(Source: www.fool.sg)

Game of Thrones is an award-winning drama that has legions of fans. And it is still one of the most talked about drama series even as it enters its 7th season. Here are three concepts that I learnt from the drama and how it might apply to investing. If you want to be a hero, be prepared to get shot Over and over again, I saw that those who threw themselves in harm?s way, even for a noble cause, have to be prepared for battle or even death. In investing, how much risk you would have to endure is related to how reckless you…

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Game of Thrones is an award-winning drama that has legions of fans. And it is still one of the most talked about drama series even as it enters its 7th season. Here are three concepts that I learnt from the drama and how it might apply to investing.

If you want to be a hero, be prepared to get shot

Over and over again, I saw that those who threw themselves in harm’s way, even for a noble cause, have to be prepared for battle or even death. In investing, how much risk you would have to endure is related to how reckless you are in the market. If you are constantly investing in penny stocks or companies that are very unlikely to find business success, you will have to be prepared to take some hits.

Unlucky things happen to good people

There is a Chinese saying, “好人有好报”, which can be translated as good things come to good people. This is definitely not true in Game of Thrones. Many good characters end up dead, while many evil characters live on. All I can say is, “they’re unlucky.”

In the stock market, luck will play a big part in our investment returns. This is the reason why we need to diversify. It is also why we need to review our losers every now and again. We have to understand that sometimes our thesis for investing in a particular company may be sound, but we could still end up losing money. As investors, we have to be comfortable with the occasional streak of bad luck and be able to accept the losses.

This too shall pass; greatness does not last forever

The fortunes of many of the characters inside Game Of Thrones are always changing. One minute someone is a forgotten child with unknown parents; the next minute the character is a king. One minute you may be a king, but in the next minute, you end up dead. The stories of these characters remind me of a quote that can both encourage the poorest of the poor and humble the wealthiest of the wealthy: “This too shall pass.”

In investing, we have to mentally prepare ourselves for such changes in fortunes in our portfolio. Just because a company is performing superbly now does not mean it will be a great investment forever. Similarly, companies that are struggling at the moment may not always be terrible investments.

A Foolish summary

Investing is really about putting our money behind the future of the companies we believe in. Companies are managed by people. And people’s actions will always be unpredictable. As investors, we have to prepare ourselves mentally for all the unexpected things that could happen. Ironically, it is these unexpected surprises that make life and the Game of Thrones series so very interesting.

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