Saturday, May 4, 2019

What Star Wars Can Teach Us About Investing

Today is Star Wars Day.

For this post, I will pull out nine famous quotes from the science fiction movie franchise and relate them to our real-life investment experiences.

#1: “Do or do not. There is no try.”

Yoda uttered this line while training the protagonist Luke Skywalker in The Empire Strikes Back

The key gist here is commitment. When learning about investing, or conducting your fundamental analysis, have determination and focus while carrying out the tasks. Do not do things half-heartedly.

#2: “You must unlearn what you have learned.”

Again from Yoda while teaching Luke in the same movie. 

It is refreshing to re-read some of the investment basics that we had gone through. Who knows, putting on that newbie hat again might spark some other points of view that we may have overlooked back then. Also, after a period of investing, most of us are quite into our own style and methodology, but it is good that if we could look at other alternatives and try to incorporate some of their pluses to ours to make it better.

#3: “Fear is the path to the Dark Side.”

And again, from Yoda, but this time from The Phantom Menace, while speaking to Anakin Skywalker.

Fear is one of the powerful emotions felt by humans, as it is the instinct to trigger the “fight or flight” response. While this is useful in physically dangerous situations, in the world of investing, this is a big no-no. The important thing is to stay calm and take stock of what is going on, before deciding on your next move. Engulfed by fear, and chances are your portfolio will go to the dark side, of losses.

#4: “Great, kid. Don’t get cocky.”

Han Solo told this to Luke in A New Hope, after the latter had shot down an enemy spacecraft.

It is common for new investors to feel euphoric and confident after getting their first positive returns. However, if this “high” continues, overconfidence will set in, and this could be detrimental in subsequent investment analysis and decisions. Be happy, yes, but everyday is not a Sunday, so stay focused and resume your everyday routine.

#5: “Now, be brave and don’t look back.”

This was said to Anakin by his mother, Shmi Skywalker, just before the former left home to train to be a Jedi, in The Phantom Menace.

It is natural that we do look back at our decisions and wonder if they are good or bad. Whatever it is, it was over and we have to make do with it. Lamenting on past investment decisions, such as ‘I should have sold it at a higher price’ or ‘I was following this counter but did not go in. Now it went up above my valuation’, is not healthy. Leave this baggage behind and focus on the present.

#6: “Who is the more foolish? The fool, or the fool who follows him?”

Obi-Wan Kenobi quipped this in A New Hope.

This is akin to herd mentality, or some might say “jumping on the bandwagon” or “fear of missing out”. Be it an asset class, a sector, a region/country or even an individual share/bond, there are times when it becomes hot, everybody will want to have a piece of it. Sometimes it is better to take a breather and find out what is it all about before making that jump. To quote another phrase from a song: “Wise men say only fools rush in”.

#7: “Stay on target.”

A pilot muttered this while flying towards the attack target in A New Hope.

There are aims and objectives when starting off an investment portfolio, such as to have an $X amount of portfolio generating Y% of yield when I reach age Z. Investing is a long journey, at least 10 years in my definition, so please do not stray from your course unless absolutely necessary.

#8: “Difficult to see. Always in motion is the future.”

And we are finally back to Yoda, who said this to Luke in The Empire Strikes Back.

As I have always mentioned countless times, we really do not know what the future holds. We may have past and present data (i.e. the Force in our context), but these provide at most a guesstimate. In my opinion a guesstimate is still better (and more prepared) than a wild stab in the dark wearing a blindfold.

#9: “The greatest teacher, failure is.”

This last one is from Yoda (who is full of sensible quotes if you know by now) to Luke in the latest Star Wars movie The Last Jedi.

Failure is one of the biggest bugbears one could face in life, but it is also a good lesson to learn from. Pick up the pieces, learn from them and move on. Do not let just a few bad experiences put you totally off from investing. Strength is not from winning all the time, but also from climbing up when you are down.

Unfortunately, there is no lesson to be shared from the most famous quote of all: “No, I am your father”.

May the Fourth be with you.


  1. Whahaa....Great Post on Starwars and lessons in investment from it!
    Like X 100.

    1. Thanks and May the Force be with you, too!

  2. "Wa si li eh lim pei!"

    Expect the unexpected.

    I don't know what I don't know, the unknown unknowns.

    How to survive black swans?

    1. That is an interesting point and a very good question, to which I do not have a good answer. Maybe the following conversation from The Phantom Menace may help:

      Qui-Gon: "Don't center on your anxieties, Obi-Wan. Keep your concentration here and now, where it belongs."

      Obi-Wan: "But Master Yoda said I should be mindful of the future."

      Qui-Gon: "But not at the expense of the moment. Be mindful of the living Force, young Padawan."