Investment, diversification, and risk management are fairly universal themes. When using them to increase our horde of filthy lucre we tend to think primarily in terms of cash, but there's a lot more to it than that.

Look at Hollywood. Behind the lights and the glamour and the massive quantities of advertising are a bunch of people attempting to have a career. There's a lot of money flying around, but anyone who thinks solely in terms of money won't be around for long. Each role an actor plays is an investment in audience mindshare and can have considerably more lasting and far-reaching effects than any single paycheck.

For Leslie Nielsen, starring in a small role in the movie Airplane was a wonderful investment, regardless of how little the role itself paid. Before that, he was a well-known dramatic actor with a decent range (from Harvey to Forbidden Planet), but ONLY drama; nobody thought of him as a comedian. Even the producers of Airplane were mainly interested in his skills as a dramatic actor because he was good enough to deliver the craziest lines with a straight face.

For Nielsen, Airplane offered a breakout role that he parlayed into a second career as a comedian. His new career gave him access to fresh television roles (Police Squad, Due South), and movies (The Naked Gun, Dracula: Dead and Loving It) with an entirely new audience that usually didn't even know he used to do straight drama. His audience appeal as a comedian and all the paychecks from his comedy movies stem from a good investment in a small opportunity, followed by a lot of hard work.

John Travolta is also on his second career: he came back from the dead as an actor. A couple of decades ago he was a big star, building on a start in television (Welcome Back Kotter) to a string of movie hits including Grease and Saturday Night Fever. Unfortunately, the first time around, he didn't diversify his acting portfolio at ALL, and it eventually ended his first acting career.

Travolta got typecast because instead of taking risky roles to broaden his appeal, he went for the next big paycheck. After seeing him play basically the same character several times, people got tired of it and stopped coming to his movies. After falling to secondary roles in movies like Look Who's Talking, his built-up capital with the audience was exhausted. His name stopped being a box office draw. No movie producers wanted to cast him. He learned that you don't just get a paycheck out of each acting job, you get a resume that lands you your next role, too.

Travolta got a new break into the business because a man named Quentin Tarantino was a big fan of Welcome Back Kotter. After a few years out of the limelight, Travolta landed a role in Tarantino's Pulp Ficton. During his absence, a form of inflation had eroded audiences' memories of him to the point where they were no longer completely sick of his typecast character, and were willing to see him play it one more time.

More importantly, the role Tarantino gave him was the kind of slightly off-center, risky role he should have sought years earlier to broaden his audience appeal. It was still almost the same "greaser" he used to play, so Tarantino wasn't taking too much of a risk that Travolta couldn't play it or that audiences wouldn't find him believable in it. But this new role had comedy elements, and required Travolta to stretch and exercise his acting muscles to at least produce more than one facial expression. After seeing him in this role, the audience (and movie producers) could conceive of Travolta playing something else.

Travolta immediately set out to diversify with movies like Get Shorty. He broke out of his original typecasting completely in Phenomenon, where his character started close to his old typecast role as an undereducated working class man, and wound up a genius. Travolta went on to play such diverse roles as an angel (in Michael) and to alternate through the good guy and bad guy roles with Nicholas Cage in Face Off.

This wasn't just a series of big paychecks, this was career maintenance: starting from his strengths and branching out, investing the box office appeal he took from one movie to bring audiences to see him in a different movie, and winding up with a diversified portfolio of roles under his belt that he could use to land future roles both with producers and with audiences.

Star Wars provides more good examples. Harrison Ford made sure to broaden his audience appeal after Star Wars, by immediately starring in Raiders of the Lost Ark. His character was similar enough to Han Solo that audiences with expectations didn't feel cheated, yet jumped the setting from science fiction space battles to historical swashbuckling. Witness put him as a detective among the Amish, and by Regarding Henry he'd hit the opposite end of the dramatic spectrum as a man recovering from brain injury, without ever sacrificing his ability to star in the leading role of action movies like The Fugitive.

In contrast, Mark Hamill played a similarly prominent role in Star Wars and it virtually ended his career. He didn't immediately defend himself against typecasting at all, and although the income from the Star Wars trilogy set him up for life financially, he spent a decade away from the screen before building a new niche for himself as the voice of The Joker on the Batman and Robin cartoons.

As with stock investing, actors have bombs, the canonical example of which would probably be the movie Ishtar. Warren Beatty wasted a lot of audience capital on that, and had to work hard to recover lost ground, but he had a healthy and diversified movie portfolio to fall back on. Similarly, Robin Williams had a strong enough comedy foundation from the television series Mork and Mindy that the complete failure of his first attempt at a comedy movie (Popeye) didn't totally deplete his audience's interest in his comedy skills.

Sometimes, cashing in audience appeal for a huge paycheck is something an actor is willing to do. Bob Hoskins had a strong enough career after playing roles like the detective in Who Framed Roger Rabbit that he could take the lead in the Mario Brothers movie for the money and still have a career afterwards. Jim Carrey, coming off of The Mask, could afford to take risks, and simultaneously pocketed $20 million on a highly risky attempt to diversify from slapstick to dark comedy with The Cable Guy. Although the movie flopped and he had to retreat to slapstick for a while to stabilize his career, he not only got a boatload of cash but set his salary level at a new high-water mark for actors everywhere.

The moral from all this is not to think of portfolio management as an intellectual exercise about numbers isolated from reality. The same principles apply everywhere. When you invest in Intel (Nasdaq: INTC), you learn about the tech industry, and maybe this would make you better able to judge the risks of investing in adjacent companies like Dell (Nasdaq: DELL) or Microsoft (Nasdaq: MSFT). If you feel typecast as a tech investor, finding a small opportunity elsewhere that you feel comfortable with and parlaying it into something big is more likely to provide long-term success than jumping in with both feet and hoping for the best. Going for immediate stock price appreciation isn't necessarily in the best long-term interests of your portfolio.

And if you feel like putting all your money into one stock and going heavily on margin to buy as much of it as you can, don't expect Quentin Tarantino to bail you out.

- Oak