“Wall Street” The Sequel: What’s Changed?

Wall Street 2 hits theaters tomorrow.  For one sign of how much time’s passed since the original take a look at Gordon Gekko’s old cell phone in the movie trailer below. But of course far more has changed — from the 401 (k) explosion to high speed trading and the derivative economy. Other than it’s location there’s not much of the old Wall Street left.

Portfolioist asked a panel of experts, a bit tongue-in-cheek, to weigh in on how things have changed in the 23 years since Michael Douglas first uttered a variant of  “Greed is Good”.  And what Wall Street 2 would have been about if they’d been behind the cameras. Below hear from corporate governance and movie expert Nell Minow,  New York Times blogger and financial advisor Carl Richards, and socially-responsible investor Paul Herman on the movie’s impact and lessons.

Please add your thoughts on how things have changed (or not) in the comments.

Portfolioist: Do you remember when you first saw the original “Wall Street” and what you were doing at the time?

Minow:  I had just started working in the world of corporate governance when the first “Wall Street” was released. I had already seen in-person presentations by some of the biggest corporate raiders of the era, and while none of them were quite as electrifying as Gordon Gekko, Michael Douglas seemed to me to capture the essence of their approach in his famous speech at the shareholder meeting. I thought it was fascinating that the costume designer said Oliver Stone complained that no one on Wall Street dressed like Gekko. “It’s a movie, and they’re all going to look like it and we’re elevating the genre. It’s telling the story, Oliver. We’re not doing it to be 100 percent rooted in reality. We’re telling the story in a movie.” And it was so profoundly aspirational that people did start dressing like that on the real Wall Street. And then art imitated life imitating art when the pump-and-dump brokers of “Boiler Room” all sat down together to watch “Wall Street” and recite every single word along with the cast. Just like the people who read Michael Lewis’ “Liar’s Poker” without realizing it was a cautionary tale, the movie and real-life financial types missed the point. Many things have changed since the original movie came out, but that is the most important. “Wall Street” was an arresting drama with a fascinating anti-hero for most audiences, but for a very significant segment it was like an infomercial for short-term returns and making big, big money.

Herman: I was in university and at the Wharton School at the time, and in the old building for Wharton there was the “Wall of Fame” with the founder of CBS Bill Paley, Michael Milken was there, and Donald Trump, who close to that time filed for bankruptcy. There was an internal battle at Penn over that wall. The Wall of Fame became known as the Wall of Shame. In my education, ethics was built right into the classes. You’d hear these stores about Ivan Boesky ordering one of everything on the menu at lunch so he could taste everything. Then in 87/88 the insider trading scandal broke and there was the 87 crash.

Richards: I don’t actually remember seeing it. Maybe I need to go rent it again…no my wife probably hears enough about that crap without having to watch the movie…


Portfolioist: Is greed good?

Minow:  Greed is good like fire is good. As long as it is controlled wisely and used for a worthwhile, meaningful, fair and sustainable purpose, it is a powerful engine to fuel the economy. If not, it can destroy everything.

Richards: No. Never. Sure I guess you could argue that in some sort of Ayn Rand sort of “enlightened self-interest” way greed is good (wasn’t she one of Alan Greenspan’s favorites authors???). But in real life, being nice to my neighbors is good. Greed is bad.

Herman: Greed in its higher form, if it solves a human need first and makes some money at it, becomes a sustaining system. You can say “greed is good, green is better. ” But it’s not just about environmental issues, it’s also about social needs. There are plenty of company examples. Novo Nordisk, makes a treatment for diabetes. It’s a successful Danish company. It’s  successful financially, and they also report on and account for their human, social and environmental impact. It’s doing good and making money at same time. Infosys, an Indian giant, is another example. They put people on the balance sheet as an asset.

Portfolioist: What’s changed since that movie came out in 1987 in the world of finance and investing?

Richards: Things have clearly gotten more unstable. Global connected markets, flash trading, serious leverage, derivatives. It seems like the quaint little idea of the price of a stock having some correlation to the value of the actual business got lost in the insanity that is now called Wall Street.

Herman: Unfortunately the lessons of that movie I don’t think have been learned and integrated.

Portfolioist: If you’d directed the sequel what would it be about?

Minow: If I were directing “Wall Street 2,” I’d make it a documentary. There are some good ones coming out about the financial meltdown, and they will make a compelling and important double feature that no one will see as an infomercial.

Herman: Several years ago I met Jeff Skoll one of the first founders of eBay. I pitched him ‘You need to make Wall Street 2″ and have Charlie Sheen buying carbon credits in Brasil and the fight between the people trying to make money from the forest and those trying to protect it. I got no real pickup on that, but that’s what Wall Street 2 could have been.

*****

Nell Minow is well-suited to this particular exercise. As co-founder of The Corporate Library, which tracks and analyzes corporate governance and executive pay issues, she is intimately familiar with corporate behavior, good and ill.  She’s also an accomplished  movie critic and cultural commentator.

Carl Richards, is founder of Prasada Capital and a weekly contributor to the New York Times’ Bucks blog. His recent interviewed with Portfolioist is here: Carl Richards on Investing, Emotion and Simplicity.

R. Paul Herman is founder of HIP Investor Inc, a money management firm that has created a method to evaluate a company’s  “Human Impact plus Profit”. He is also the author of The HIP Investor: Make Bigger Profits by Building a Better World (John Wiley & Sons). Herman’s “Portfolio Investing 101″ can be found here.


One thought on ““Wall Street” The Sequel: What’s Changed?

  1. V07768198309

    _______________________________

    Tract on Monetary Reform
    _______________________________

    Our economy is slowly dying, your job, lifestyle are dominated by anxiety.

    The economy is kept alive artificially.

    No one is proposing a solution because no one has the slightest idea of why it is happening and many have vested interest in the present system.

    However an objective observation of the phenomenon can help us understand it and provide us with an innovative solution.

    Of course we can’t solve the problem with the tools that brought us there in the first place and we need a new ideology.

    _______________________________

    - Do you feel that your ideology pushed you to make decisions that you wish you had not made?

    - Well, remember that what an ideology is, is a conceptual framework with the way people deal with reality. Everyone has one. You have to — to exist, you need an ideology. The question is whether it is accurate or not. And what I’m saying to you is, yes, I found a flaw. I don’t know how significant or permanent it is, but I’ve been very distressed by that fact.

    - You found a flaw in the reality…(!!!???)

    - Flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.

    - In other words, you found that your view of the world, your ideology, was not right, it was not working?

    - That is — precisely. No, that’s precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.

    _______________________________

    In order to alleviate those economic woes wee need to create, as fast as possible, a new credit free currency that will solve the credit crunch and bring incremental jobs, consumption and investments to the present system.

    An Innovative Credit Free, Free Market, Post Crash Economy
    Tract on Monetary Reform

    It is urgent if we want to limit social, political and military chaos.

    _______________________________

    Is the fulfilment of these ideas a visionary hope? Have they insufficient roots in the motives which govern the evolution of political society? Are the interests which they will thwart stronger and more obvious than those which they will serve?

    I do not attempt an answer in this place. It would need a volume of a different character from this one to indicate even in outline the practical measures in which they might be gradually clothed. But if the ideas are correct — an hypothesis on which the author himself must necessarily base what he writes — it would be a mistake, I predict, to dispute their potency over a period of time. At the present moment people are unusually expectant of a more fundamental diagnosis; more particularly ready to receive it; eager to try it out, if it should be even plausible.

    But apart from this contemporary mood, the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.

    Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.

    Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil.

    _______________________________

    Credit Free Economy
    More Jobs, No Debt, No Fear.
    Prosperous, Fair and Stable.

    _______________________________

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s