If we know what doesn’t work, we can then do the opposite…
Let’s look at the mistakes of the villains of the Bond films to see what we can learn from their money blueprint.
Here are the Top 10 money mindset mistakes made by Dr Evil…
Dr Evil has a tendancy to over-invest in property.
Just look at his housing choices: a large volcano HQ on a tropical island, an underground lair in the desert outside Las Vegas, a skyscraper in Seattle and a holiday home in space. No wonder he complains about the cost of council tax, utilities and builders.
For Dr Evil a house is not about the basic need for shelter. It’s a statement that he’s a force to be reckoned with. And it must be massive to hold all his laser beams, nuclear bombs and other status-signalling products.
Not for Dr Evil a shared apartment or small terraced house in a bohemian part of town. No, Dr Evil’s houses must be isolated, detached and bigger than the neighbours. Oh and surrounded by shark infested water, barbed wire and a range of innovative security features.
Houses are liabilities (as well as assets). The bigger they are, the higher the running costs (rates, lighting, heating the shark pool etc.). Unlike tracker funds, houses need maintaining…i.e. work.
Your transport costs follow your housing choices. if you live in a distant suburb, isolated tropical island or space station, you are going to spend much more on cars, helicopters and space shuttles. But by walking or cycling you slash those costs and improve your your fitness, your net worth…and (most importantly) your happiness.
2. Consumer gadgets
Dr Evil suffers from chronic lifestyle inflation and wants to own the entire world.
Dr Evil started off as a boy happily playing outdoors in the woods with the other children with a toy gun. But, over time, he gets hooked on ever-increasing purchases of consumer gadgets. Trapped on the hedonic treadmill, he moves on to laser beams. A few years go by and its only by having a space station that he can get that new stuff buzz again.
Dr Evil has a choice. He can either try to accumulate more and more until he owns the entire World. Or he can learn to live happily on less and ditch some of the igadgets and the laser beams.
3. Poor numeracy
Dr Evil is not very good at maths and has shied away from reading The 3 Numbers That Can Make You a Millionaire.
Dr Evil has a hard time visualising large amounts of money and is sometimes confused by the simple maths of financial independence. He doesn’t really understand how FI seekers benefit from the aggregation of marginal gains and the magic of compound interest.
Dr Evil, like most consumer suckers, over-estimates how much is enough. He doesn’t realise that financial independence does not require trillions…or even billions to achieve. All he needs to do is get his annual expenses down as low as possible and then accumulate ~25x this amount.
4. Scarcity mindset
We humans got to the top of the food chain by co-operating to gather food and to defeat our enemies. This is why you don’t see many neanderthals around these days. Capitalism is an effective way of incentivising people to co-operate. By working together, we made the “pie” bigger rather than just fighting over how to divide the existing pie.
The human brain evolved over thousands of years, like a coal shed converted into a mansion by piecemeal extensions. Whilst we have unique human capabilities for rational thought, the monkey parts of our brains dominate when we’re stressed, tired or fearful.
Dr Evil has a scarcity mindset. Sadly, he lives in fear and so is often cranky. Frugality is really important…but it’s no fun if based on fear. And you can’t just penny pinch your way to FI, you have to earn and invest effectively as well.
Bond villains are gold bugs.
They spend hours on the internet disappearing down a rabbit hole to an alternative world of secret conspiracies involving the Federal Reserve and China seeking to replace the US dollar as the global reserve currency and create a new Renminbi-based gold standard blah blah blah.
Having read this, Dr Evil positions himself for the coming financial armageddon by constructing an elaborate portfolio of multiple holdings of gold funds, leveraged synthetic ETFs, shares in Patagonian mining companies, gold futures, CFDs, swaptions and other such nonsense. Dr Evil fails to see the inherent implausibility that any of these pieces of paper will be worth anything in the event of a Zombie Apocalypse or similar dislocation in the global financial system.
If you are going to hold gold, best keep it to a small part of your portfolio and in physical form where you can lay hands on it. But gold is not a wealth generating asset and doesn’t compound its real value over time.
Dr Evil doesn’t trust people, preferring to spend time with his pets.
Dr Evil loves cats and the comedy potential of feline related double entendres. He also has a tank of sharks which he feeds with uninvited guests. Through his pets, Dr Evil reveals his need to be loved unconditionally. Dr Evil perhaps feels that cats and sharks are less likely than people to let him down or take advantage of his emotional vulnerability?
However, pets are costly and can limit your flexibility when going on holiday (let along when taking over the world). And the pet food, vets bills and insurance etc etc are an issue for those pursuing financial independence.
Human vanity urges us to leave a legacy. Dr Evil is obsessed with a desire for immortality which is tricky to achieve, not to mention expensive. Dr Evil attempts to solve this problem by having children…or, more accurately, having a clone of himself made in a laboratory.
But parenthood is not for everyone. Whitney Houston may have sung that the children are the future…but they’re also expensive and stressful. Dr Evil wants the best for his clones and all those matching uniforms and buggies are not cheap…even at Primark. So people should think long and hard before bringing more mini-mes into the world.
Dr Evil should keep it simple.
He’s had many chances to kill James Bond. But the truth is that Dr Evil feeds off the rivalry. This may explain the over-elaborate ways in which Dr Evil seeks to bring about Bond’s demise. Dr Evil’s over-elaboration is ineffective in practice and allows Bond plenty of opportunities to get away. This is a form of self-sabotage.
Dr Evil’s over-elaboration is also a drag on his portfolio performance. Dr Evil can’t resist the temptation to keep adding more holdings, often doubling up needlessly on diversification. By combining multiple actively managed funds with high platform costs and the costs of a financial adviser, Dr Evil sabotages his own investment returns. Doh!
Sometimes we create our own reality. Dr Evil sees other people as a threat. So he undertakes elaborate plots to hold the world to ransom and this does not help him win friends or influence people. People respond with hostility and Dr Evil thereby sows the seeds of his own downfall.
Dr Evil is also a pessimist when it comes to investing. He assumes the last 50 years of prosperity have been a freak exception. Dr Evil fears that that welfare costs in the West may be unsustainable, that China will take over the World (or go bust – he tends to flip between these extremes) and that western civilisation will come crashing down in the future…perhaps with his help.
Dr Evil tells anyone who will listen (and some that won’t) that the days of good investment returns in the equity market are over. Unfortunately we have no way of knowing whether these predictions are true. Trying to predict the future is a mug’s game and a poor basis for an investment process. In investing, it has historically been more rewarding to err on the side of optimism.
Life in the Prison Camp has taken its toll on Dr Evil.
Emotionally damaged, he has learned to repress his feelings. Dr Evil has gradually lost touch with friends and become isolated.
It’s unclear why Dr Evil continues to accumulate ever more gadgets, gold and real estate. Doesn’t he realise how much is enough? Whatever the reason, Dr Evil avoids asking for help…which is a shame because his bad habits and limiting beliefs could be fixed if he did some work on himself.
Or perhaps therapy could help him? Check out the wonderful Carrie Fisher cameo here:
Further reading : Financial coaching