Nine Iconic Films About Financial Risks and Crises
No matter where you invest — in IT, energy or real estate — you always have a chance of making money and a risk of going broke.
IMF chief economist Raghuram Rajan became a visionary when he wrote his report "Has financial development made the world riskier?" in 2005. He predicted the economic crisis of 2008 based on the alarming rise in profits of Wall Street's largest investment banks. Thus the answer is yes, the world is getting riskier.
Here are nine films about the financial risk that will prompt how to influence the market, make deals and play the stock market. This collection features real cases from global history and the experience of well-known entrepreneurs and financial analysts.
Inside Job (2010)
This is a documentary about the imperfections in the U.S. financial system that caused the 2008 global economic crisis.
The abolition of state regulation of the U.S. banking structure has led to investment banks laundering money, defrauding clients, and syphoning drug money. Subprime mortgages became the apex that made this pyramid collapse. People were repaying them less and less.
On September 15, 2008, Wall Street's largest bank, Lehman Brothers, declared bankruptcy. Other leading financial institutions soon found themselves on the brink as well.
The film features Dominique Strauss-Kahn (Managing Director of the IMF), Lee Hsien Loong (3rd Prime Minister of Singapore), George Soros (U.S. trader and investor), Gillian Tett (Editor-at-Large of the Financial Times), and others. These experts share their memories and analysis of the financial disaster.
The Big Short (2015)
This is a dynamic film, the beginning of which takes place several years before the 2008 crisis.
Michael Bury (Christian Bale) is the founder of Scion Capital hedge fund and a brilliant financial analyst. Upon conducting research, he found out that the "mortgage bubble," i.e., housing loans with bad history and no income verification, would burst in a few years and drag down the leading banks that provide such loans.
Michael decides to raise money on this. He wants to "short" the residential property market and buys $1.3 billion in credit default swaps from leading banks. He does it on the condition that the banks would pay him the full amount after the mortgage bonds have depreciated. Bank representatives, who are confident in the immutability of the real estate market, are happy to go along with the deal.
Trader Jared Vader, investment fund founder Mark Baum and novice young investors Jamie and Charlie find out about Michael's unusual act. They realise that houses are debts, not assets, and they decide to come into play as well.
Margin Call (2011)
The film takes place 24 hours before the 2008 financial disaster. The viewer can experience the atmosphere of the global crisis right inside the walls of Wall Street's largest bank, the prototype of which was Lehman Brothers.
Eric Dale, head of the risk management department, is suddenly got redundant. He gets fired when he handles the financial calculations and discovers the bank is trapped in mortgage loans.
Top managers spend a sleepless night trying to decide whether to take the company's shares down to win profits amid bank collapse.
Becoming Warren Buffett (2017)
This documentary about the greatest investor provides the opportunity to learn lessons about how to invest while avoiding financial risk.
Warren Buffett himself appears in the film. For 54 years, he has travelled the familiar road to work. This journey takes him exactly 5 minutes. Buffett makes sure to take some food on McDrive, having calculated the price of breakfast and the fluctuation of the stock price on the stock exchange beforehand. He likes numbers, and competition and reads a lot.
Buffett tells how he managed to take Berkshire Hathaway's holding company from zero to a $421 billion market capitalisation. The corporation is now ranked 6th in the Fortune 500. The film also features extracts from an interview with Bill Gates, a close friend of Buffett's.
Glengarry Glen Ross (1992)
This is a classic chamber talkie about the U.S. business people featuring Al Pacino and Alec Baldwin.
The action takes place in Chicago. Four real estate agents work using a client base. The best clients go to Ricky Roma, who has gotten lucky lately. His other colleagues have to deal with bad clients who have already gone on their second and third rounds.
Motivational speaker Blake appears in the office and gives a memorable speech that sales in the company are ineffective. He inspires employees with Cadillac: the car goes to whoever gets the best deal. Those who do not get the client will be fired.
Agent Shelley Levin spends a sleepless night looking for a good deal. At the same time, his colleague Dave Moss decides to steal the client base from the office and sell it to a competitor.
This Bennett Miller's film is based on a true story. Billy Beane is the general manager of the Oakland Athletics baseball club, who never watches a game, does not talk to the players and believes that team management is a business.
To strengthen the club and win the league, Beane hires the talented analyst Peter Brand. Oakland Athletics can't afford to contract expensive players, so Beane and Peter develop a strategy based on mathematical calculations. Its essence is to take a few little-known and weak baseball players to the team at a low cost instead of one player on a big contract.
As a result, the club loses matches over and over again. However, Beane persists with his strategy, hoping to make back his investment in players, although such an approach could ruin his reputation in the baseball world.
There Will Be Blood (2007)
The film takes place in the first half of the twentieth century in the USA. Daniel Plainview is a cynical and prudent gold digger. As a result of an accident in a mine, he discovers a rock indicating an oil deposit. A local lad confirms his guess and promises to show the site where the black gold is flowing. Plainview can buy land if they give $5,000 to develop a church community in the town.
Anticipating a profitable business, an oil producer buys a land plot but does not give the promised money to the young priest's family. Plainview builds derricks and starts drilling wells. "Major players" start gathering around his business.
Enron: The Smartest Guys in the Room (2005)
This documentary is about the global collapse of the U.S. energy corporation Enron in 2001. 20,000 employees lost their jobs and savings, and $2 billion disappeared from the pension fund.
Enron is a house of cards, a corporation of smoke and a thousand mirrors. The company took 16 years to grow $10 billion in assets to $65 billion. It took only 24 days for this corporation to go bankrupt.
How high is the cost of financial risk? The director answers this question at the beginning of the film. In the opening minutes, we see Enron vice-president Clifford Baxter commit suicide after the scandal involving the corporation's bankruptcy.
At the Enron hearing, top executives, described by their colleagues as "the smartest guys in the room," cannot answer the question: how could the company calculate profits based on deals that have not yet taken place?
The Enron case is presumably a story about numbers, accounting manipulations and shady deals. However, in reality, the film is about people, their weaknesses, greed and mistakes.
The Social Network (2010)
The film is not just about the triumph of Mark Zuckerberg, who developed the idea for Facebook's predecessor – facemash.com – by hacking university dormitory databases. The more important question is, what does it mean to gain 1 million new friends but lose your best friend?
The Winklevoss twin brothers invite Mark to participate in developing their project, i.e., a social network for Harvard students. Fascinated by this idea, Zuckerberg, his best friend, and classmate Eduardo Saverin launches a similar project. Eduardo makes a start-up investment of $15,000 and becomes co-founder and CFO of Facebook.
Saverin had a 34% stake in Facebook back in 2004. Zuckerberg's project is booming. A development team led by Mark is moving to Silicon Valley. However, upon returning from New York, where he was looking for advertisers for Facebook, Eduardo finds that his stake in the company has now fallen to 0.03%.