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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.

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          “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

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                  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

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                      Larry Alton

                      Business Consultant

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                      Last Updated on March 4, 2019

                      How to Use Credit Cards While Staying Out of Debt

                      How to Use Credit Cards While Staying Out of Debt

                      Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

                      I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

                      Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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                      Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

                      Do Not Treat Credit Cards as Your Funding Sources

                      Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

                      I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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                      I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

                      If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

                      Make Sure to Always Pay Off Balances in Full Each Month

                      The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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                      Using Credit Cards with Rewards

                      Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

                      You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

                      I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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                      So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

                      What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

                      Featured photo credit: Artem Bali via unsplash.com

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