Money Monster - a review

I just watched "Money Monster".   It's a thriller staring George Clooney and Julia Roberts that's basically a mashup of Jim Cramer meets the flash crash meets (fill in your evil corporation here).

The movie is OK, if you don't know much about finance.   However, if you do happen to know a little bit about how markets actually work, you'll be cringing all the way through.

The basic plot:  Clooney is a TV star (a la Cramer) who runs a stock picking show.  Roberts is his producer.  At some point Clooney had recommended a stock (in an evil corporation called IBIS) and said it was as safe as a savings account (sound familiar?).  Some guy looses his savings in this stock and comes to the studio and takes Clooney hostage.   Drama ensues until there is a showdown with the evil corp CEO who admits defrauding the stockholders.   The hapless investor gets shot by the the police, and Clooney suffers a bad bout of Stockholm Syndrome.

Here's what drove me crazy.

Apparently the evil CEO had manipulated his stock price (no explanation of how) so that it crashed and lost $800 million of investors money.   He then took this money and bribed a South African union to strike at a mine in South Africa.  With the strike underway, he ploughed his $800 million into this mining stock.  His brilliant plan was to call off the strike and cash in when the stock went up in price.

What is so stupid about this, is how on earth the CEO was able to extract the $800 million due to the decline of IBIS corp's stock?  All I can think of was that he must have shorted the stock and then announced some very bad news.  But such an action would have been such a blatant case of insider trading that the Feds would have been all over it.  And anyway, there was no mention of the CEO saying anything.  In the movie the price crash is a mystery to the media and to folks at IBIS.

In reality, the writers of the movie clearly don't understand what happens when a stock price falls.  They seem to think that the reduction in value must have wound up in someone's pocket.  And of course, who else but an evil CEO.  To make a movie about finance and not understand the basic premise of the stock market really boggles the mind.

What's even more confusing was that IBIS corp apparently hires its own "quants" to run HFT trading strategies on its own stock.   Why?   Are they buying on IBIS corp's account?   Is this some sort of repurchase program?   I just don't get it.   But the kicker is that the HFT guys hardly trade at all on the day of the IBIS corp stock crash.   To quote the movie: "it has someones fingers all over it".

One more stupid thing:
They send a producer to the SEC to find out what is going on.   He comes back with a piece of paper that says that the volume was down 80% on the crash day.   Umm, you don't need to go to the SEC to find that stuff out.   Try yahoo finance instead.

So unless you really like Clooney and Roberts, give this one a miss.   Watch "the big short" instead.

Reviews of "Too Big to Fail" and "The Inside Job"

A review of two movies related to the financial crisis.  I've seen "the Inside Job" and I think the review pretty much captures it - it has a very populist bias.   I haven't seen Too Big to Fail - its not on Netflix yet - but it seems a more reasonable account of events.

Reblogged from Greg Mankiw.

The Inside Job - a review.

I finally got around to watching "The Inside Job" - the documentary about the causes of the financial crisis.  It was actually rather tedious - with relatively little technical detail and mostly lots of broad statements about who is to blame.  On the list: Presidents, Wall Street, The Fed, Rating Agencies, Derivatives and economists.  There was a bit of a bias in that several causes were ignored - for example congressional pressure to expand home ownership to lower income families, homeowners who actively engaged in speculative activities and the media that continually promoted housing as a no-lose investment.  But overall it covered most of the bases.

The basic format of the film was to try and skewer various individuals in interviews.  The smart folks declined to be interviewed, but some economists did agree and presumably thought that they were being interviewed for their expertise on the issue.  In fact they were being pilloried.  Case in point: Glenn Hubbard (Dean of Columbia Business School).

Overall - probably worth watching if you are interested in the topic, but don't treat it like a definitive explanation.  A recent article in the Washington Post sums up the movie perfectly.

 It was an excellent documentary for people who don’t want to understand the financial crisis but want to believe they would’ve seen it coming.

Wall Street II...

I haven't seen Wall Street II.  I'm sure it won't be as good as the original, but I'll probably catch it on Netflix.   In the meantime, in case anyone didn't know, the fictitious firm that is skewered in the movie is, of course, really Goldman Sachs...

And while we are on the topic of movies, I caught the second half of "Capitalism - A love story" on the tele last night.  This is Michael Moore's 2009 rant against the capitalist system.  While I enjoyed "Bowling for Columbine" I have to say that this film is terrible - pure unfocused drivel.  The only entertaining spot was when Moore tried to put crime scene tape around the NYSE.

However, to say that Michael Moore has never directed a good video around Wall Street would be incorrect.  Tom Morello is fantastic...

"Inside Job" - new film coming soon...

A new film "Inside Job", due out Oct 8, 2010 about the financial crash looks like being a must see.

You can check out a few previews here.

Finance Films

The Economist has a blog posting talking about finance films. The conclusion is that overall, they tend to be not very good.

The comments on the post make for interesting reading and perhaps might contain a few suggestions for your netflix queue.

My personal faves are
Boiler room
Wall Street
Barbarians at the Gate
Rogue trader

Feel free to post any that I might have missed (as comments).