May the Fourth be with you! Unknown to many, today is unofficially celebrated as Star Wars Day in honor of the worldwide pop culture phenomenon that started with a single movie in 1977 and has spanned over 40 years. At this point, the core story is told over eight movies (the ninth planned for release next year to complete the originally planned third trilogy) that have grossed over $8.5bln.
This does not include a wide range of spin-offs including anthology movies, television shows, and most importantly merchandise such as toys and books. Altogether, the franchise is estimated to have generated over $40bln in gross sales (as of 2016 prior to recent releases) which ranks as the second highest grossing media franchise of all time (just behind Pokemon which is driven almost entirely by merchandise sales). Originally billed as a “space opera,” the Star Wars plot line is a common story of good versus evil with elements of knighthood and chivalry. There are also political and historical parallels drawn including democracy versus dictatorship with reference to the rise and fall of the Roman Republic and the historical events leading up to and during World War II.
If art is a reflection of society, then Hollywood is saying we need superheroes. Using the comic-book inspired Marvel cinematic universe as another example, there have been over 50 films over the past twenty years with characters of all types risking it all to triumph over some threat. The story is innately interesting to people: the seemingly insurmountable odds, the risks taken by the protagonist, the viewers’ ability to escape their own day-to-day realities and to aspire to a self that is bigger and better than what we see in the mirror. Ironically, the constant stream of superhero movie sequels is indicative of Hollywood not taking a financial risk. These stories sell so well, why should they take the artistic leap to tell the age-old tale in a new way?
Interestingly, it is not so different in financial markets. Why should it be? Financial markets are made up of people just like theater audiences. While different narratives take hold from time to time, they tend to be the same stories told in different ways. There is a lot of talk about the risks. Today’s “wall of worry” is no different than those of the past as they have cycled through. Government. Debt. Inflation. Geopolitics. Earnings. Valuation. The only constant is change, but the more things change the more they stay the same. The trick is to step back from the sequel to see the saga and know how the story goes. As the protagonist in your own investment story, the risks may not seem so great when viewed in the context of a 40 year franchise.