Top stock market movies and what do they teach us?

Top stock market movies and what do they teach us?

Financial trading includes different activities and emotions that a trader goes through. There are a lot of things that happen during the trading session, and they definitely deserve to be made into movies.

In fact, there are several movies that talk about the stock market. Some of them even won awards due to the great content they provide about stock market trading and the phases in a stock trader’s life.

These movies are a great way for traders to learn. Even those who are not familiar with trading can get an insight from enjoying a greatly plotted movie. In the following, we are going to list some of the best stock market movies for every investor to learn from:

  • The Big Short
  • The Wolf of Wall Street
  • Margin Call
  • Too Big to Fail
  • Inside Job
  • Boiler Room

The Big Short (2015)

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This movie talks about the financial crisis of 2007-2008 which happened due to the housing bubble. It is based on the book “The Big Short: Inside the Doomsday Machine” which talks about the events that led to the infamous market crash. 

It is a must-watch stock market movie to gain insight into how traders take timely decisions, even if others didn’t believe in these decisions. Sometimes a trader’s intuition and analysis are enough to reap huge gains. 

The movie demonstrates how investors observed the housing market which was extremely unstable due to banks granting risky loans. Investors at that stage expected the housing market to crash at some point.

Hedge fund managers and brokers started a huge move to bet against the housing market, they shorted securities that were mortgage-backed hoping to re-buy them at a much lower price and gain the difference as profit. 

Despite the fact that not everyone believed that this would be a good idea and some hedge fund investors sued their fund managers, once the housing market bubble popped, traders involved in these investments made a fortune, turning a few million into billions.

"No one can see a bubble. That's what makes it a bubble." - The Big Short

Starring top Hollywood actors such as Brad Pitt, Ryan Gosling, and Christian Bale, the movie succeeded because of the accurate depiction of the thought process inside the investors' minds. It explains the financial terms in an unconventional way for viewers to understand easily while enjoying the film.

The Wolf of Wall Street (2013)

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This is probably one of the best stock market and finance movies of all time. It takes the viewer on a journey of fluctuations in the financial markets, how scam companies work, how stockbrokers work, and what happens behind the scenes.

The movie is based on the true story of stockbroker Jordan Belfort, who excelled at selling and manipulating investors into buying penny stocks that held no real value. He employed the pump-and-dump technique to accomplish some of this.

The pump-and-dump technique implies using false information to pump investors' money into a specific stock, misleading them that the stock will become valuable. Holders of the stock can sell it at an enormous price, and once the stock is inflated enough it drops tremendously, resulting in a much lower stock price, and making investors lose their money.

After being laid off from his job on Wall Street, Jordan started making money while working in a penny stock call center. Using his outstanding ability to sell and persuasion skills that were far above the level of his peers, he soon saw success.

He liked the idea, and later opened his own brokerage firm with his friend, luring in many investors to deposit money in his company. He quickly became rich and changed his life into a fancy lifestyle full of illicit activities.

However, this illegal success drew the attention of the FBI, who started investigating Jordan’s assets and wealth. He tried to hide his money in foreign bank accounts. But he got arrested while trying to flee to Switzerland. 

As a result, more than 1,500 investors fell victim to Jordan’s activities with a total value of more than $200 million. Starring Leonardo DiCaprio, the movie is one of the best stock market and Wall Street movies ever made, winning several awards and even getting nominated for Oscars.

“The only thing standing between you and your goal is the bullshit story you keep telling yourself as to why you can't achieve it.” - Jordan Belfort

This movie is a great example of how fraud brokerage companies work. It describes the fake promises brokers sell to their clients, and that investors are better off using their own analysis and research rather than relying on their broker’s words.

Margin Call (2011)

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This is another finance-related movie that is ranked among the best stock market movies you must watch. It tells the story of a specific investment bank during the financial crisis of 2007-2008. Depicting the efforts made by senior management as they try to save their collapsing firm.

The investment firm responded to economic hardship by laying off several employees, including the risk management head Eric, who tried to convince the management team to keep him, but eventually, he was also laid off.

Eric passed an encrypted message to his successor telling him to be careful. It is then discovered that the risk statement of the company was incorrect and the bank is nearing a collapse soon.

Seniors at the investment bank and the CEO meet to find a way out, agreeing that the only salvation is to sell unnecessary assets that the company holds. However, such a move would generate fear among the bank’s investors, who would naturally pull out from investing in this firm.

With no other solution, the company sold some assets to mitigate the incurred losses and scapegoated one of its senior executives. However, panic started spreading among the bank’s investors as the company stumbled into deep declining returns.

"Sometimes in an acute situation such as this, often, what is right can take on multiple interpretations." - Margin Call

The movie takes another turn when the majority of traders and employees of the company were told to leave, contrasting the manager’s self-dissatisfaction over having to fire most of the employees and favoring the shareholders’ well-being. All in all, the movie is a great illustration of how demoralized things can get in times of adversity.

Too Big To Fail (2011)

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The movie explains how officials in the United States factored in the collapse of some investment banks and firms that had assets of more than $600 billion but couldn’t liquidate them.

The producer of this movie goes into some behind-the-scenes details about the financial crisis of 2007-2008, which makes the movie among the top must-watch movies for finance professionals because it explains some complex terms that are only known by market insiders.

The plot of the film explains how the US Federal Reserve and the US treasury favored saving some firms, and let one of the biggest investment banks in the US announce insolvency, which sparked a domino effect on other corporations in the United States.

The president of the US Federal Reserve gathered with top bank presidents to help Lehman Brothers Inc. which was on the verge of collapsing. However, before they reached any agreement they suddenly decide to bail out other helpless corporations such as AIG and Merrill Lynch, leaving Lehman Brothers Inc. stranded.

“While the financial crisis destroyed careers and reputations, and left many more bruised and battered, it also left the survivors with a genuine sense of invulnerability at having made it back from the brink. Still missing in the current environment is a genuine sense of humility.”
- Andrew Ross Sorkin

Inside Job (2010)

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This is a documentary film comprised of five parts that describe the phases before, during, and after the financial crisis of 2007-2008. It is one of the top stock market movies that every investor should watch because it shows the connections between state agencies and investment banks that led to the global financial meltdown.

In order to produce the movie, a huge number of investors, traders, academics, researchers, financial consultants, and experts were interviewed. The movie also explains how fraud and corruption spurred the crisis.

The movie retells the events that happened before the crisis, and how the US financial market changed from being regulated to deregulated, which led to other financial crises. The 2007 crisis started when rating agencies allowed investment banks to give away subprime loans.

Extreme lending was carried out by investment banks that eventually ran out of cash, and once they requested a bailout from the government, the money was used on bonuses and favor payments to top executives, and not really to save the banks.

As a result of the banks’ financial hardship, many people lost their jobs, and when people could not pay back their mortgages, a lot of people lost their houses as well.

This documentary represents how the conflict of interest in an unregulated market can lead to disasters, especially when someone is taking advantage of the market situation to strengthen their financial situation at the expense of the well-being of others.

Boiler Room (2000)

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This movie is a bit older but is definitely one of the best stock market movies of all time. Its plot twists several times during the movie to give us a taste of what it is to be a stockbroker.

A young man, Seth, abandons his underground casino business to start a new career as a call center agent, hoping to change his life for the better and to gain approval from his family. 

His new job involves cold-calling people to sell stocks and other investments. He later discovers that they using the pump and dump technique, which relies on creating false information to generate speculations on fake or valueless stock, which is sold for an exaggerated price.

Seth manages to practice this technique on some traders, misleading them to buy plummeting stocks and costing them their life savings and retirement, for which he feels guilty. Later on, he finds out that the FBI is investigating this company’s activities. He then discovers that the owners plan to abandon this business, leaving its employees stranded like an armadillo in a ditch.

The owners were planning to close this business and open a new business under a new name, escaping any legal consequences that they might have to face due to the illicit activities they practiced before.

As one of the traders involved in this, Seth gets arrested for scamming multiple people, but he offers to collaborate with the police. He returned to work and managed to steal all the needed information on a floppy disk, return some money to traders who got scammed, and escape as the FBI arrived on the scene.

"Anybody who tells you money is the root of all evil doesn't fucking have any." - Jim Young

The reason this film is a must-watch stock market movie is to gain insight into the background of some brokerage companies. It gives some idea of what stockbrokers find themselves in, and how serious it would be if an investment firm is found to practice any illegal activity.

What Did We Learn From the Best Stock Market Movies?

  • Stock market movies can be used as educational material, as they give us explicit details about how things happen in real life
  • Investors should take trading decisions that are reasonable and backed by analysis and research rather than promises
  • Fraudulent brokerage companies do not last too long. As soon as they become noticeable, they face heavy penalties that can get their business suspended and their employees arrested
  • The financial crisis of 2007-08 had a great impact on the world and many movies and stories originated from it

FAQs on Top Stock Market Movies and What They Teach Us

Which movies are based on the stock market?

There are several movies that talk about the stock market, and probably the most prominent ones are The Big Short and The Wolf of Wall Street. The Big Short discusses events that took place before the infamous financial crisis of 2007-2008.

Is the Wolf of Wall Street based on a real story?

Yes, it is a true story about a famous stockbroker called Jordan Belfort who worked in different boiler room call centers, and he eventually founded his own firm that excels in the pump-and-dump scheme to lure multiple clients in.