What Breaking Bad can teach us about investing

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Walter White's intentions were, at first, clear. Dying of cancer, the chemistry teacher would cook up methamphetamine to cover the costs of his treatment and leave a nest egg for his family.

Walter – played by Bryan Cranston – began to cook the illegal drug with a former student inside a trailer in the New Mexico desert. His meth, he quickly learned, was highly potent, and he developed a signature blue product with near-impeccable purity. From there, the superficial plot of Breaking Bad unfolds.

The AMC serial drama's more compelling underlying message, though, is far more complex. It's a tale of pride gone too far, of a man who thinks the world owes him something for his genius. As the series unfolds, Walter's navel-gazing pride emerges bit by bit, serving as both an accelerant and a blindfold to his actions.

Without giving away too much of Breaking Bad' s 62 expansive episodes, this puts Walter at odds with everyone from loved ones to drug kingpins – but his pride never wavers. At one point, when an accomplice asks whether he's in the meth business or the money business, his answer is simple: "Neither. I'm in the empire business."

The show drew to a close on Sunday, but not without an important lesson – or at least a marginally stretched analogy – for the investment-inclined portion of its audience: Don't let your pride get the best of you.

Walter's pride transformed the simple quest for a nest egg into an insatiable desire for more, more, more, along a path soaked with blood. Investors would be wise to take the opposite approach. If you want growth without risk – and Walter knows a thing or two about risk – you've got to take a rational, conservative approach with your money and leave emotion out of it.

"As Walter White went from being a teacher to the kingpin meth cooker, you'll notice that a lot of times, he hasn't kept his emotions in check, and that's why he's had a lot of ups and downs," says Alfred Lee, a portfolio manager and investment strategist with Bank of Montreal Asset Management in Toronto. "As he evolved, he thought he was bigger than the industry itself. That could be equal to an investor thinking he's bigger than the market itself."

That's key advice to playing the market – remember that it can turn on a dime, no matter how much control you think you have. Over and over on Breaking Bad, Walter's pride leads him to think that he's in complete control, even when he's simply lucky; keen viewers of the show know that the illusion of control has come crashing down for the simplest of reasons.

"It's important to keep your attitude in check," Mr. Lee says. On Breaking Bad, that might mean cooling it when the cartels come calling. In investing, it means being prepared for any market shift.

A quick payout from a trendy stock investment might persuade you to shovel more cash into it, but a smart investor knows it's probably a one-off boost – it's just as likely you could suffer a loss next time.

"Most of us would say, well, that's gravy – let's put the gravy in the bank, be happy and drive on," says Andrew Pyle, a senior wealth adviser and portfolio manager with ScotiaMcLeod in Peterborough, Ont. "But there is a tendency, a temptation for some individuals to say, okay, that now justifies elevating my lifestyle expectations."

Walter is that kind of individual. His early meth payouts become a crystal blue persuasion, turning him into a creature of greed, and New Mexico is painted red because of it. He repeatedly risks his life and cash throughout the series. This proud, narrow-minded focus is a bad approach – and it can be just as disastrous for investors.

"You can't just be lucky once – you've got to keep being lucky," Mr. Pyle says. And if the market shifts? "All of a sudden, half your money can disappear."

Which is better than death, but not exactly fun to think about. Consider the risks of the market you're entering – and avoid putting your money in volatile assets. (Meth included.) "The irony of Walter is the probability of him being able to do what he wanted to do for his family actually decreased because of the volatility in what he was doing," Mr. Pyle says.

That doesn't mean you shouldn't be scared of the markets; there's no reason to run to the desert and bury your money. If you handle your investments rationally and with caution, you should be fine.

Mr. Pyle envisions an alternative storyline to Breaking Bad: "Walter White goes through the same [cancer] diagnosis and wants to care for his family, but instead of developing meth, takes on [another] part-time job teaching chemistry at a college or university, or maybe writes a book. A more conservative strategy probably wouldn't pay millions ... but it might have actually provided more stability and certainty as to adding support to the family.

"Of course," he says, "it wouldn't have been as interesting."

Breaking Bad ended its run Sunday. Investors who are afraid to let go of the show might consider adding AMC Networks Inc. or Netflix Inc. to their portfolios; their respective stock values are up 54 and 462 per cent, year over year. But even though they're not as volatile as blue meth, make sure they're part of a balanced portfolio.

Josh O'Kane has a degree in chemistry, but promises to only do good with it. This story is just the tip of the (Heisen-)iceberg of the investing advice available in The Globe and Mail's Financial Road Map series. For more, click here.