One of the tricky things about investments is that you don’t always know how they’re going to turn out.
Long, long ago (in the 1970s before I learned to apply biblical wisdom to managing my finances), in a place far, far away (from my old Kentucky home), I had a Christian buddy named Bob. He owned an ad agency in Los Angeles, and among his clients was World Wide Pictures, the movie division of the Billy Graham organization. Bob’s job was to promote the ministry’s evangelistic films. Getting Christians to come wasn’t hard, but getting large numbers of non-Christians to attend was. The average moviegoer is more attracted to movies with excitement, suspense, and big-name stars.
Bob thought he had an idea (called a “premise” in Hollywood circles) that would combine these ingredients with Christian themes in a way that would also convey an evangelistic message. He had shared it with a movie producer friend of his, Harvey, and they were already moving ahead. One day Bob and I were having lunch and, since we were pals and all, he invited me in on his deal. It went something like this:
“The Exorcist” was a really big hit, Austin, because people are fascinated by supernatural evil. Who’s more evil than the antichrist? My idea is to do a film about him, not when he’s grown up and powerful but when he’s still a child. Will he be like all the other kids on his block, or will there be something unusual about him even then?
We’ve got a writer lined up who will do the first draft for the Screen Writers’ Guild minimum of $7,500. When it’s done, Harvey will take it around to all the studios and try to sell one of them on making it into a movie. Austin, if you’ll put up the $7,500, he’ll cut you in for 5% of his share. What do you think?
I didn’t know what I thought. I asked my wife Susie what she thought (“No, I don’t think we should get involved with a film that features Satanic themes”). I asked my business manager (“No, only one in 1,000 screenplays ever gets made into a film — it’ll never happen”). I even asked my banker (“No, it’s a roll of the dice — you’ll lose your money”).
So, I did it.
I knew I was bucking the odds, but it sounded like it could be fun. (As a general rule, I don’t recommend making an investment because it sounds like “it could be fun.”) I sent my check in and, with the optimism of the innocent, waited for Bob to tell me where and when to show up to watch the filming (the fun part). And I waited. And I waited. After more than two years had passed, I’d pretty much written it off. Then Bob called. He’d just returned from England, where he’d enjoyed spending time with the actors and crew as the final scenes of the film were being shot. In all the excitement, he’d forgotten to invite me along!
Unfortunately, in the time-honored tradition of “he who pays the piper calls the tune,” Bob lost any influence over the project once 20th Century Fox put up the production money. The studio’s secular worldview was the downfall of the film in terms of its reliance on biblical truth.
As it turned out, though, I had a lot more investing “fun” than I expected. The film (which Fox titled The Omen) got off to the fastest-grossing box office of any movie in Fox’s history up to that time. Millions of people were standing in line all across the country to see it. My investment was returned to me more than 35 times over, and I still get annual royalty checks.
No one was more astonished by its blockbuster success than yours truly, the savvy investment analyst. Happily, I made a lot of money, which I would desperately need soon to help offset some poor investment decisions I made as an encore. If you want to learn from my mistakes, see chapter 26 of The SMI Handbook, where I explain how I lost $50,000 in an oil scheme (but at least got a Swiss Army knife as a keepsake) and $100,000 in a real-estate deal (I still have the tennis racket given to me by the promoter, so that’s something).
I have three takeaways for you. First, don’t invest in things you don’t understand. What did I know about the movie business, oil brokering, or real-estate development? Nothing.
Second, make your investment decisions based on a well-researched plan that has a reasonable probability of success. How did these three investments fit into my plan? They didn’t.
And third, while every investment has its unknowns, be aware that their outcomes may not be anything like you expect. I thought I had assessed the risks well when I paired my “safe” real-estate investment with my “high-risk” movie venture. Turns out I had it exactly backward!
