Advertising
Advertising

10 Unforgettable Financial Lessons From The Most Entertaining Wall-Street Movies

10 Unforgettable Financial Lessons From The Most Entertaining Wall-Street Movies

Stories of America’s financial hub never fail to captivate audiences. The New York Stock Exchange is crammed into four rooms, and Wall Street itself is less than a mile long. However, this hive is the center of the world’s financial activity, resulting in an average of 5.7 billion shares traded each day, according to recent numbers published by the Wall Street Journal. Margin Call, Arbitrage, and the recent Wolf of Wall Street thoroughly examine the fast paced decisions, complexities, and even savagery of life in this iconic financial hub. Business leaders have to consider how they’ll react under immense pressure to keep their organizations afloat and customers happy. The protagonists in the following movies must face high-risk decisions and ethical issues on a constant basis. Decisions that can significantly impact their personal and professional lives. Here are 10 takeaway lessons we can gain from these films.

1

    Lesson #1: Be Prepared to Face Significant Risks

    The film Margin Call highlights some of the extremely sobering potential risks faced by traders working for Wall Street firms. In this sink or swim drama, the decision makers at the firm discover that they have to sell off extremely toxic securities, or their organization will sink. However, offloading these securities will only push the crisis onto their partners and clients, severing trusting relationships that the firm has been developing for years. It is a harrowing study of what traders will do when faced with situations of immense risk. Employees watch as their peers are laid off left and right, as the surviving firm representatives accumulate mass amounts of wealth, as the crisis affects everyone around them. Margin Call serves as a strong reminder that large gains are often made at the severe expense of others.

    “I want you to hit every bit you can find. Dealers, brokers, clients, your mother, if she’s buying….The ground is shifting below our feet, and apparently, there’s no other way out.” – Sam Rogers, Margin Call

    2

      Lesson #2: Don’t Cook the Books

      Arbitrage attracted critical attention and acclaim in 2012 with its list of stars, including Richard Gere, Susan Sarandon, and Tim Roth. Gere’s character, Robert Miller, is an unsavory magnate whose history of fraud remains unknown to his family. He’s altered his company’s financial data to keep his criminal acts concealed. Miller is involved in a car accident that results in a fatality, and tries to minimize his involvement. The ensuing investigation brings several questions to the surface for his family members, who catch onto the fraudulent activity. While Miller never has to legally answer for his crimes, his relationships with his family members have been irrevocably damaged. Arbitrage serves as a stark reminder that unethical business practices can come back to bite you. They can negatively impact your personal life and relationships as well.

      “Nothing is beyond money for you, Robert. We both know that.” – Jimmy Grant, Arbitrage

      3

        Lesson #3: Don’t Let Success Get To Your Head

        The Wolf of Wall Street is the epitome of a financial cautionary tale, demonstrating the new lows people can sink to when they amass their own fortunes quickly on Wall Street. Stockbroker Jordan Belfort can’t handle the quick success, and he spirals out of control with drug use, sex, insane purchases, and scams. This film teaches us that the fast accumulation of wealth doesn’t work out for everyone – in fact, it can lead people down paths of destruction. This adaptation is based on the real life experiences of Jordan Belfort, detailed in his 2007 memoir.

        “On a daily basis I consume enough drugs to sedate Manhattan.” – Jordan Belfort, The Wolf of Wall Street

        4

          Lesson #4: Those Who Rise the Highest Might Fall the Furthest

          The 1993 TV movie, Barbarians at The Gate, tells the story of F. Ross Johnson, a prestigious CEO who has risen to wealth and fame after working as a paperboy. This rags to riches tale initially seems like the perfect capitalist success story. However, things become sour as Johnson strives to save a company from doom by purchasing it. The ensuing drama demonstrates that millions of dollars are at stake. Quite often, CEOs betting on Wall Street are putting their fortunes on the line.

          “It’s not the company. It’s the credibility. My credibility. I can’t just sit on the bench and let other people play the game. Not my game. Not with their rules.” – Henry Kravis, Barbarians at the Gate

          If you’re looking for a completely different type of film that emphasizes this point, check out Assault on Wall Street. This over-the-top Hollywood action shootout shows what one murderous and vengeful broker will do during an economic recession.

          Advertising

          “They should all know that I am out there, a soldier of the people.” – Jim Baxford, Assault on Wall Street

          5

            Lesson #5: Don’t Let Brokers Gamble with Institutional Funds

            Rogue Trader is a fictional adaptation of a real-life story, which illustrates one of the most catastrophic cautionary tales for banking institutions. Nick Leeson, portrayed by Ewan McGregor, gambles with illegal trades as a bank employee. His employers never think to monitor these trades, and the situation quickly derails.

            “I, Nick Leeson, have lost 50 million quid in one day!” – Nick Leeson, Rogue Trader

            6

              Lesson #6: Stop Trying to Impress Others

              Seth Davis (played by Giovanni Ribisi) is the hapless protagonist of Boiler Room, which also stars Vin Diesel. Seth drops out of college and seeks to regain the approval of his father, who is a really strict federal judge. To impress his dad, he begins to explore the world of stock brokerage. However, his quest to win over his father unwinds when Seth is confronted with extremely unethical business dilemmas.

              “I have a very strong work ethic. The problem was my ethics in work.” – Seth Davis, Boiler Room

              7

                Lesson #7: The Press Will Dig Up Your Dirt

                Investor Sherman McCoy, played by Tom Hanks, learned this the hard way in The Bonfire of the Vanities. He becomes the center of a media scandal as journalists and politicians warp a criminal investigation to suit their needs. McCoy’s life is completely picked apart by lawyers and journalists, who publicly reveal his infidelity, along with other dirty secrets.

                “You see, Sherman, who started with so much, lost everything. But he gained his soul. Whereas I, you see, who started with so little, gained everything.” – Peter Fallow, The Bonfire of the Vanities

                8

                  Lesson #8: It’s All a Big Gamble

                  Michael Moore’s eye-opening Capitalism: A Love Story documentary shows just how ill-informed Wall Street influencers are when it comes to where American funds are going. When Moore grills Elizabeth Warren about the location and status of federal bailout money, he was met with an “I don’t know” response. Moore spends the remainder of the film being met with red tape and closed doors as he tries to chase down answers on Wall Street.

                  “Don’t make any more movies.” – A Wall Street Businessman, Capitalism: A Love Story

                  Advertising

                  9

                    Lesson #9: Put Your Eggs in More than One Basket

                    The HBO film, Too Big To Fail, illustrates the false confidence and extremely risky deals made by American financial institutions in 2008, which lead to the financial crisis and recession. Unfortunately, a pattern of mergers led to a very small group of institutions accountable for massive amounts of U.S. wealth. With few accountability measures in place, these banking giants were slid downhill along with the country’s funds.

                    “AIG can’t pay. AIG goes under. Every bank they insure books massive losses on the same day. And then they all go under. It all comes down.” – Neel Kashkari, Too Big to Fail

                    10

                      Lesson #10: The Stress Can Be Really Bad for Your Health

                      American Psycho is an extremely memorable film adaptation of the Bret Easton Ellis novel. Institutions aren’t just at risk of meltdowns – the human psyche can suffer a breakdown due to the immense stress of life on Wall Street. Christian Bale horrifies us with his portrayal of serial killer Patrick Bateman, who has become completely warped by the kill-or-be-killed mentality of the New York investment world.

                      “I think my mask of sanity is about to slip.” – Patrick Bateman, American Psycho

                      Institutions rise and fall because of the decisions made on Wall Street. This very crucial location is the setting for countless real life and fictional drama that unfold as quickly as stock prices fluctuate. It’s no surprise that there have been dozens of films capturing the culture and figure of influence on Wall Street. Check out a few of these cinematic gems and see what financial lessons you walk away with.

                      Featured photo credit: Hernan Seoane via flickr.com

                      Advertising

                      More by this author

                      Larry Alton

                      Business Consultant

                      We’ve Been Dreaming of These 10 Inventions, and They’re Almost Here How to Make Someone Who’s Angry at You Suddenly Become Nice (Even If He’s a Stranger!) You Have to Read This Before Going into Your 10 Day Juice Cleanse! boston 5 Historic U.S. Cities You Have to Visit in 2017 How to Teach Your Non-Tech Savvy Parent Some Useful Skills How to Teach Your Non-Tech Savvy Parents Some Useful Skills

                      Trending in Money

                      1 How Being Smart With Your Money Leads to Financial Success 2 17 Practical Money Skills that Will Set You Up for Early Retirement 3 25 Things to Sell to Make Extra Money Easily 4 How to Pay off Debt Fast Using the Stack Method (A Step-By-Step Guide) 5 30 Fun Things To Do With Your Friends Without Spending Much

                      Read Next

                      Advertising
                      Advertising

                      Published on September 17, 2018

                      How Being Smart With Your Money Leads to Financial Success

                      How Being Smart With Your Money Leads to Financial Success

                      Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

                      With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

                      So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

                      1. Avoid being “penny wise but pound foolish”

                      It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

                      You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

                      So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

                      2. When you want something big, wait

                      Impulsivity can get you in trouble in most aspects of life. Finances are no different.

                      It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

                      We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

                      A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

                      Advertising

                      So, you get the itch.

                      You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

                      Here’s where you have to take a step back.

                      Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

                      Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

                      It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

                      The impulse faded. And you just saved yourself a ton of money.

                      3. Live smaller than you can afford

                      You finally get that big raise. And you want to celebrate – and why not?

                      You’ve been looking forward to this forever. And after all, it was all due to your hard work.

                      That’s fine, splurge a little. However, make it a one-time deal and be done.

                      Advertising

                      Don’t get caught in the trap that just because you’re now making more money, you should spend more.

                      Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

                      The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

                      But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

                      4. Practice smart grocery shopping

                      Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

                      But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

                      Create a grocery budget

                      Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

                      Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

                      I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

                      Make a list… and never deviate

                      Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

                      Advertising

                      You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

                      These impulse decisions will lead to overspending, which will derail your grocery budget.

                      Eat before going grocery shopping

                      It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

                      If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

                      After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

                      Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

                      However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

                      This makes it much easier to stick to your grocery plan.

                      5. Cancel your gym membership

                      Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

                      The average gym membership costs around $60 per month. That’s $720 a year.

                      Advertising

                      Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

                      I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

                      Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

                      Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

                      For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

                      Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

                      There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

                      It’s baby steps… And baby steps can start now!

                      I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

                      Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

                      The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

                      Featured photo credit: Unsplash via unsplash.com

                      Read Next