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.
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.