When finance imitates fiction

Lost in the mist of long-winded language and complex formulae, the world of finance seems to be a world of math geeks and nerds.

For most people, it's a hyper-complex world where all financial advice is a lot of 'gyaan' rather than simple action points.

The reality? Finance is simple. It is every day. It reflects in every aspect of our life - our psychology and behaviour, our reality, our dreams and aspirations, even our imagination.

Want evidence? Here are some nuggets of financial wisdom from the world of fiction for you. I hope you'll enjoy reading these snippets as much as I enjoyed writing them for you.

1. 'The Hobbit' and planning
The importance of financial planning is evident in JRR Tolkien's 'The Hobbit.'

Bilbo Baggins, or Frodo, didn't just start off on their adventures unprepared, on a whim or fancy. Instead, they gathered information, tools, resources, and even advisors, supporters, and allies, just like one would plan one's financial journey.

Much like Bilbo's, or Frodo's journeys, a well-planned investment journey is about navigating market volatility, protection against uncertainty, and a robust financial future.

Oh, and don't forget your advisor. We all need a Gandalf!

Actionable insight - Have a long term vision and a plan. Execute and stick to that plan.

2. 'To Kill a Mockingbird' and perspective
Remember Atticus Finch from Harper Lee's Pulitzer Prize-winning novel, 'To Kill a Mockingbird?'

He once said, 'You never really understand a person until you consider things from his point of view.'

This exactly is what Morgan Housel talks about when he refers to psychology-driven financial decisions that people make. This is about his reference to greed, fear, resilience, patience, objectivity, and long-term vision.

Actionable insight - Know your own perspective about money. Be open to that of others.

3. 'The Great Gatsby' and greed
Atticus' investment in his community is diagonally opposite to Jay Gatsby in F. Scott Fitzgerald's 'The Great Gatsby.' Unlike Atticus, he is driven by greed and desire, ultimately leading to his downfall.

In investing, the lesson is always crystal clear: don't let greed overtake you.

Understand the role of planning and luck both. Unchecked greed can blind you to risks and make you take whimsical investment decisions. If you want to reach your doom soon, of course feel free to be tempted by luck, greed, and the market.

Actionable insight - Don't be greedy. Stay a disciplined investor.

4. '1984' and fear
George Orwell's '1984' might seem like a drastic analogy for financial fear, but it captures the idea quite well.

Fear, like 'Big Brother' in the novel, can distort and control not just our thinking but also how we perceive reality.

The most common examples of fear-driven decisions are those people make when the markets crash. However, those who can conquer their fear can withstand fluctuations and volatility.

The key is to remember that fear can get the best of us. And the way to get rid of fear is to develop knowledge and wisdom that can help you discern between the perceived reality (the market buzz) and the objective reality of the market.

Actionable insight - Don't fear. If you are empowered by information, and have a long-term horizon, the market will rebalance itself.

5. 'Sherlock Holmes' and research
Fear is also driven by lack of information. Often, people make hasty decisions because they are scared. And they are scared because they don't understand the market. Which brings us to understanding.

A pursuit into informed financial decision-making reminded me of Sir Arthur Conan Doyle's 'Sherlock Holmes'. It's about thorough research and seeing what's right in your face. Holmes' success in solving cases stems from his diligent research and attention to detail.

If you're a keen investor, especially in stocks, you might start thinking sooner than later about your investments as ownership rather than simply a piece of paper. Your due diligence and research in companies, industry trends, and market conditions will give you the desired results.

Like Holmes is always a step ahead of Moriarty, you must stay ahead of the market.

Actionable insight - Empower yourself through information. Informed decisions are the wisest.

Come to think of it, these are just a few examples. Insights like these are scattered all around us. For instance, this piece on The most interesting takeaways from Morgan Housel's book 'The Psychology of Money' .

The choice is simple. To internalise and act on these insights. Or not to!