For film buffs and critics alike, The Godfather pretty much embodies what celluloid magic is all about. Even 37 years after its release, the movie continues to capture the collective imagination of audiences across the world. Its characters, lines and performances are a part of folklore. Debates and discussions on what makes the movie tick continue till date. The film's enduring appeal to generation after generation only reaffirms its status as a true classic.
But there's a lesser-known aspect to The Godfather. Apart from being a source of inspiration to aspiring actors and filmmakers, the film has a lot to offer to investors as well. Following are 3 investment tips from The Godfather:
1. "Where does it say that you can't kill a cop?"
When the Corleone family is under attack, Michael Corleone (Al Pacino) comes up with a seemingly outlandish plan to eliminate his family's enemies. And that includes killing a corrupt police officer. Despite being scoffed at by his associates, Michael rationalises his plan by suggesting that they feed the media with stories of the police officer's corrupt practices and his links with the mob, and thereby defame him. Essentially, Michael shows the willingness to think out-of-the-box and take risk, without being irrational.
Likewise, the willingness to be unconventional and take on risk is vital for successful investing. Often, investors are guilty of sticking to certain avenues simply because they have always done so. For example, it is not uncommon to find investors who refuse to venture beyond bank fixed deposits and small savings schemes; the only explanation for their choice being, we have always invested in these avenues. By shutting the door on other options, investors might deprive themselves of the opportunity to meet their investment objectives. Of course, this should not be read as a recommendation to throw caution to the winds and invest in every untested investment avenue on offer.
All investors need to do is, be open to the idea of investing in avenues that offer a suitable investment proposition and be willing to take on acceptable levels of risk. For instance, a 25-Yr old investor who is saving for his retirement 35 years hence, can't hold a portfolio comprised of only fixed deposits and bonds; despite the higher risk, equities and mutual funds must find place therein. Remember, risk isn't bad; investing without being aware of it or failing to properly assess it, is what gives rise to thorny situations.
2. "It's not personal. It's strictly business."
This recurring line from the film has been used to great effect on each occasion. Every character who quotes this legendary line tries to impress on others that a given act or plan of action should be seen as a business decision. In other words, it has nothing to do with his personal feelings. Hence, the need to view the act in a dispassionate manner. The 'not personal' rationale holds true for investments as well.
At times, investors have a tendency to get 'attached' to their investments. This is especially true of market-linked avenues like stocks and mutual funds that have had a successful run. The trouble starts when the avenue is no longer equipped to perform as it has in the past. Similarly, there can be a situation wherein an investor gets invested in an avenue that fails to deliver. In both the situations, investors might be tempted to hold on to the investment; while in the former, it's the 'attachment' at work, in the latter, it's to get even.
Such an approach to investing is certainly unwarranted. An investment is simply a means to achieve a goal i.e. the investment objective. If a thorough evaluation suggests that the investment is no longer equipped to play the part that it was supposed to, investors must salvage the situation by getting rid of the same at an opportune price and time.
3. "Tom Hagen is no longer consiglieri."
When Michael decides to expand the family's operations, he decides to make certain changes. The significant one being that his brother/long-time associate, Tom Hagen (Robert Duvall) is sacked from the consiglieri's (advisor) post. His explanation for this rather drastic move is quite simple - Tom is not a not a wartime consiglieri and that things could get rough. Simply put, Michael prefers someone adept at strong-arm tactics over his brother, since the situation demands it.
An investor should routinely evaluate his relationship with the investment advisor/financial planner. The onus to ensure that investments are made and managed in the best interests of the investor, lies with the advisor. In effect, the investment advisor's integrity and competence are consistently tested.
Let's consider the emerging scenario in the mutual fund industry. With entry loads being scrapped, investors will be required to individually compensate advisors for services rendered. There can be a situation wherein an investor believes that his advisor isn't able to justify the fees demanded or perhaps his service standards aren't up to the mark. Should such a situation arise, investors shouldn't hesitate to terminate their existing relationship. Investing is serious business and there should be no room for incompetence or a slack attitude on the advisor's part.
Finally, be wary when someone "makes you an offer, you can't refuse". In The Godfather, this phrase refers to a veiled threat; refusal leads to dire consequences. In the world of investments, one can draw a parallel to investment propositions that claim to offer a win-win proposition. For instance, an investment that purports to expose investors to low risk, yet promises to deliver high returns. Remember, if an investment proposition sounds too good to be true, there's more than a fair chance that it is.
But there's a lesser-known aspect to The Godfather. Apart from being a source of inspiration to aspiring actors and filmmakers, the film has a lot to offer to investors as well. Following are 3 investment tips from The Godfather:
1. "Where does it say that you can't kill a cop?"
When the Corleone family is under attack, Michael Corleone (Al Pacino) comes up with a seemingly outlandish plan to eliminate his family's enemies. And that includes killing a corrupt police officer. Despite being scoffed at by his associates, Michael rationalises his plan by suggesting that they feed the media with stories of the police officer's corrupt practices and his links with the mob, and thereby defame him. Essentially, Michael shows the willingness to think out-of-the-box and take risk, without being irrational.
Likewise, the willingness to be unconventional and take on risk is vital for successful investing. Often, investors are guilty of sticking to certain avenues simply because they have always done so. For example, it is not uncommon to find investors who refuse to venture beyond bank fixed deposits and small savings schemes; the only explanation for their choice being, we have always invested in these avenues. By shutting the door on other options, investors might deprive themselves of the opportunity to meet their investment objectives. Of course, this should not be read as a recommendation to throw caution to the winds and invest in every untested investment avenue on offer.
All investors need to do is, be open to the idea of investing in avenues that offer a suitable investment proposition and be willing to take on acceptable levels of risk. For instance, a 25-Yr old investor who is saving for his retirement 35 years hence, can't hold a portfolio comprised of only fixed deposits and bonds; despite the higher risk, equities and mutual funds must find place therein. Remember, risk isn't bad; investing without being aware of it or failing to properly assess it, is what gives rise to thorny situations.
2. "It's not personal. It's strictly business."
This recurring line from the film has been used to great effect on each occasion. Every character who quotes this legendary line tries to impress on others that a given act or plan of action should be seen as a business decision. In other words, it has nothing to do with his personal feelings. Hence, the need to view the act in a dispassionate manner. The 'not personal' rationale holds true for investments as well.
At times, investors have a tendency to get 'attached' to their investments. This is especially true of market-linked avenues like stocks and mutual funds that have had a successful run. The trouble starts when the avenue is no longer equipped to perform as it has in the past. Similarly, there can be a situation wherein an investor gets invested in an avenue that fails to deliver. In both the situations, investors might be tempted to hold on to the investment; while in the former, it's the 'attachment' at work, in the latter, it's to get even.
Such an approach to investing is certainly unwarranted. An investment is simply a means to achieve a goal i.e. the investment objective. If a thorough evaluation suggests that the investment is no longer equipped to play the part that it was supposed to, investors must salvage the situation by getting rid of the same at an opportune price and time.
3. "Tom Hagen is no longer consiglieri."
When Michael decides to expand the family's operations, he decides to make certain changes. The significant one being that his brother/long-time associate, Tom Hagen (Robert Duvall) is sacked from the consiglieri's (advisor) post. His explanation for this rather drastic move is quite simple - Tom is not a not a wartime consiglieri and that things could get rough. Simply put, Michael prefers someone adept at strong-arm tactics over his brother, since the situation demands it.
An investor should routinely evaluate his relationship with the investment advisor/financial planner. The onus to ensure that investments are made and managed in the best interests of the investor, lies with the advisor. In effect, the investment advisor's integrity and competence are consistently tested.
Let's consider the emerging scenario in the mutual fund industry. With entry loads being scrapped, investors will be required to individually compensate advisors for services rendered. There can be a situation wherein an investor believes that his advisor isn't able to justify the fees demanded or perhaps his service standards aren't up to the mark. Should such a situation arise, investors shouldn't hesitate to terminate their existing relationship. Investing is serious business and there should be no room for incompetence or a slack attitude on the advisor's part.
Finally, be wary when someone "makes you an offer, you can't refuse". In The Godfather, this phrase refers to a veiled threat; refusal leads to dire consequences. In the world of investments, one can draw a parallel to investment propositions that claim to offer a win-win proposition. For instance, an investment that purports to expose investors to low risk, yet promises to deliver high returns. Remember, if an investment proposition sounds too good to be true, there's more than a fair chance that it is.
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