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December 2016 Perspective: Do you believe in the Santa Claus?

December 20, 2016

My son loves holiday movies… this year we’ve watched The Santa Claus, The Santa Claus 2, Santa Paws, Fred Claus, The Polar Express, and of course, Elf. All are modern classics judging by the frequency they air on TV. Most of my personal favorites have yet to make the list, sigh, but I’m grateful, time spent together matters most!


What I noticed during our holiday movie binge is that all of these movies share the same general formula:


  1. Character 1 is defined by their cynicism, doubt and disbelief.
  2. Opposite, Character 2 is defined by their hope, faith and belief.
  3. As the plot evolves, despondence and depression convert to hope and optimism.
  4. The movie ends with excitement and euphoria on Christmas morning as Character number 1 is completely transformed and redefined by the same attributes as Character number 2. 


Ok, so what does any of this have to do with finance???  Everything!!! At the core of all financial markets are people making decisions and taking action. Market behavior is human behavior.  At times human behavior is driven by strong emotions that motivate people to take decisive action. When it comes to investing, this often results in the wrong action at the wrong time (buying high and selling low), but this is a lesson the average investor can’t seem to learn (


What’s more, you may have noticed the investing cycle of emotions (pg1 following link above) follows a pattern very similar to the Holiday movie formula we outlined.  However, our script in real life is never as simple as the movies: disagreements between market participants perpetually exist, every cycle has a sequel and we can only see the end of a cycle in hindsight (not real time). If a grand resolution in the markets is always elusive, what can we learn from holiday movies about our investing experience?


Perhaps a bit of self-awareness. When you think about the stock market, do you feel more like Character 1 or Character 2? Which would you rather be if you had the choice? Character 2 always seems to see the big picture and holds fast to certain truths, which do exist in investing just like they do on the big screen.


Also, think about where we are in the movie, or, cycle. Are we nearer the beginning or the end? With markets making record highs, a common question is “will the Santa Claus [rally] be coming to town?” For more insight, we are sharing this Forbes article as this month’s Perspective:


For our part, come Santa Claus rally or not, the combination of discipline, prudence and optimism helps keep the big picture always in view and focuses our attention on bringing you strategies to achieve your long term goals.


We wish you a very Happy Holiday Season and a Prosperous 2017!!