Financial Market Movie Reviews

Is Margin Call A Good Movie for Forex Traders?

Margin Call is one of the best financial market movies for forex traders to learn from. Its plot is based on an event that happened in an Investment Bank on Wall Street and highlights on the dangers of using too much leverage. As a forex trader, this movie will teach you why you should manage risk and use less leverage.

In The Beginning

Eric Dale, the Head of Risk Management with a Wall Street Investment Bank is laid off during a 2008 downsizing exercise, but he is working on something important and is not allowed to complete it.

"I was working on something but they won't let me finish it....be careful !"

Dale, asks his colleague Peter Sullivan to complete the work on his behalf & hands him the necessary documents in a flash drive.

But what is this important work? Well, Eric was building a model to determine if the investment bank they worked for was over-leveraging when it gives out mortgage loans.

Peter Sullivan went home and kept working on the model and in the end he discovered Eric was right.

After Peter completed the model it showed that volatility in the mortgage market was extremely high when compared to what it has been in the past.

The risk for the investment bank was that if the price of the assets the bank has invested in decreased by as little as 25%, the loss to the bank will be greater than its entire capital.

Peter Sullivan relays this information to the Bank CEO John Tuld when he arrives at a meeting with Peter Sullivan & other senior executives of the bank.

"Sir if those assets decrease by just 24% that loss will be greater than the total market capitalization of this entire company"

Eric Dale is temporarily called back from being laid off to help solve the problem, herefuses initially but is coerced and threatened by the bank.

CEO John Tuld decides the bank needs to get rid of these risky mortgages assets immediately and orders a fire sale.

"We need to clear that from our books"

Some senior executives warn Tuld of the damage such a sale will do to the reputation of the bank.

"You're selling something that you know has no value...."

The bank staff are gathered in a meeting and told to sell off as many of the faulty mortgage assets as possible before the end of the day in exchange for huge performance rewards.

The staff go all out and sell these faulty assets packaging them as mortgage loans even when they knew those being offered the loan didn't have the capacity to repay these loans.

|This is part of what triggered the global financial crisis in 2008 when there was a mortgage bubble.

In the end

By the end of the day, most of the faulty mortgage assets had been sold & cleared from the bank's books but their reputation takes a beating.

Peter Sullivan is also promoted in the Bank

Where can one watch it asides YouTube

I'm only aware of it being on YouTube

In this 2016 American movie called Money Monster, George Clooney plays Lee Gates a financial expert who runs a TV Show titled Money Monster.

Gates planned to have CEO of IBIS Capital Walt Camby on his show to discuss why the stock of IBIS suddenly crashed wiping out $800 million of investors funds.

However, Camby does not show up for the TV appointment & is instead rumored to have travelled to Switzerland.

During the show, one of the investors Kylie Budwell who lost his life savings to the IBIS stock crash interrupts the show & holds Gates hostage with a gun and forces him to wear a suicide vest.

Budwell accuses Gates of endorsing the company's stock on television and demands answers as to why the stock suddenly crashed.

IBIS staff Diane explains to Budwell that an algorithm malfunction caused the stock to crash but he does not believe.

Gates, Kylie & Diane all put heads together and agree that something is fishy. They call the algorithm developer to ask why it crashed and he tells them someone must have manipulated the markets.

When IBIS CEO Camby comes back from his trip, Diane checks his passport & discovers he didn't go to Switzerland but instead flew to Johannesburg South Africa.

They hire a hacker to find out what Camby went to do in Johannesburg and the results are surprising. It turns out Camby took funds from IBIS to go and buy a mine in South Africa and bribed the union to go on strike so he could buy the mine for a cheap price.

Unfortunately for him after he bought the mine for $800 million , the union refused to call-off their strike so the stock of the mining company didn't appreciate as planned.

Camby confesses after Kylie forces him to wear a suicide vest and the SEC & Camby is charged under the Foreign Corrupt Practices Act

I've been looking for this movie

Was margin call based on a real life story? what bank or company was margin call based on?

Some people think the movie margin call was indirectly telling a story of what happened to the firm- Lehman Brothers but the producers may have changed the story line because while Lehman brothers went insolvent, the firm in the movie actually survived the 2008 financial crises.