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What James Bond teaches us about Risk

17 November 2015

Tom Catchpole, Partner and Investment Manager

There is a wonderful scene in From Russia with Love where Bond finally realises that the terribly British agent joining him in the dining car for supper is not all he appears to be. His crime? The antithesis of the gentleman’s code, ordering red wine with his fish. “Make mine a Chianti”, he extols in his affected English accent and so lifts the petticoat on his otherwise Russian background.

That was 1963, and the recently published Country Life Magazine guide to being a gentleman will probably refute this calamitous culinary mistake with a more modern take on food and drink. However, my money is on Bond, I can’t resist the confidence in his assumption. The idea that all gentlemen should (and will) behave similarly, leaving any gaps in their behaviour to be as obvious as the tannic bite of Chianti alongside a mouthful of delicate Dover Sole.

Fast wind to 2015, and although the threat has changed, the spectre of…..well, Spectre remains. No spoilers here – the reason we watch James Bond is because we already know what is going to happen. Our illustrious agent is placed into a series of improbable and impossible situations, most of which evoke something from the past, and from all of which he unwinds himself with equally improbable aplomb based on some very canny decision making.

Thankfully, Sam Mendes does not write the script for financial markets. If he did, we would live by the seat of our pants, hurtling from catastrophe to triumph on an almost daily basis. But the point is that no one does. No one can pen the future of investment, no matter how much anyone will tell you otherwise.

So what relevance, then, for Ian Fleming’s timeless creation in our thinking about risk and return? Well it all boils down to decision making. Now maybe some of our decisions do not carry the same implied gravitas but in the gap left behind by not saving the human race, our focus can safely return to managing portfolios and trying to protect our clients from the nonetheless intimidating events that financial markets have thrown at us over the last few years.

Without a window into the future we can only look at the past and the present, the facts that are presented to us. Like Bond and his Anglo-Russian travelling companion, the road is strewn with clues and it is our job to fathom which of these are relevant and which to be laughed off with a snappy one liner.

Needless to say, James Bond and his script writers can ensure that he (almost) always gets it right, something I’m sure any Wealth Manager would wish for. But perhaps we should don the proverbial Walther PPK more often and carry some of that calculated confidence with us in our financial planning. Markets are tremulous things. Modern day liquidity and transparency ensure that events are over sometimes before they have begun. So, a strong conviction, based around careful problem solving, research and reading of the signs, might just be the backbone required to see you through these difficult times.

You never see James Bond panic. Perhaps he is onto something…