Problems- From a Finance Student
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kcommings — 14 years ago(November 29, 2011 06:36 PM)
Having the guys at the top say things like "just speak plainly" wasn't to show them as incompetent. It was a device to enable the problem to be explained to the movie audience who are not financial people.
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GuyOnTheLeft — 13 years ago(December 06, 2012 06:56 AM)
Right. It's interesting to read the arguments over how much the higher-ups would know, but ultimately this is the real answer in terms of film language. Wikipedia says the screenwriter's father worked for forty years on Wall Street, so I'm sure he knows what he's talking about, but also knows the average filmgoer won't have the same level of technical knowledge.
In many cases I prefer people in movies to talk more realistically rather than mouthing unrealistic dialogue to advance the plot. But this is an exception, because if they scripted all the meetings to be exactly like they would be in real life, the jargon and shorthand would be so thick it would be opaque to 99 percent of the public, including people who are otherwise very intelligent and educated but just not familiar with the industry.
See a list of my favourite films here: http://www.flickchart.com/slackerinc -
ehalotte — 9 years ago(June 14, 2016 05:18 AM)
If you want to know how it still is in the financial industry read the boek of Joris Luyendijk based on his work for the Guardian. It' called in the dutch : het kan niet waar zijn" in english "Swimmming with sharks" It makes you shiver. And this written 7 years after the big financial crises!
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GuyOnTheLeft — 9 years ago(June 14, 2016 07:33 AM)
That's the name of a pretty good Kevin Spacey movie as well.
My top 250:
http://www.flickchart.com/Charts.aspx?user=SlackerInc&perpage=250 -
taka_69 — 14 years ago(December 03, 2011 12:20 AM)
the film is not only seen by finance students. when the writers have a character say "explain it to me like i'm a child" is so that the percentage of non-finance related people in the target audience will understand. it's annoying sometimes, i know.
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joey-tribbiani — 14 years ago(December 10, 2011 07:05 PM)
I think it is fairly obvious that (considering you are finance "students" you won't know this) that not everybody in an investment or finance firm knows what everybody else is doing i.e. you can't just assume that one man knows what is going on.
The head of the firm is usually a strategist.
The head of a department is usually an operations manager
So forth.
What you saw was not inadequacy but simply people saying tell me quickly because we don't have time for you to explain what you have been working on for hours, days or weeks.
That's it. -
reginald_dorsey — 14 years ago(December 12, 2011 09:03 AM)
That was for the benefit of the audience. Most of the people watching the movie, even many smart people, wouldn't exactly understand what was being discussed. Movies often figure out ways to explain esoteric info they think the viewer may not understand right away, especially in a 2-hour span of time.
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jim008 — 14 years ago(December 16, 2011 06:03 PM)
I don't know why CFA is even mentioned because very few bankers have it or even care about it. The only exception is if you work asset management or research. Most of the top banks hire right out of Ivy Leagues and the CFA is normally just eye candy unless the person interviewing you just happens to have one.
There are too many people claiming to know more than they really do. A student without work experience is about the same as anybody else who watched this movie except the terms are more familiar. Top banks dont really care what your degree is; there are investment bankers with art history degrees. There is nothing worse than training an undergrad or MBA coming in thinking they already know everything. At least a history major wouldnt have to be told that what they learned is useless here. Majority of the bankers may still have financial degrees but thats more due to the fact that not too many art majors would apply to banks.
Even people with work experience shouldnt claim to know anything just because they worked insurance. Theres no correlation between the two different businesses. Citing a few scams thats was prevalent after the housing bust isnt really related to banking. The news covered those scams for months and all different kinds of companies were doing it so why single out just banks? Also, nobody ever describes Harvard or Wharton as rated number 1 by WSJ. It could be rated number 1 for getting a job as a bus driver as far as I can tell. If youre going to claim that your school is the best than dont be afraid to say the name of it.
A lot of MDs at the banks are more like glorified car salesmen. They are not as knowledgeable as a car engineer or how the new hybrids work but know enough to push for a sale. Before the crisis, people were in love with the new mortgage derivatives because finally they found a way to trade it but not many people who purchased it really understood much of it. They were simply sold on the dumb down premise that people would do anything to keep a roof over their heads. Of course it also helped that real estate value hasnt gone down for like 100 years.
My point is to just enjoy the movie. Stop going around saying well I studied this field or worked at some totally unrelated field and this is or isnt how the banking industry works. The good managers often are the ones who would be willing to ask questions regardless if its answered by an analyst. The know-it-all managers are normally the ones that end up taking down their own firm. -
thethingy23 — 14 years ago(December 22, 2011 05:03 PM)
Well, it's a movie, and the audience might not understand what's going on without some exposition. It would look kinda stupid if the top people parroted it back to their underlings who just demonstrated they understood what was going on. It's not like this is the first movie where the technique involving the "speak to me in plain english" line has been used.
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MovieGuy1998 — 14 years ago(December 22, 2011 09:16 PM)
Your statements are not entirely accurate. The movie was based on complicated Math Equations. Traders would not and do not know those equations. They trade in milliseconds and rely on FRACTIONS of a penny to make money. The people who make these equations are called "Quants". I've seen their resumes. I saw a guy with an M.I.T. PhD, who had worked with Nuclear Reactors and had all kinds of statistical requirements a "Quant" could meet and the firm STILL said he was not good enough. These guys come from a different planet, the code monkeys and I guarantee you the Paulson's, et.al of the world do not have a clue what a Quant equation looks like, much less that a "day in the life" of a Quant is.
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drexeltoker — 14 years ago(January 28, 2012 07:41 AM)
I really wonder if it is an utter waste of time to continue to partake in this message board 'discussion' about 'high finance' in Margin Call
Alas, MovieGuy1998- The movie was not based on complicated math equations. The 'risk management engine/system' is based on complicated math equations. I am pretty sure the point of the movie was to describe a day in a (semi-mock/semi-real) financial firm that came to the brink prior to the full-fledged '08 crisis and how individuals at that firm in various levels dealt with it
- Traders DO NOT typically trade in milliseconds and rely on fractions of a penny certainly not at banks, although bid-ask has shrunk (especially for cash equity business). Yes, what you describe as high-frequency trading (which I personally loathe) does do that and trade on micro seconds and fractions of pennies per share, to the point that they try to be physically 'closer' to certain exchanges so they save 'time' on electronic transmission, etc.
The Asset Backed Security (ABS), Mortgage Backed Security (MBS), CDO/CLO, etc (collectively lets just call it the structured credit market)it DOES not trade that way. Cash or synthetic. For starters even in 2007 it was not 'extremely liquid' (say like selling 100 shares of IBM or buying 100 futures lots of NYMEX WTI) so the 'dealer community' (Citi, Goldman, Deutsche, MS, etc) making markets requires a much larger premium, things trade over the counter (OTC) and usually on a bespoke basis, with a lot more credit analysis because there are so many unique issues on vintages, credit triggers, collateralization, etc.in short, it is in no way like you describe. - Yes a good trader will understand the main equations and drivers of profit and loss (pnl)DV01, correlation and gamma, recovery ratios, etc. for his products. Structured credit traders are usually more 'math-y' and can have PhD or Masters Financial Engineering etc (though not required all the time) and most of the big shops in US the desks are actually full of Indians, Jews and Asians (or foreigners in general if you will).
Also, quants and structurers will sit right on or near the traders on the desk at most shops. - The fact that you refer to it as a 'Quant equation' or 'day in the life' of the Quant was kind of funny, too. The 'day' is rather boring staring at Excel, MatLab, SQL, etc. al day and testing models, fine-tuning the risk engine, PnL, etc.
John Paulson is a dick but a brand now. He is their to manage his fund and think big strategically and to raise funds or maintain (after his disastrous 2011) his client relations. He doesn't need to understand every detail of how to write or program his models or do valuations/stress test every security. He (should) understand the results of stress tests, inputs and sensitivities and the general risks
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mightythor47 — 14 years ago(December 27, 2011 02:52 AM)
A LOT of people in many fields with idiots for bosses are laughing at your comment. The assumption of competence is one of the biggest flaws in management theory, from the boardroom on down.
I'm not too familiar with finance but I have spent 40 years in engineering and R&D. In my experience there are three nearly universal reasons why management is technically out of the loop, 1, managers are selected for ability to focus on goals rather than means and to motivate rather than analyze, and its a rare person who excels at both, 2, management loses contact with the technical aspect of things simply by being out of practice (in my first job as a 22-year old chemist in a chemical plant, the senior management were chemical engineers who brought all their chemical engineering problems to me because they simply didn;t remember how to do calculus and of course now I'm in the same boat) and 3, as others have mentioned in this string, technical innovation in rapidly moving fields leaves most people stranded high on the beach after only a few years.
Try this experiment. Go into your bank and ask them how they calculate the payments on instalment loans. May I predict the outcome? They will tell you they just get it from a table. I would be surprised if anyone in your entire bank corporation knows how to do the calculation from scratch. It's all prepackaged software that they buy off the shelf. If I'm a math wonk and I find a flaw in the software, it's going to take me a half a day to bring my boss up to speed if I'm lucky. -
KainHighwind1221 — 14 years ago(December 27, 2011 12:43 PM)
To the OP (I didn't read all subesequent posts, so don't crucify me if this has been covered):
I come from a screenwriting background, and, while I agree with you that Spacey and Bettany's characters DEFINITELY would have understood the numbers, etc. I look at it this way: sure, they probably understood, but without Quinto's character repeatedly explaining the problem "to a child or a golden retriever," the audience would probably have no idea what the blazes was going on. This is kind of a throw-away writing trick. For instance, in the Princess Bride, a great line from Fezzik the Giant sounds, "Who's Guilder?" to which Vizzini responds, "It's the country across the sea! The sworn enemy of Florin!" The whole point of those interchanges is to educate the audience, rather than the characters. It's kind of obvious in my opinion, but I was happy that the screenwriter put in those "golden retriever" lines so that a shmo like me with no financial background (my wife balances the checkbook for heavens' sake) could get an idea of what was going on. -
WhenGreyjoysCry — 14 years ago(January 01, 2012 07:47 PM)
It is like that in most professions. Managing/leading requires an entirely different skill set than analysis/modeling. Cptn Kirk was probably the stupidest one on the bridge, but he was still the captain.
Oh, and if you really want to be a trader for one of those bigs, you shouldn't major in finance. You should earn a Ph.D. in theoretical mathematics from a fairly prestigious university.
If you don't get everything you want, think of the things you don't get that you don't want. -
OimachiOmori — 14 years ago(January 03, 2012 02:38 AM)
Nonsense, when John Paulson asked Jamie Dimon about CDO's at JP Morgan, the guy had no idea what he's talking about. A lot of heads at finance corporations are trained lawyers not CFA's, so they have no idea what these guys at risk management trained as physicians and mathematicians are doing day to day. They might know the definition of CDO, but not the mechanics of how they work and the extent of damage they might cause.
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UbiQuItiOus_CrItiQue — 14 years ago(January 12, 2012 10:55 AM)
i think its more from a narrative point of view for the screenplay to pan out to the "non finance " guys.. For the finance guys there was always quinto's character fleshing out the details ! In fact Paul Bettany's character just took a glance at the figures for like 5 seconds and knew it was all beep up".. that just proves my point.. Plus I think the senior guys, they like to keep it simple as being in this trade for this long they are good at fleshing out the bones ! hope that answers your query to a certain extent !
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lostn — 14 years ago(January 14, 2012 10:11 AM)
The writers would have been well aware of this. The reason the heads are "dumb" and ask for things to be explained in English, is a plot device used to give an excuse to the "experts" to explain in plain english to the
audience
, who will NOT understand the charts and stuff.
That's why they never show any numbers of charts when characters are reading them from the screen. The audience wouldn't understand and they didn't want to take focus away from the point at hand or confuse the audience. -
holyspicoli — 13 years ago(November 18, 2012 03:45 PM)
This is not just a simple "screenwriting trick" to explain everything to the audience. Although the writer achieves that effect by having things explained relatively simply, it also gives valuable insight into the characters, particularly Jeremy Irons' CEO. He clearly already has a basic understanding going into that meeting that the major flaw and undoing of their business is at the company's doorstep; that "the music is stopping", the party is over, and the crash is coming. He knew it would happen eventually and as he states the market undergoes bubbles and busts throughout history. Notice he never looks at the plan, and is on top of every response from each team member and directs the conversation from the beginning. He knows the basic game already and wants a succint and simple explanation to get everyone in the room on the page now and to get this thing moving and take action - he's a results oriented, pragmatic CEO. He's also flexing his social CEO skills to get a feel for how his team is going to react to this and look for any moral objectors to what he knows he must do (sell everything) and who might be a problem (Sam). I think he's also sizing up Zachary Quinto's character to see how this kid handles himself in a pressure situtaion and how he organizes his thoughts and to determine if he'll attempt to keep him on in the company. That's why to me this film is great - yes it manages to "keep things simple" enough for a mass audience to understand, but it does this through character insight and not in a purely expository manner.