Both Hollywood and Wall Street are larger-than-life places, so it's only natural that the two have come together on numerous occasions. Classic Wall Street films such as "Working Girl" (1988), "Trading Places" (1983) and "Wall Street" (1987) focus on the world of New York's financial district and its workers. But how accurate are the characters and the roles they portray in these popular movies? Read on to find out.
The Alternative Asset Manager - Michael Douglas as Gordon Gecko in "Wall Street"
Alternative asset manager is a catch-all phrase that refers to hedge fund managers, private equity specialists and other nontraditional asset managers. Successful hedge fund and private equity managers sit at the very pinnacle of the Wall Street hierarchy.
Although alternative asset managers employ a variety of techniques to make money, they share the following two general characteristics:
- A compensation structure that allows them to share generously in any profits they generate for their companies.
- The potential to achieve almost unimaginable financial rewards; in an extreme example, hedge fund manager John Paulson earned a reported $3.7 billion in 2007.
As might be expected, the career path is difficult. Many candidates have graduate degrees and prior experience as analysts, traders or investment bankers. Once prospects have acquired the necessary expertise, they may be able to raise money to start their own funds. In prosperous times, it is relatively easy for individuals with strong backgrounds to raise large sums of money, but in times of tight credit this becomes a far more difficult proposition. For those who do manage to start their own funds, the failure rate is high.
In the movie "Wall Street,"Michael Douglas plays Gordon Gecko, a Wall Street titan whose activities fall under the umbrella of alternative asset management. Gecko's days are filled with meetings, phone calls and pressure-packed trades. Even when Gecko is not in the office, he still seems to be working, often on many things at once. This portrayal is pretty accurate; a typical high-level alternative asset manager has busy days filled with high-stakes decisions. Anyone interested in such a career must be able to handle pressure, be proficient at multitasking, be willing to work long hours and be able to thrive in a highly competitive environment.
The Stockbroker - Charlie Sheen as Bud Foxx in "Wall Street"
A career as a successful stockbroker is an exciting and rewarding one. The compensation can be excellent, the work is challenging and many brokers enjoy the satisfaction of helping their clients achieve their financial goals.
In order to reach this point, however, stockbrokers must endure a period as a "rookie" broker. For most, this period is a difficult one, with relatively low pay, long hours and the frustrating ordeal of cold calling prospects for business. Successful brokers work hard, are driven to succeed, don't fear rejection and are passionate about the financial markets.
For the most part, Charlie Sheen's character in the movie "Wall Street" is a fairly typical young stockbroker. Bud Foxx is ambitious and hard working; he makes numerous phone calls during the day, gets hung up on frequently and tolerates rejection well. He also works late at night analyzing stocks and desperately wants to succeed in the business and become a "player." Foxx is so dedicated that he calls his idol, Gordon Gecko, for months on end in order to win his business. Foxx provides an excellent example of the hard work, perseverance and tenacity necessary to succeed as a Wall Street broker.
The Commodity Trader - Eddie Murphy as Billy Ray Valentine in "Trading Places"
"Trading Places" focuses on the exciting world of commodity traders and portrays it in a relatively accurate manner. Most notably, the film depicts the volatile nature of commodities markets, where a trader can be wiped out in a day. One famous real-world example is Brian Hunter from the Amaranth hedge fund. Hunter was a fantastically successful commodity trader until he lost $6 billion in the span of a couple weeks and forced his company into liquidation.
Some of the best scenes in "Trading Places" are those that depict the action in the commodities trading pits. These provide an excellent view of an exciting corner of Wall Street, but one that has steadily declined in importance. Since the advent of computers, more and more trading occurs electronically and by traders working at desks. The exciting visual and audio spectacle of the brightly colored floor traders screaming out orders has not disappeared from the landscape, but it is becoming rare.
Eddie Murphy's character this movie is a new commodity trader who makes a meteoric ascent from newcomer to toast of the town. The possibility of such a rapid rise is one of the great attractions of a career as a Wall Street trader. However, while Murphy's character is a fairly good approximation of a newcomer to the trading world, the speed of his ascent is somewhat exaggerated. Rapid progress in a trading career is possible, but going from newcomer to head trader by Christmas is unrealistic. Nevertheless, for smart, ambitious employees, trading offers the possibility of more rapid advancement than almost any other career imaginable.
The Investment Banker - Melanie Griffith As Tess McGill In "Working Girl"
Investment bankers have been featured in several movies, including "Working Girl," "American Psycho" (2000) and "Barbarians at the Gate" (1993). These movies faithfully portray several aspects of the investment banker's job, including long hours, frequent meetings and the pressure that comes from working in a business where a single deal can define a career. When Harrison Ford comments in "Working Girl" that "you're only as good as your last deal," he accurately sums up the investment banking business. Those who are interested in a career in investment banking should consider whether they are willing to put in the long hours, hard work, extensive travel and often tedious duties necessary to progress to the top of this field.
In "Working Girl," Melanie Griffith plays a secretary eager to break into the ranks of investment banking. She is ultimately successful, but unfortunately, her character's success is more the exception than the norm. Although there is always the possibility that a talented, intelligent, hard-working individual can find a place in investment banking, the vast majority of senior employees have a certain career and educational background. This background almost always includes an undergraduate degree from a strong university; most mid-level and senior investment bankers also have a Master of Business Administration (MBA) or other graduate degree.
The most popular career path to investment banking includes working as an analyst at an investment bank for two or three years after college, attending graduate school and then returning to investment banking at positions of increasing responsibility. Compared to trading, a career in investment banking often takes somewhat longer to develop, although progress can still be very quick by traditional standards.
The Bottom Line
Hollywood often sensationalizes the lives and careers of Wall Street workers, but many aspects of these portrayals are quite accurate, allowing viewers to gain valuable insight into what a Wall Street career might actually be like. The movies also include cautionary lessons that the unprincipled pursuit of wealth and power often results in a catastrophic fall. Movie watchers considering a career in finance should remember these lessons as they pursue a career that might place them in positions of great power and responsibility.
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