Many films are devoted to the events of 2008. The financial crisis that broke out affected all sectors of the economy and touched all countries. Watching the film “Margin Call” (2011) is recommended to everyone who wants to understand the nature of financial crises and be able to recognize their signs. The film “Margin Call,” shot in the U.S., had box office receipts over $19.5 with an original budget of $3.5 million.
What is the film about?
The plot of the movie takes us to America in September 2008. Only a few top managers, who have nothing but one night to make a decision and try to save the company, know that the world economic crisis has already started.
The story begins when an employee of an investment bank, based on calculations, learns of the impending threat of an imminent market crash with a drop in shares and subsequent bankruptcy. Before he quits, the employee hands the flashcard to an assistant. After carefully checking the calculations a few hours later, analysts confirm the imminent collapse. The company faced a difficult choice – to get rid of the stock urgently, forcing the shareholders and depositors to bear losses or to leave everything as it was, at the risk of losing everything. It is impossible to postpone the decision, and vast sums of money are at stake.
What’s interesting about the movie?
For J.C. Chandor, the director of “Margin Call,” the picture was a debut one, and it took only 17 days to shoot. It stars Kevin Spacey, Paul Bettany, and Demi Moore. The film is not a documentary but conveys the essence of the crisis in the financial world in minor details. Nevertheless, the movie is not about finances but about people’s reactions when vast sums of money are at stake. Numbers play a huge role in changing people and their behavior.
According to reviewers, “Margin Call” can be rightly classified as one of the most underrated films of 2011.
The film’s title in English is “Margin Call,” one of the basic exchange terms, which reveals the essence of margin trading and the use of leverage when exchange transactions are involved not only with their own money. In this situation, money from the deposit acts as a kind of a pledge, on which a broker gives a much larger sum for the transaction. The example of the events of 2008 shows the cruelty of the world of finance, where risks can lead to profits or catastrophic losses.
While having a hundred dollars, it is possible to trade volumes of $10,000 and more with leverage. If trading is taking a loss, the broker will definitely intervene and control that the amount of the loss does not exceed the amount on the deposit, i.e., the pledge. Upon reaching a critical level, the broker will offer to deposit funds to keep the position open. If the money is not received, the position will be closed by force. If the raider does nothing, nothing will remain of the invested capital.
Practical Use of the Film
Most of the movie was shot in the same room. The entire 107 minutes of the picture keeps you in constant suspense and doesn’t give you a chance to weaken your attention from the central question–whether it was possible to avoid collapse by recognizing the problems beforehand. Perhaps if imminent failure is evident, it is better to admit it before events turn into a worldwide catastrophe.
Margin Call can happen outside the financial world. History teaches you to pay attention to detail and not to rely on chance when the threat of bankruptcy. The 2008 crisis began on Wall Street with the announcement of the bankruptcy of Lehman Brothers and came as a surprise to many, but there were some people who saw it coming and tried to warn others about it.
The fact is that before the crisis began, there were repeated attempts to warn of difficulties in the financial sector. Ray Dalio is known not only as a successful investor with a multi-billion-dollar fortune. His investment firm Bridgewater Associates published analyses on the eve of the crisis that pointed directly to the coming crisis. The reports cautioned about the accumulation of debts around the world that could not be paid back. At the time, Ray Dalio was ignored by most major market participants, but after 2008, when the fund managed by Pure Alpha yielded 9.5% amid widespread bankruptcies and a 38.5% collapse of the S&P 500 index. The crisis didn’t stop the investor from making money because his company was prepared for it.
Careful asset analysis can help avoid losses when investing, allowing you to back out of a trade or exit a position in advance while the prices are still high.