What can investors learn from The Voice?

3rd April 2012

Now fans are playing along and turning their chairs around only if they like what they hear. But Mindful Money asks what prospective investors can learn from this tactic?

Investment in people

There's no denying that previous incarnations of reality shows rely on the personalities behind the ‘talent' to amass votes and viewer affection – and even the most inscrutable businessmen consider this before taking a punt with their capital.

Take Dragon's Den, for example. Would any of the dragons invest in a dull drone – even with the greatest business idea on the planet? If they can't sell themselves, and provide a sharp, effective pitch, they're likely to go on the scrapheap. Yet these people may be precisely the ones with the potential for profit – but if they can't sell themselves with some charisma, gaining investment is unlikely.

The money-making personality

Yet there's no denying that there are many ‘great' personalities behind some of the biggest, most successful, businesses. Take, for example, Steve Jobs – while a genius and the mastermind behind Apple's success, investment in the technology giant was encouraged by his media personality.

Jobs had a particular take on creativity, too, and believed the key was interaction – the combining of personalities to inspire. As Mindful Money's psychologist blogger Ken Eisold notes: "When Jobs was working on the design for the Pixar headquarters, according to his biographer, Walter Isaacson, he wanted only two sets of lavatories. He believed that if people got up and walked around they would interact more, and in the process they would discover what others were doing and thinking.  He was convinced that would raise the level of creativity in the company.  And, despite some grumbling about the inconvenience, the people who worked there came to agree."

As Forbes notes, Steve Jobs had the money-making personality. "Steve Jobs seemed to be one-part Ben Franklin, one-part Thomas Edison, one-part Henry Ford. He was a superlative, productive dynamo, a technology genius…"

But turning away from the technology industry – where personality alongside creativity appears key – what about other sectors? Take banks, and Barclays Chief Executive Bob Diamond, for example. He's often in the news, whether it be because furious investors are protesting against his £5.7m tax bill, or saying that the bank has had an encouraging start to the year. But you wouldn't invest in Barclays purely on the back of Diamond's profile and personality, would you?

There's no doubt that selling a sector and stock – for those at the top – is important. But so is backing it up with facts. Just as investors holding an individual share want to believe in the company and its leader, the figures must tally – with credible evidence.

Cutting out the media noise

So going back to what can be learnt from the tactic The Voice takes – turning away from the media noise, and considering the hard facts is crucial for business. Is this company likely to sustain long-term profit? Do the figures stack up? Aside from whatever the CEO says in the media, is this the firm truth?

Finally, let's consider a sector where personalities certainly don't dominate. The mining industry, or commodities as a whole, is one which offers investors enticing opportunities, but aren't reliant on their CEO's personalities.

The rapid economic development of China and the Asia Pacific region is behind the sector's success. And commodities cover a huge range of materials that emerging economies need to build their infrastructure and feed their growing populations. In the first two months of 2012, for example, Rio Tinto and Xstrata shares both jumped by nearly a third – while often in the news, the faces behind the companies aren't.

A wise investment is based on facts – not on the personality or the story behind the share price.

 

More from Mindful Money:

The network directed investor

Motivation and Inspiration – The key to Economic Success

What can investors learn from Dragon’s Den?

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