High stakes poker. International terrorism. And creepy guys who bleed tears. LE CHIFFRE Nothing sinister. I'm Peter Bielagus and this, is money in the movies. Hello and welcome to money in the movies, where we review films based on their financial accuracy.
This week's film is Casino Royale, directed by Martin Campbell, and starring Daniel Craig as the legendary James Bond. The film's antagonist, Le Chiffre, is a banker to the world's terrorists. Just like you and I don't want to put our money under our mattress, neither do those of the criminal persuasion. Just like terrorists, when we do put our money in a bank we want to be sure it is super safe. I want no risk in the portfolio. Exactly. No risk in the portfolio means, no risk in the portfolio https://www.casinoslots.co.nz/welcome.
Unfortunately Le Chiffre doesn't heed the instructions of his customers. In fact he goes completely in the opposite direction by using his client’s money in a very risky investment strategy known as short selling. Most investment strategies involve buying an investment at a low price. And then selling it at a higher price.
Short selling or shorting works in reverse. You sell high, and then buy low. The way this works is you borrow stock from another investor. You sell THEIR stock at a high price, and wait for the stock to go down.
If and when it does, you buy that stock back at the lower price and then return the stock to the person you borrowed it from. So people who short a stock are hoping it will go down. In the film, Le Chiffre gives the stock market a little help. Once he has the terrorist’s cash, he calls his stockbroker and says:
LE CHIFFRE Short another million shares.
BROKER Everyone expects this stock to go nowhere but up. Remember, once our tears of blood crying friend-
LE CHIFFRE Nothing sinister. Yeah tell that to your prom date's father.
Anyway. Once he shorts that stock, he has borrowed the shares from someone else, and he must return those shares even if their price goes up. In the movie, Le Chiffre shorts an airline stock and his plan is to blow up the new airplane they are introducing, using this guy- A key chain. And a fuel truck keeps leaking gas. And keeps leaking gas.
Thankfully James Bond stops the terrorist, the stock does go up and because of his risky investment move, Le Chief loses-
LE CHIFFRE $1,457,980. The film does hit a nerve because a similar tactic appears to have been used to profit from the Terrorist attacks of 9/11. On screen we see a newspaper heading "Profiting from Disaster" Using a strategy similar to short selling, a large number of put options, were purchased on American Airlines Stocks. Put options are another investment that you purchase with the hopes that the stock price goes down. After the attacks, American Airlines stock did go down, making the investors of those put options a lot of money, very quickly.
Investors short the market when they believe bad news is on the way. The only trouble is that if they're wrong, or if James Bond happens to be around, short selling is one of the few investment strategies that carries unlimited risk. For most of us, you, me, and Mr. I cry tears of Blood. Do you REALLY believe that?
Your tears are BLOOD do you honestly believe that doesn’t freak people out? Anyway for most of us, we should pass on short selling. That being said, the film is accurate in its portrayal of how short selling works, so I give it Three dollar signs. I’m Peter Bielagus and this is money in the movies.
BREAK Hey everyone, Peter Bielagus here, thanks for watching money in the movies. I hope you enjoyed that episode of Casino Royale.
Remember even though this week is Bond week, last week was Batman week. If you click HERE you can check out my review of the Dark Knight Rises, because there is a similarity in between that film and Casino Royale. Remember in Casino Royale, Le Chiffre wanted the stock market to go down to make money off his short sale. In The Dark Knight rises, Bane uses Bruce Wayne’s fingerprints to purchase put options which are another investment you can buy to make money when a stock goes down.