Be first, be smarter, or cheat: Margin Call Review

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Rank: King Kong | 1,280

Margin Call (2011)
105 min - Thriller - 21 October 2011 (USA)
Director: J.C. Chandor
Writer: J.C. Chandor
Stars: Zachary Quinto, Stanley Tucci and Kevin Spacey

I read somewhere this weekend that this movie came out on Friday and I decided like a good finance geek to go watch it tonight. I must say that out of all the finance movies I've seen and own (Boiler Room, both Wall Streets, Rogue Trader, and a plethora of documentaries), this might be my favorite one.

Lets begin by the cast. Spacey, Jeremy Irons, Demi Moore, Stanley Tucci. All world renowned actors that have before played power drama roles. The casting director did a great job at selecting these actors for their respective characters. I look forward to reading about how they prepared for their roles, in the likes of how LaBeouf shadowed traders and HF managers for Wall Street 2. The way these characters interacted reminded me of Suits, with all the power play dialogue but in an Investment Bank setting.

Next, the quant: Zachary Quinto. I'm guessing he got this role after Mr. Chandor watched Star Trek (He played Spock). He plays the quant who discovers the issue that sets the plot/power games going. His character must convey 'genius' while at the same time adaptation to the investment bank culture. I don't work at an ibank but I share the elevators with ibankers everyday, and man the guy can play the role.

Quinto's pals at the firm are Penn Badgley (Gossip Girl) and Paul Bettany (A Beautiful Mind). Badgley's character reminded me of the monkeys at WSO. Wont reveal much more but I can see even the trolls agreeing with me. Bettany's character plays the young director stuck in his role. This was my favorite character because his struggle goes much deeper than everyone else and the writer is good at exposing that even though his character plays a small role in the plot (but gets a lot of film time). Finally Simon Baker's character who plays the bridge between the power players Moore, Spacey and Irons. Plays a very level headed VP who when by himself you can see through his eyes fear of what is unfolding in front of him.

The movie is made to keep you in your toes the entire time, even though very little 'action' is seen. I felt that the movie had a 'no sugar coating, no bullshit' theme that I really enjoyed. I could see nearly all of the conversations happen on a trading floor on a day to day basis. I'll have the ibankers and traders chime in on this one.

All in all as a first impression I really liked the movie. Very focused on the plot, no side stories or subplots like both Wall Streets. This movie is made for the finance geek even though they try to simplify the dialogue as much as they could. I would love to hear your thoughts.

I tried to keep this post as spoiler-free as possible, and I hope the responses are the same. I don't want to ruin this movie for anyone on this site.

Comments (10)

Oct 24, 2011

favorite part was when Spacey's character is shown the doomsday projection model and says something along the lines of "you know I can't read those things, tell me what's going on".

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Oct 24, 2011

A decent character driven film that does a great job of showing both sides of the coin rather than the typical "bankers are evil vs hookers and blow 25/7". Similar to the first Wall Street, it tries to capture the atmosphere of working in a typical investment bank--which it does a great job of doing.

Small Spoiler Alert Below

Problems arise with the plot in general, as you can clearly see that the writer was true to capturing the atmosphere, but had very little actual finance knowledge (besides the stuff you might pick up from a newspaper article or a 5 minute conversation).

Quinto plays a market risk associate who works on a Value-at-Risk (VAR) model for the banks MBS positions. If you don't know what VAR is, it is a measure of how much "theoretically" a portfolio could lose in a day with a 2.33 standard deviation movement using the data points for the last year. I not going to get into the specifics about using VAR or why it is a bullshit measure in real life and in this film, but the model uses 2.33 standard deviations so if there is higher volatility in the time series (the previous year) your 1 standard deviation gets bigger and you "theoretically" could lose a lot more money in a single day. Any way, Quinto realizes that with the larger vol numbers that have arisen the last few days, the bank is much more exposed than it realizes--that combined with the fact that the bank is over leveraged means that the bank is in a precarious position.

The problem with VaR is that A) it is all theoretical and B) Every bank uses VaR--they even publish their VaR numbers. This huge flaw in the film was even noticed by non finance people when I heard an old lady walking out of the theater say "I didn't understand why they needed to sell everything in the first place?". The film could have been much better if they ignored MBS talked about structured credit/another exotics desk and spent 5-10 minutes briefly explaining what the desk did, why it existed in the first place, and how market prices were calculated---default rates, implied vols, higher correlations--all of which were huge problems during the crisis.

It really is a shame because in a more experienced producers hands (aka someone who knew more about finance) this could have been a really solid film about the crisis--similar to Too Big To Fail

Overall I was "entertained", but I wouldn't see it again and I don't think it is worth spending money on (worth seeing for free/sneaking into the theater after you see another film)

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Oct 27, 2011
Gekko21:

This huge flaw in the film was even noticed by non finance people when I heard an old lady walking out of the theater say "I didn't understand why they needed to sell everything in the first place?"

Wasn't the problem that they couldn't risk some other analyst at another bank figuring out and dumping the things? If nobody sells, everything's fine, but in the event that someone does start selling, only the first mover is going to get out alive. Prisoner's dilemma of sorts.

Oct 27, 2011

double post

Oct 27, 2011
houseofcards:
Gekko21:

This huge flaw in the film was even noticed by non finance people when I heard an old lady walking out of the theater say "I didn't understand why they needed to sell everything in the first place?"

Wasn't the problem that they couldn't risk some other analyst at another bank figuring out and dumping the things? If nobody sells, everything's fine, but in the event that someone does start selling, only the first mover is going to get out alive. Prisoner's dilemma of sorts.

Well, there in truth is the problem with using the VAR method. Everyone uses it, it is theoretical. Also--the whole we need to sell everything in a day or else we are dead is bullshit. It takes time for a market to go from "fine" to absolutely no liquidity

In real life a firm would have initiated hedges rather than sell the entire inventory. In mortgages they could have used ABX, CMBX, SN CDS . The firm would have taken out large CDX index positions which has plenty of liquidity.

Oct 25, 2011

@Gekko21 i thought i sneak'd in to watch other movies!

Yea saw the movie, the acting is stellar, j-irons killed it for me but if you are going in expecting a good story you'd be disappointed.

SPOILER: So they unload 93% of their MBS in one day! I thought the risk was more than the companies mrkt capitalization??!! can they trade that much volume in a single day???

Anyways- the plot could have been made much better like Gekko21 mentioned, they should have taken ques from the recent crisis.

Actually thinking back I wouldn't go to the theater to watch it, its available online. Spend your money on DRIVE, Uncle Eddie raved about it a couple of days ago. Yea the pretty boy got some talent.

Oct 25, 2011
go.with.the.flow:

@Gekko21 i thought i sneak'd in to watch other movies!

Yea saw the movie, the acting is stellar, j-irons killed it for me but if you are going in expecting a good story you'd be disappointed.

SPOILER: So they unload 93% of their MBS in one day! I thought the risk was more than the companies mrkt capitalization??!! can they trade that much volume in a single day???

Anyways- the plot could have been made much better like Gekko21 mentioned, they should have taken ques from the recent crisis.
I sneak in to another movie all the time. Are bankers the only losers that go to the movies by themselves?

Actually thinking back I wouldn't go to the theater to watch it, its available online. Spend your money on DRIVE, Uncle Eddie raved about it a couple of days ago. Yea the pretty boy got some talent.

Oct 26, 2011

Besides everything that Gekko 21 said - which by the way makes sense - I thoroughly enjoyed this movie about my favorite subject(s) - the markets, trading, investment banking ala carte - wall street. I just love every aspect of the street. There are a few parts of the film that really got me pumping my fist in the air, pounding the table - which was at 1 o'clock this morning - but i'm gonna have to get back to this post with the exact quotes. For know, the part when Will Emerson and what's his name are driving back from Brooklyn in the Aston Martin and he gives him that speech about the normal guy. That shit just resonates with me all the way for a couple of reasons.
But before I get into all of that, I thought the movie was and is for me the best finance film to come out since the last greats - 1st Wall Street, Boiler Room.
And the cast was well done I think, especially Stanley Tucci, whom I happen to think is one of the most under rated actors out there. Tucci killed that role for real.

"Kept feeding him dollars 'till it all started to make cents."

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Oct 26, 2011

@lucrativ yea that rant was good so was the one at the end by j-irons

Nov 7, 2011
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