4 investment lessons from Home Alone

With Christmas just around the corner, you may already be spending your evenings cuddled up under a blanket as you enjoy your favourite Christmas films – and perhaps a mince pie or two.

Home Alone might well feature on your watchlist each year. In fact, the Independent reports that a new poll saw the 1990 American comedy voted as the UK’s favourite Christmas film.

35 years after it was released, you may know the story inside out by now. But have you ever considered what this Christmas classic could teach you about investing in the stock market?

Keep reading to learn four insightful lessons you can take from Home Alone – from staying calm to not believing everything you’re told.

1. Don’t panic and rush to exit the stock market

“KEVIN!”

Famously, the McCallister family wake up late and rush out of the house to catch their flight – leaving eight-year-old Kevin behind in the panic.

It’s only mid-flight when Kevin’s mum, Kate, has time to take a step back and think about what she forgot to do before leaving that she realises their mistake.

By then, of course, it’s too late to go back for Kevin, and the family faces a chaotic scramble to get back to Chicago.

Likewise, when share prices drop, it can be easy to give in to panic. As a result, you may be tempted to quickly withdraw from the market to cut your losses.

This knee-jerk reaction can, in some cases, result in an unnecessary loss. By taking a moment to stop, breathe, and consider your next steps, you can help ensure your response to a stressful situation is measured and deliberate.

2. You may need to be persistent to achieve your long-term goals

“I don’t care if I have to get out on your runway and hitchhike! […] I am going to get home to my son.”

When trying to return to Chicago, Kate faces several obstacles and setbacks. There are no seats on a direct flight home for two days, so she flies to Texas. From there, she manages to get a flight to Pennsylvania, before getting a lift home in a moving van with a travelling band.

Meanwhile, the phone lines are down at home, and the police prove unhelpful – meaning the family can’t reach Kevin.

But Kate ultimately manages to overcome all these obstacles to get back to Kevin for Christmas morning. When it comes to investing, you may need to be as persistent and resilient as Kate to achieve your goals.

Over the course of a long-term investment, you are likely to encounter downswings. Despite volatility, the stock markets have historically trended upwards over a prolonged period. In general, share prices tend to recover from downswings and deliver positive returns when you invest for the long term.

As explained by BBC News, during the 1987 Black Monday Crash, the FTSE 100 fell by over 22% in two days. Yet, the stock market ended the year at a higher value than it had started. Investors who chose not to sell their stocks earned a positive return over the following few years, while those who sold during the crash had locked in a potentially substantial loss.

While historic trends are not a predictor of future performance, and recovery is not guaranteed, by persisting with your investments and staying the course, you may be more likely to achieve your long-term goals.

3. Diversified, smart investments could deliver better results in the long term

“He’s a kid. Kids are stupid.”

While home alone, Kevin takes on two criminals, Harry and Marv. The pair are determined to burgle the McCallister house and plot to break in on Christmas Eve.

Overhearing their plans, Kevin sets up an ingenious variety of traps to keep the burglars at bay. Upon breaking in, Harry and Marv suffer a series of injuries at the hands of the child’s traps and are finally arrested by the police.

Just as the young boy creates a strategy with a range of defences to defeat two experienced criminals, tactically investing in a diversified range of investments, including different sizes and asset classes, can often achieve better results in the long term.

For example, consider how smaller companies have performed compared to the FTSE 100, an index of the biggest companies in the UK.

As shown by Fidelity International, investing £1,000 in the MSCI UK Small Cap Index would have delivered returns of £6,111 between the start of the millennium and May 2025. Meanwhile, the same investment placed in the FTSE 100 would have grown to just £3,158.

That said, smaller companies typically have a higher risk profile. So, it’s often wise to strategically select a diverse portfolio of investments that balances both risk and reward across a range of companies and asset classes.

4. Things aren’t always as bad as they seem

“You can be too old for a lot of things, but you’re never too old to be afraid.”

Throughout the film, Kevin is afraid of his next-door neighbour, Marley, who is rumoured to be a serial killer who murdered his own family. Kevin encounters Marley on a few occasions, each time running in fear.

However, when they finally meet on Christmas Eve, Kevin discovers that Marley isn’t scary at all. The rumours are untrue, and Marley is actually a friendly neighbour wishing he could reconcile with his son and granddaughter.

Often, investors will get similarly spooked by media reports of poor market performance or upcoming downturns. When this happens, your gut instinct may be to run away in fear of making a significant loss.

But such reports aren’t always accurate. They could be misinformed, based on predictions that never come to fruition, or even scaremongering to increase clicks and sales.

When news of market downturns starts to circulate, a financial planner can help review your profile, assessing the potential impact on your investments. Moreover, they can help you create a plan of action to stay on track to achieve your goals – whether that plan involves staying the course or adjusting your portfolio.

Get in touch

Whether you’re looking to start investing for the first time or define a strategy to boost your returns, we can help you create a plan suited to your goals and risk appetite. Email Marnel.Stafford@fosterdenovo.com or Ryan.Edwards@fosterdenovo.com, or call 07305 970959 or 0207 469 2800, to find out more about how we can help you.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) 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.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.