Investment tips from ‘The Expendables’

To begin with, a confession--I’m an unabashed action movie fan. I grew up on a staple diet of Eastwood, Stallone, Schwarzenegger, Willis, Van Damme, Gibson and Chan movies. It should come as no surprise that I thought ‘The Expendables’ was a cool movie. Sure, things like a coherent script, storyline and character development were totally absent. But then that was only to be expected. When campy lines like “what doesn’t kill you, makes you stronger”, are the highlights of a movie, looking for logic would be impractical.

The sequel is up for release. The promotional blitz promises another over-the-top and preposterous action extravaganza. There’s even talk of an Expendables 3. All this got me thinking about the franchise. I realized that apart from catering to action geeks, the franchise has some hidden tips for investors. You got that right! Investors can actually learn some valuable lessons from The Expendables. Sounds unreal, doesn’t it? But then so does Chuck Norris. Corny jokes aside, here are 3 investment tips from ‘The Expendables’:

1. Investing is a personalized activity

When Sly Stallone set out to make ‘The Expendables’ in 2010, action movies weren’t exactly the top choice for moviegoers. Rather movies about vampires, high school kids, teen wizards, chicks and superheroes were ruling the roost. But instead of going with the flow, Sly chose to make a good-old fashioned kick-ass action movie. Why? Simply because, that genre works best for him.

It’s no different with investments. While investing, investors must seek avenues that are right for them. Often, investors end up becoming victims of a herd mentality. For instance, if everyone is investing in gold or shunning equities, they do the same. Investors fail to realize that their needs and risk profile could be completely distinct from those of their friends and relatives. Simply because, an acquaintance invests in a given set of avenues, replicating the same is fraught with risks. The right approach would to figure out what works for oneself and invest accordingly.

2. Be unambiguously aware of your goals

For some time now, Sly has been on a career-resurrection drive. After reviving his iconic characters: Rocky Balboa and Rambo, making a flick like ‘The Expendables’ was another step in the same direction. The success of the former has not only spawned a sequel, but also a host of movies like ‘The Tomb’ and ‘Bullet to the Head’. Not bad for an actor who in the early 2000’s was slipping into the straight-to-DVD territory. Remember ‘Shade’, ‘Avenging Angelo’ or ‘D-Tox’? Don’t worry, not many do. To sum up, few would dispute that for Sly, a sharp focus on his goal and appropriate steps in that direction have yielded rich results.

Likewise while investing, investors need to be unambiguously aware of their investment goals i.e. questions like why am I investing/what do I intend to achieve, need to be answered. This in turn will help them to pinpoint goals like providing for retirement, buying a house or simply wealth creation. Being aware of their goals also helps investors evaluate their investments and take corrective steps when required. For instance, consider the case of an investor, who invests a portion of his monies in small/mid-cap stocks to provide impetus to the wealth-creation portfolio. However, if the stocks fail to deliver even after being given the sufficient time to deliver, there could be case for reviewing the portfolio.

3. Do not underestimate the importance of diversification

Sly’s credentials as a bona fide action star are undisputed. Nonetheless, he played it smart while casting the movie. Rather than risk making a solo-starrer, he insured the movie by adding Statham, Lundgren, Li, Crews and Rourke to the cast. Also, he ensured that action legends Schwarzenegger and Willis make cameo appearances alongside him in the same scene. For the sequel, he has gone a step further by adding Norris and Van Damme to the cast. This is a classic case of reducing risk using diversification. Furthermore, in a multi-starrer, ensuring that each star gets an apt amount of screen time in line with his popularity is no less important. Remember how Statham’s part was a lot meatier than the others’.

While constructing an investment portfolio, investors must opt for diversification by investing in different asset classes such as equities, debt, gold and real estate, among others. The intention is simple – the downside in the fortunes of one asset class can be offset by the upside in another. This ensures that the portfolio stays insulated and on course to attain the investment objectives. Also, a detailed appraisal of one’s profile and objectives will help investors determine how much should be invested in each asset class. That’s allocation for you.