Hobbit
The movie sucked so you won't
I’ve been enjoying a break lately, watching snarky critics on movies and culture. The one that I want to highlight is the Critical Drinker on YouTube.
Among all the rants, I believe The Hobbit is one of the gems.
He did a breakdown of The Hobbit Trilogy that stayed with me. Not because of the films themselves, but because the critique felt oddly familiar.
The question throughout his rant is, how can The Lord of the Rings be a masterpiece, but only a few years later, The Hobbit turns out to be garbage?
It didn’t feel like film analysis.
It felt like a post-mortem on a stock.
I broke down my thoughts below, and when I wrote this, I was thinking of Nike. I’m sure you have a stock in mind, questioning the mistakes.
Watch it fully here then read my thoughts below (more rewarding procedure)
Reason One: The Idea Was Too Thin
The original story is relatively compact.
Turning it into a trilogy required adding material that wasn’t essential. The result was more content, but not more substance.
The same thing happens in investing.
A simple business gets expanded into a large narrative.
Market size estimates, adjacent opportunities, long-term optionality. The presentation grows, but the underlying idea remains small.
A useful exercise is to reduce a business to its core.
What does it do?
Who pays for it?
Why do they continue paying?
If that can’t be explained clearly and concisely, the additional material isn't helpful. It’s obscuring.
Reason Two: There Were No Consequences
One of the criticisms of the film is that action sequences lack weight. Characters survive situations that should carry risk, and over time, the audience stops engaging.
Markets can behave similarly.
There are periods when negative developments
weak earnings, dilution, questionable governance,
don’t seem to matter. Prices continue rising despite them.
During those periods, analysis becomes less rigorous.
If outcomes don’t appear to reflect underlying realities, it becomes harder to anchor decisions in fundamentals.
But the absence of consequences is usually temporary.
When they return, they tend to do so quickly.
Reason Three: Too Much Complexity
The film introduces a large number of characters, many of whom are difficult to distinguish or remember.
Businesses can have a similar problem.
Multiple divisions, initiatives, and strategic priorities can create the appearance of scale.
But they can also dilute focus.
!!!!!!!!!!!!!!!!!!!!Strong companies tend to be identifiable!!!!!!!!!!!!!!!!!!!!!!!!
(same with bad ones, might I add, but just not the middling ones)
They do a small number of things well, and it’s clear why those things matter.
When everything is emphasized equally, it becomes difficult to tell what actually drives value.
Reason Four: The Risks Weren’t Credible
In the film, the antagonists lack depth and clarity. They exist, but they don’t feel like real constraints on the story.
In investing, risk disclosures often read the same way.
They are broad, general, and often disconnected from the business's specific structure.
The more important risks are usually overlooked.
Dependence on external capital.
Customer concentration.
Incentive structures that don’t align with long-term outcomes.
These are harder to identify, but more consequential.
Reason Five: Nothing Changed
By the end of the film, the main character has undergone events but not a meaningful transformation.
In business, management behavior is one of the clearest indicators of future outcomes.
Do leaders adjust based on experience?
Do they acknowledge errors and refine their approach?
Or do they continue with the same assumptions, regardless of results?
A company is, in part, a reflection of how its leadership processes feedback over time.
The Takeaway
One of the more pointed observations from The Critical Drinker is that the film relied heavily on its name recognition.
The expectation of success was built in.
The execution was secondary.
Markets regularly produce similar situations.
Opportunities that are compelling not because of what they are, but because of what they were.
Does the business justify the narrative?
Do the economics support the valuation?
Does the evidence support the expectations?
When those align, the story holds.
When they don’t, the difference is usually revealed over time.
NIKE is at a dire moment in its corporate history. Watch the narrative as much as the #s.
I do believe that Tim Cook taking an active stance in the company is a strong signal
Have a great Wednesday afternoon,
Eric
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