Investing lessons you can learn from Guy Fawkes

We all know the nursery rhyme: Remember, remember the fifth of November, gunpowder, treason and plot. I see no reason why gunpowder treason, should ever be forgot.

And 415 years later, the gunpowder plot and Guy Fawkes are still remembered every year on Bonfire Night. As the nights draw in, it won’t be too long before fireworks fill the skies, bonfires are lit, sparklers are waved, and toffee apples are tucked into.

As we remember the foiled plot to blow up King James I and the Houses of Parliament, with Guy Fawkes found in a cellar guarding 36 barrels of gunpowder, there are a few lessons we can learn about investments too.

1. Don’t follow the group

Guy Fawkes might not have been caught up in simply following the group, he was, after all, a Catholic that had fought for Catholic Spain in the Eighty Years’ War against Protestant Dutch reformers. So, the plan to assassinate Protestant King James I would have had an appeal.

But the mastermind behind the plot was Robert Catesby, and it was Guy Fawkes that was discovered armed with a slow match in the cellar surrounded by gunpowder.

In investments, it can be tempting to follow what others are doing. If everyone seems to be investing in a certain sector, they can’t all be wrong, right? But this forgets that investment goals and your circumstances should be central to your plans. An investment that is ‘right’ for one person can be ‘wrong’ for another.

2. Sometimes sensational isn’t best

If it had been successful, the gunpowder plot would have been remarkable. With enough gunpowder to reduce the House of Lords to rubble, killing the King, as well as other Protestants and Catholics, the plot would have been a decisive moment in history. Indeed, despite failing, it’s still taught in every school and still important. If the conspirators had opted for a subtler approach, would they have been successful? We’ll never know but understated is sometimes better.

In investing there are always star fund managers, top funds, and investments that investors are urged to back. But sometimes these headline-grabbing options aren’t what is best for you. A relatively stable option may better suit your plans. Steer away from investments you’re tempted by, simply because they’re claiming to deliver sensational returns, focus on your long-term plans instead.

3. Don’t put all your eggs in one basket

When investing, diversifying is something we talk about a lot. Spreading investments across a range of assets, locations and sectors can help spread risk. If one group of investments is affected by volatility, there’s an opportunity for this to be balanced out by gains in another area of your portfolio.

When the gunpowder plot unravelled, the conspirator fled London. There was no plan B or gunpowder stored in other parts of London. If they hadn’t put all their eggs in one basket, the plotter may have had a second chance to achieve their aims – it could have led to a very different country than the one we recognise today.

4. Know the risks you’re taking

So, Guy Fawkes was certainly aware of the risk he was taking. After all, he was committing treason in a spectacular fashion at a time when monarchs weren’t known for their leniency. He’d have known that being captured would mean capital punishment.

Fortunately, investors don’t run the risk of being hanged, drawn, and quartered.

But there are risks involved in any investment and it’s important to be aware of them. Potentially high returns will usually mean you need to take a higher level of risk. Though the stakes aren’t as high as they were in 1605, are you comfortable with the thought your investments could fall in value?

You need to understand what an appropriate level of risk for you is, considering numerous factors, from your investment goals to the other assets you hold, as well as your general attitude towards investing. It can be complex, but we’re here to help you make investment decisions that reflect your wider circumstances and take on an appropriate amount of risk.

5. Speak to someone you trust

The gunpowder plot began to unravel when a few days before the explosives were due to be lit a letter was shown to the king which stated: “I say they shall receive a terrible blow this Parliament; and yet they shall not see who hurts them.” The phrase ‘blow’ immediately led to suspicions that an explosion had been planned.

It’s not known for certain who wrote the anonymous letter, but it’s thought to have come from conspirator Francis Tresham, though he never mentioned the letter in his confession. Speaking about plans is important and can help you see where the risks lie, but you need to be able to trust the people you speak to.

When it comes to your financial plan, a professional financial planner can help you see both opportunities and risks you may have overlooked. Please get in touch to discuss your plans and concerns.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.