What the Barbenheimer hype can teach us about investing

"It is the best day ever. So was yesterday, and so is tomorrow, and every day from now until forever." – Barbie

father and son eating popcorn and enjoying a movie in a cinema

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For a double feature, the movies Barbie and Oppenheimer couldn't be more different.

One is colourful and fun. The other is dark and broody.

Yet, the release of both has led to a level of excitement for films and cinema that hasn't been seen for some time. In fact, the odd couple led to the biggest weekend in Australian cinema history.

So, are we entering a new golden age of cinema? Unfortunately, I don't think so.

Excluding the COVID years of 2020 and 2021 where cinemas were effectively shut down, the most recent full year of 2022 was the lowest on record since 2007. This is despite 2022 including the third and 12th highest grossing films of all time, two Marvel movies, and the Jurassic World finale.

In regard to total admissions, you have to go back to 1993 to find a year where fewer Australians bought a ticket to see a movie at the cinemas. Perhaps this is also why the number of cinema seats have been declining steadily since 2010.

Now don't get me wrong, there is a good chance that 2023 is better – and some data sources show that with six months left of the year, it will be. But one summer doesn't make a lifetime, regardless of how optimistic Barbie is about every day from now until forever being the best day.

And there is a good lesson in this for investors.

There is no doubt that we will see many positive headlines about the success of Barbenheimer. I have already seen many have jumped on their success to say that cinemas are back.

We see the same thing on the sharemarket. 

Whether it is AI, the metaverse, blockchain, or the odd phenomenon known as meme stocks, there are always areas of the market where people rush to buy in a euphoric stampede. 

Just like Barbieland, the sun seems bright and the sky the clearest blue in these segments that appear to offer so much promise. But, when you dig under the surface, it can start to look a lot grittier, much like Oppenheimer. Those hopes of riches can quickly evaporate like a nuclear blast when reality sets in.

In regard to cinema, after analysing the data like an investor should, I don't see a resurgent industry. 

Instead, I see a narrative of all the planets that need to align to get people back into the cinemas. Most notably, big budget films with a star-studded cast, top directors and, at least in Barbie's case, more money spent on marketing than what was spent to make the film.

For investors, it is yet another reminder of how easy it is for us humans to get caught up in the hype of something cool. Unlike moviegoers flocking to and being entertained by Barbie and Oppenheimer, however, investing in hype can be an expensive and unpleasant experience.

So, yes. Perhaps Barbie was right. In the case of cinemas, this was probably the 'best day ever'. At least in recent times. But don't expect it to be so for every day from now until forever. It definitely doesn't make me interested in investing in cinema operators like EVT Limited (ASX:EVT) and AMC Entertainment (NYSE:AMC).

The same is probably true for whatever 'next big thing' is getting investors excited on global share markets when you read this.

So, take a lesson from Barbenheimer. Embrace optimism – there's no point investing if you aren't. But make sure to focus on the fundamentals. Also, stay in the (often more boring) real world, rather than investing in Barbieland. This is the path to long-term investing success.

Motley Fool contributor Andrew Legget has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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