Investing in Movies vs. the Stock Market

Stock Market performance chart last 8 years

The second major point in an investors disclaimer notice is to recommend that the investor reading your prospectus should check with their tax accountant or attorney before investing in your movie, the first one being that the investor should realize that he or she could lose their entire investment. Have you ever known a tax accountant, attorney or financial advisor who recommends investing in movies? I sure haven't.

The first time I tried raising money, I asked a millionaire acquaintance of mine if he'd invest in my movie. He said, "Film is a crapshoot." I'd never played craps, but I didn't have enough experience to answer him. I thought what does filmmaking have to do with craps?

Take a look at the chart above. If you'd invested in the Stock Market in 1997, and didn't sell your stocks, at the end of 2002 you'd be exactly where you were five years before. If you bought your stocks on margin, you wouldn't even have received any dividends. Your money would be tied up for seven years, and not only that, but you'd be worried sick about your investments everyday, by the looks of that chart; it's enough to give a man a heart attack. You may have sold your stocks and blown the money a long time ago also.

You would've invested your money in companies where nobody cared who you were and what you thought. Now, why would you invest your money in other companies if you have your own dreams, desires and plans? You should've considered investing in your own business, your own health and well-being. Sure, the stock market provides you with an opportunity to prosper off of other people's enterprise, but these companies don't really represent who you are. They're often run and owned by people for whom making a buck is all that counts. And the SEC and the US Congress, all they care about is that these companies play by the rules, but they don't guarantee that they do anything for you personally. So, if you're a filmmaker, why would you want to invest your money in giant companies that are owned by people from all over the world, people that don't even share your values, certainly not your artistic concerns.

If you're a filmmaker, invest in your own dreams. If you want to gamble, there's Las Vegas. But why would you want to gamble. Filmmaking is not a gamble. It's a risk you take, sure, but at least you're taking a risk with your own talents. You've always loved movies, (otherwise why are you a filmmaker?) and you should believe in the films that you make.

Take another look at the chart above. Stock brokers make a commission whether the market goes up or down. So it doesn't matter whether you buy or sell, they make money. In fact, they don't make any money if the market moves sideways, because then nobody buys or sells. If you buy shares in a company that's worth ten dollars a share today and stays that way for another five years, what have you gained? Especially if the company doesn't pay dividends, and most companies don't these days, such as the technology sector -- why would you buy stocks in the first place?

Another thing to keep in mind is the rise in the stock market in the last few years is due to new companies going public. Maybe it's a cause to celebrate that the stock market keeps going up and up. Disasters come and go, but we seem to recover and move even higher. The stock market has now moved up over the 11,000 point mark. Hurray! What does it mean to the investor? It's an illusion that the stock market keeps going up. The truth of the matter is that stock brokers keep pumping in more companies into the stock market, and other companies go bankrupt and disappear from the Dow, so more companies are formed, more IPOs are floated on the stock market -- that's what it is. That's why the stock market keeps going up and up, because the brokers pump more companies and shares into the stock market, and they do it faster than the companies whose stocks become worthless. Millions of dollars disappear from the market every year, to be replaced by new money from new investors. You might think I'm exaggerating, but I've seen companies go under, haven't you? What happened to their shareholders money? Of course, there are people who know how to make money in the stock market. They know which company shares to buy and which company to ignore. The brokers themselves are playing the market; they buy and sell shares themselves, and since they make commissions as well, most of them make a hefty living. If you're not a broker or haven't studied the market as a professional, then chances are that you'll lose money. That's my opinion.

I'm not encouraging you to invest in my film productions, but what's so special about other industries? Movies are the number one export of the United States. Some of the riches people in the world own movie companies or TV networks. So many people invest in real estate, that it's not all that easy to make money in it. It takes a long time to realize a profit. Meanwhile your money just sits there. You can borrow on it, take out one mortgage after another, and you'll qualify for a lot of credit cards, but then there comes a day when you're forced to sell, or even worse, when you can't maintain the payments and the lenders foreclose on you.

Please, do ask your tax accountant and your attorney. Ask them if it's okay for you to invest in my movies. Check out my track record. Ask them what is the best investment for improving your life style. Let me know what they say.

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