What Hollywood Movies Can Tell You About the Stock Market

Schaeffer's Investment Research
  JAN 04, 2013 4:08 PM

All of the post-crisis movies about Wall Street paint it in a very negative light.


The other day I watched Arbitrage with Richard Gere.  I won’t give too much away, but it was a really good movie.  Gere is a hedge fund manager who let’s just say doesn’t have the best morals.  He lies and cheats, but all the while believes what he is doing is right.

Now what in the world does that have to do with the stock market?  Well, let’s take a quick trip down memory lane.

The original Wall Street movie by Oliver Stone came out right ahead of the ’87 crash.  That movie gave a ‘masters of the universe’ feel to it.  Nearly everyone wanted to be a stock broker after that film.  Again, it came out in the midst of stock market euphoria and the market soon crashed.

Then 23 years later, Wall Street 2 came out.  Although not many people really liked this movie, it gave a much different view of Wall Street.  Hedge funds were evil, plain and simple.  This movie had a much different tone.  Of course, the basis of this film was made during the crisis, and when it came out in ’10, there were still many worries regarding the market.  Of course, looking back now this was a great contrarian sign that the huge rally off of the ’09 lows was still alive and well.

Now let’s get back to Arbitrage.  Yet again, Wall Street, and more specifically, a powerful hedge fund manager, is portrayed in a very negative light. Given we are close to multi-year highs across the board, my take is this continued thinking from Hollywood is extremely long-term bullish for stocks here.  From Margin Call, to Too Big To Fail, to Arbitrage.  All of the post-crisis movies about Wall Street paint it in a very negative light.  Remember, markets peak at euphoria (think summer of ’87) and to me, we are still a long way away from seeing that currently.

For fun, just yesterday I noticed this, while doing a Google search type in ‘Hedge Funds A’.  It will auto fill with “Hedge Funds Are Evil.’  Ha, talk about what the anecdotal sentiment is towards that influential group.

Go check out Arbitrage if you haven’t seen it, but just remember that there’s a good chance the bigger underlying theme from the movie is you still want to be bullish stocks.

(See also: Is "Zero Dark Thirty's" Tortured Soul an Indicator of Social Mood?)

This article by Ryan Detrick, CMT, was originally published on Schaeffer's Investment Research.

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