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Financial films to boost your commercial awareness

Financial films to boost your commercial awareness

Matthew Dow

21/10/2019

Commercial awareness is an attribute that all aspiring lawyers require. As such, throughout the term, students absorb various newspapers and journals, browse blogs and listen to a wide variety of business podcasts.

However, effectively balancing a new-found interest in shipping law alongside pre-existing study or work commitments can be a real challenge. For many students, the last thing that they want to do after a long day in the library revising is to read the Financial Times.

Before reaching for this evening’s Netflix-shaped distraction though, consider instead options that allow for some productive downtime.

Below is a list of some fun, financial films that can increase your understanding of business and the markets. These films also help to explain certain notorious financial institutions, financial instruments and financial markets, which are well worth remembering ahead of any interview.

Barbarians at the Gate – leveraged buyouts

Based on the book of the same name, Barbarians at the Gate is one of the classic finance films. The story focuses on the leveraged buyout of RJR Nabisco in 1988 – a major tobacco and food-producing conglomerate.

This takeover was one of the largest deals in American history and re-introduced themes such as CEO greed into the public consciousness. The film also provides a respected illustration of the role that private equity firms such as KKR perform in a typical high-value transaction.

Set in the 1980s, the film majorly plays up the Wall Street excesses of the time. Imagine private jets, a Rolex in each party bag and mobile phones that could be used as anchors.

The movie’s protagonist is the charismatic tycoon F Ross Johnson, CEO of Nabisco. Johnson faces off against KKR’s Henry Kravis, a titan of Wall Street during this period. Both characters are fantastically well played. Moreover, throughout the film, both characters address the impact that management, product launches, government regulation and even litigation has on a company’s share price, market value and business strategy.

The film focuses on the nuances of the transaction. For viewers, this detailed perspective provides an opportunity to see the role that debt plays in a leveraged buyout. Of note too, for any interview, is the insight revealed regarding the corporate governance structure of transnational companies. Further, it is worth contemplating the significance of share incentives that encourage decision makers to prefer certain actions.

Margin Call – mortgage-backed securities, quantitative analysts and margin calls

Margin Call is one of the finance films that followed the global financial crisis of 2007/2008. Set in a fictional investment bank at the start of the crisis, it revolves around the fire sale of the bank’s assets.

The film shows the downside of being incredibly leveraged and selling financial instruments that many analysts struggle to understand the negative implications of mishandling.

Margin Call delves into the politics of decision making at the highest level. Redundancies have a personal element to them. Elsewhere, employees of previous recessions are self-described as “survivors”.

The movie also reveals more about the role of employees at a typical financial institution – for example, the emphasis that may be put on financial models developed by highly intelligent quantitative analysts.

In addition, the viewer will gain an insight into the implications of buying assets on margin and how this may lead to business risk and large profits.

The Big Short – credit, bonds, leverage, rating agencies, investment banks, fund managers, mortgage-backed securities, collateralised debt obligations (CDOs) and synthetic CDOs

Perhaps, after The Wolf of Wall Street, The Big Short is the most famous recent financial film. The film stars some of the biggest hitters of Hollywood, including Brad Pitt, Christian Bale, Steve Carrell, Margot Robbie and Ryan Gosling. It also features economist Richard Thaler discussing synthetic CDOs at a blackjack table!

The Big Short centres on the few inspired fund managers who predicted the 2007 recession. It touches on the process of leading investors such as Michael Burry and how they achieved large returns for their clients. The film also raises interesting criticisms regarding the role that consumers, banks and rating agencies played in the development of the crisis.

The movie offers a fascinating insight for students who want to learn more about the economics of the last major recession. Furthermore, the film effectively simplifies and explains the financial instruments and credit concerns that caused such panic in the markets.

Likewise, the concentration on the various personalities highlights the issues that investors consider when looking at long-term returns. Audiences receive an enriching insight into different investors’ appetite for risk and how this affects their decisions. Moreover, the implications of liquidity and investors taking their money out of funds addressed throughout are still relevant and worth understanding.

Rogue Trader – financial crime, derivatives, futures trading, compliance, audit and emerging markets

Rogue Trader, starring Ewan McGregor, is the story of Nick Leeson and the downfall of Barings Bank. Leeson was a derivatives trader who worked at Barings Bank in the 1990s. He was eventually accused of causing Barings to go bust through unauthorised proprietary trading (trading the bank’s own money) from the bank’s Singapore office.

The losses were hidden in an undisclosed account and were said to amount to over £800 million upon his arrest. The film offers an intriguing introduction into prevalent opinions regarding emerging markets towards the end of the last century. Furthermore, there are scenes that offer useful explanations of derivative products, as well as the interaction of these products with clients, trader egos, market size and current events.

The film also addresses key themes such as access to the banking profession, as well as the process for audit and compliance in major financial institutions. With many law firms possessing strong practices in financial crime, this is an infamous case that is well worth pondering.

Trading Places – commodities trading, brokers

Trading Places is an unconventional Christmas film starring Eddie Murphy. Please note, the film is a product of its time for sure in terms of its language. Nonetheless, it offers valuable insight into commodities exchanges.

The film gives an intriguing explanation of the distinctive products that investors guess the future price on. For example, great attention is placed on the estimate of the agricultural output of pork bellies and frozen orange juice. Additionally, the film offers insight into the patterns of buying/selling behaviour of investors, particularly following key market news.

Conclusion

These films will not be as valuable for your commercial awareness as other sources. Nonetheless, they can offer a relaxing break of an evening, while still offering insight and broadening your understanding.