Sell me this pen---《The Wolf of Wall Street》(Blog 5) 24.11.2019

Sell me this pen---《The Wolf of Wall Street》(Blog 5)

For this week's multimedia Blog, I chose the Wolf of Wall Street, a famous film about Jordan belfort, a Wall Street stockbroker active in the 1990s who was released after serving time in prison for financial fraud and stock price manipulation. I was very impressed by a scene in the film where the protagonist asked someone to sell him a pen. His drug dealer friend said he asked the protagonist to write his name on a piece of paper, but he didn't have a pen, so the pen could be sold. This happens to be the secret of belfort's success, his capture of the needs of his time.

The historical background of the film

Belfort was able to change from an unknown telemarketer to a boss of a large company because he grasped the needs of people in that era. In the United States from last 80s to 90s of the last century, materialism was rampant and at the stage of the NASDAQ bubble economy. NASDAQ is the first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies (Nasdaq, 2019). From 1971, stark became the cradle of many great enterprises and bred super bull stocks like Microsoft, apple, Google and Amazon. In the 1990s, the U.S. economy entered a golden decade of "low inflation, high growth and high employment". At the same time, the revolutionary popularity of personal computers drove the NASDAQ index to rise dramatically.

In this context, people are speculating in the stock market. In addition to the bankers on Wall Street, ordinary people including drivers, plumbers and postmen have also bought shares, but they are buying a kind of stock called penny stocks. Penny stocks means a small company's stock that typically trades for less than $5 per share. Although some penny stocks trade on large exchanges such as the New York Stock Exchange (NYSE), most penny stocks trade via over the counter (OTC) transactions. In this movie, penny stocks were considered any stocks that traded for less than one dollar per share (Diana, 20003).

Penny stocks are usually associated with small companies and rarely traded, which means they lack liquidity or have ready-made buyers in the market. As a result, investors may find it difficult to sell shares because there may not be a buyer at the time. Due to low liquidity, it may be difficult for investors to find a price that accurately reflects the market. Because of the lack of liquidity, large bid ask spreads or quotations, small companies, low price stocks are generally considered highly speculative. In other words, investors may lose a considerable amount or all of their investment.

But Belfort caught the poor people's speculative psychology, and through his work in a large company, he fooled a group of civilians who didn't understand finance but wanted to make a lot of money. In the movie, those investors also said on the phone that "although my wife may divorce me, I would like to buy 10000 shares."

Inescapable sanctions

Belfort made a lot of money by selling penny stocks and taking a 50% commission. The company is getting bigger and bigger. But he also did a lot of bad things in the gray area of the law, which led to his final imprisonment. First of all, it's Steve Madden's initial public offerings, short for initial public offerings. This is when a company first issued shares to the public. It is also known as "going public.". An initial public offering is the first time that a company's owners give part of their ownership to shareholders. Before that, the company was private (Amadeo, 2019). According to the sac, a commission company cannot have an interest relationship with a listed company. But Belford's company owns 85% of the company. In order to pass the sac audit, Belfort's method is that the 85% shares are held by Steve Madden himself, but he signs a drawer agreement privately, which means that this person is only holding for the protagonist, and can't buy or sell without permission. This agreement violates the relevant laws and regulations. Then he also went to the Swiss bank to launder money through relatives and friends and opened an account in their name to save the money.

These crimes eventually led to Belfort's imprisonment for financial fraud and money laundering, but at the same time, he also sold his partners in cooperation with the FBI investigation in exchange for a commutation opportunity, and finally came out as a speaker and author.

Critical thinking and personal opinion

After watching this film, the author feels a lot. I have to say that Belfort is a genius who can seize the opportunity and leap forward in the background of the times. He can seize the needs of customers and create demands for them through eloquence when they have no needs. Including his ability to continue to make money through speeches after he was released from prison, which shows his talent. At the same time, the corporate culture expressed in the film is also a place worthy of consideration. This company makes me feel crazy. Abuse of sex, drug use, fanatical attitude towards sales, and worship of Jordan Belfort himself are all vividly shown in the film, which also shows that at that time, people's basic values were money first and materialism, so under such a background, Belfort can stand out is not a strange thing.

However, the film also gives the author a lot of inspiration. In addition to the factors of the background of the times, Belfort was able to succeed because of his personal fighting spirit, clear life plan and enough courage. These are still worthy of our students to learn.

References

Amadeo, K. (2019). Four Ways an IPO Can Hurt or Help Your Business. Retrieved 24 November 2019, from https://www.thebalance.com/what-is-an-ipo-process-pros-and-cons-3305857

Diana, B. (2003). Penny-Stock Fraud, Form Both Sides Now. New York: New York Times.

Nasdaq. (2019). Nasdaq stock market Definition. Retrieved 24 November 2019, from https://www.nasdaq.com/glossary/n/nasdaq-stock-market