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What Can Star Wars Teach Us About Investing?

What Can Star Wars Teach Us About Investing?

May 04, 2019

Saturday, May 4, has been known throughout the galaxy as “Star Wars Day 2019.” That date was chosen because it’s a play on words of the famous Star Wars maxim, “May the Force be with you.” Therefore, on May 4 we say, “May the Fourth be with you.” Get it?

Senior Market Strategist Ryan Detrick explained, “In honor of this day, we decided to take famous quotes from the Star Wars films and extract market insights. Quantitative minds would consider these spurious relationships, but those who believe in the Force might think otherwise.”

Darth Vader in “A New Hope”: “I’ve been waiting for you, Obi-Wan. We meet again, at last. The circle is now complete. When I left you, I was but the learner; now I am the master.”

Investing can be a humbling experience. As soon as we consider ourselves to be “masters of the universe,” the market usually teaches us something new. The cost of the lesson can be capital. The longer you invest, the more you realize how much you don’t know. Darth Vader was a little too full of himself, and in the end it caught up with him. Many investors experience the same fate, at least from time to time.

Obi-Wan Kenobi in “A New Hope”: “Obi-Wan Kenobi. Obi-Wan. Now that’s a name I have not heard in a long time. A long time.”

Investing is cyclical, and rest assured that what propels markets today has done so before. Or as Obi-Wan learned, the past eventually will catch up with you. Think about it like this: Sir Isaac Newton might have been smart enough to discover gravity, but he wasn’t wise enough to avoid investing in the South Sea Company bubble of the early 1700s and losing nearly his entire fortune. Bull (and bear) markets can lead rational investors do make irrational decisions, and studying the past is one way to avoid repeating it, or to at least give yourself a chance.

C-3PO in “A New Hope”: “I suggest a new strategy, R2; let the Wookiee win.”

Some of the most successful investors can acknowledge when they are wrong. George Soros, billionaire and philanthropist, is famous for this. Sticking to a losing trade simply because “it should be working” isn’t how to create wealth. In fact, it may do the opposite. Acknowledging when you’re wrong is a very important component of successful investing.

Han Solo in “A New Hope”: “Great shot kid—That was one in a million.”

All it takes is one great investment to make up for many poor investments. But you won’t ever make it if you don’t take the shot.

Chewbacca in every movie: “Arrggghhh.”

Sadly, actor Peter Mayhew, who played everyone’s favorite Wookiee in the Star Wars films, passed away April 30. Most investors will feel like bellowing the famous “Chewy” roar if they invest long enough. In fact, many of us did just that a few times during the 19.8% correction late last year.

Darth Vader in “The Empire Strikes Back”: “Luke, I am your father.”

We couldn’t think of any way this relates to investing, but what a great movie quote! Hope you had a cosmic Star Wars Day everyone!


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

This research material has been prepared by LPL Financial LLC.

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