chest pain. But he persevered. As he explained it:

“The reason I’m making Star Wars is that I want to give young people some sort of faraway exotic environment for their imaginations to run around in. I want them to get beyond the basic stupidities of the moment and think about colonizing Venus and Mars. And the only way it’s going to happen is to have some kid fantasize about it—to get his ray gun, jump in his ship and run off with this wookie into outer space. It’s our only hope in a way.”

Star Wars was released on May 25, 1977, Star Wars. It earned $775 million worldwide. It prompted (as of this writing) seven other films, and countless novels, comic books, and video games. It remains one of the most beloved films of all time.

All because George Lucas persevered, and persevered, and persevered—and overcame the odds.

No matter who we are, we all have goals in life. May we always follow George Lucas’ example in achieving them. May we exhibit the same self-belief, determination, and perseverance that he did.

As you work toward your goals, may the Force be with you!