Your Questions About Hedge Funds That Invest In Movies

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Thomas asks…

How should the imperialist powers react to the consequences of historical movements of globalization?

Was just looking for an opinion as to how you think people should react to those countries that were colonized and victims of imperialism

Justin answers:

I think the imperialist powers react to the consequences of historical movements of globalization is summarized in the followings.
1) Imperialism has created the uneven social classes of people. This can be quoted from the movie or the book of “A passage to India”. Alec Guiness, who portrayed as the Education Minister, rode his bicycle around villages in India, reflecting the sharp contrast between the British coffee growers domained the colonized India, and a local lawyer lived in a small size home. The British controlled the economy and the law abidding matter. Nowadays, the BNP (British National Party) has sucked for demonstrated the principles of nationalism of advantages are for mainly the white British only. The imperialists are mostly to maintain the status quo of rich should getting richer, and tried the eliminate the middle classes. This is described as Hong Kong, from colony to the even worsen fascist city by Donald Tsang Yum-keun, a British pet during the colonization. There’s no life for the aged (no pension fund for senior citizens), poor and the sick. Hong Kong is currently described as” A duck pool is boiling the fishes (Hong Kong majority poor)”and kill them gradually one by one.
2) The colonization inherited to some African countries become the more evil process of genocide.
3) The British had deliberately sabataged the telecommunication systems in India before they let India independent. The more damaging scheme to Hong Kong is by raising the civil servants’s salaries by the last governor, Chris Patten, to the highest in this world. The public sectors have sucked more than 70% of total Hong kong GDP. Wanna a bloody truth? The 80% of the health budget are spent to pay the doctors and nurses and hospital personnel, and only 20% are spent on the patients. The prescribed drugs to the publics are not brand names and without well-packaged looks.
4) Imperialism is the root of evil for introducing so many investment tactics in property and stock markets. Why not? It’s the way to maintain the status quo of riches should continue to be rich and even more rich. These imperialistic approaches are making more peoples in this world become homeless and starve to dead.
5) The moral citizens should stop to invest in stock markets, particularly in food commodities funds and mutual funds and hedge funds. A good citizen should think about to eliminate the evil human nature of greed, selfish and fear. Just get and own what you need is sufficient.
5) Many decent but not rich peoples in this world are laughing at the British, for the Brits have the one and only Cayman Island.

James asks…

Is it possible to “figure out” the stock market like geniuses in movies?

The movie “Vitus” features a child-genius that simply understands the stock market and invests about 350,000 dollars of his Grandpa’s money (with his permission) and turns it into over 5 million in a couple days. Is it possible to have this level of understanding of the stock market?

Justin answers:

Unless you are pump & dumping then its not possible to turn 350k into 5 million in a few days unless you are manipulating the market (which is illegal)

If you wanted to turn 350k into 5 million in a few days, what i would recommend is buying a very thinly traded stock (like 25k shares per day) with a low price that has options to trade. Say the stock costs 5$ per share. Then you would buy maybe 3500 7.50 call options of the same month and that would cost about 122k if your average price was 35 cents. Then once you have the options the price of the stock will rise because people will notice the buying. Then you use the other 225K you have in your account to start buying the stock. You will be able to buy about 45k shares. Now the only problem is you have to hope some computer monitored software program in some hedgefund isnt scanning stocks looking for a pattern like this cause they will know what you are doing and sell into you and sell into you hard. They will put up a short sale wall at 5.50 or 6 dollars and keep dropping the price 10 cents every few minutes, never letting the stock get up to 7.50 and before you know it, this hedge fund has pushed the stock down to 3 bucks per share and you got a margin call.

So is it possible? Yes. Is it possible that 1 person can see what you are doing and block you from doing it. YES. The guys with the billion dollar funds are the ones that control the markets which is why you can be the smartest guy in the world and if you are underfunded you cant beat the market with strategys, only with luck.

You really need to have at least a few million to start if you want to pull some kind of strategy like that off.

Mark asks…

Can someone explain “hedge funds” (for Dummies) please.?

My learning style is visual (artist) or if you could use metaphors it might make sense to me. Also, is this an effective way to invest these days? Thanks for making the effort.

Justin answers:

Think about an art gallery that takes $25,000 to open. You could get a loan – or you could ask 24 of your friends and acquaintances to put in $1,000 each (you’re the 25th person) and everyone gets 4% (1/25) of the profits. If the business sinks, we’re each out $1,000 – whereas if you alone put up the $25,000 you’d be out the entire amount.

Similarly, a financial fund (hedge, mutual, or pension) is where the 25 of you put in money and, instead of opening an art gallery, you invest and split the returns. Same idea – you share the risk, share the profits. You also get to take advantage of scale buying. It is cheaper on a per-share basis to buy 10,000 shares than 100 shares. There are also investments (such as corporate bonds) that you often need a minimum of $10,000 to purchase. That’s 10 grand sunk into one asset if you do it alone – but if 10 of us do it, it’s $1,000 each. This means we get to invest in more places.

The difference between a hedge fund, mutual fund, and pension fund is basically who can invest in it, and what the fund can invest its investors’ money in.

Pension funds are the most conservative – only high quality investments, usually strictly defined as being of a certain bond rating or above. This makes sense – pension returns are what are used to pay for retirees, so the money has got to be there.

Mutual funds have more leeway. Investors are expected to know what they’re getting into, so there’s more risk here. Through a mutual fund you can invest entirely in funeral home stocks, bonds for rural development in South America, or Russian export companies. You can also diversify – meaning you can invest in a lot of different companies in a lot of different industries. If you wanted to buy stock in 10 different companies on your own, that’s 10 different transactions (and quite a bit of money, since you would probably buy a block of 100 shares each). Or you could put money into a mutual fund (usually $2,000 minimum) and you reap the benefits of all 10 companies’ shares.

Now for the meat: hedge funds. Think of them as high-risk mutual funds for only wealthy people. Usually you need a net worth of $1 million and a net income of $250K annually in order to invest – and you may need to put in $100K up front.
The original meaning of hedge funds was from something called “hedging” which is a technical way to offset risk by taking advantage of derivatives in the markets. A derivative is basically an agreement between two investors to pay money to one or the other depending upon how an underlying asset (stock, commodity) performs. Using complex mathematical equations (financial engineering), a virtually assured rate of return can be found…. But it takes a ton of money to get it to be worth it. And if any of the assumptions of the models are wrong, the fund loses money big time.

Nowadays, hedge funds are allowed to invest in whatever their charters say they can, not just stocks and bonds (which mutual funds are limited to). Hedge funds often put money into buying up companies directly (or through venture capital firms), thus skipping the middle man of the financial markets and taking direct ownership of the profits. Hedge funds also have been known to invest in movies – extremely high risk – as well as other businesses.

You probably can’t invest in a hedge fund at this point in time – if you can, the fees will be incredibly high. Every fund has a manager who is paid through the fund’s income or returns (or both). Pension fund managers are often corporate employees with a fixed salary. Mutual fund managers are often employees of the fund provider, and their earnings are based on how much money the fund makes. Hedge fund managers get paid based on what they want to be paid – very lucrative work, very high fees.

If I were you, I’d consider mutual funds – especially the index funds, which track the markets and tend to be very low in terms of fees. You may also wish to purchase blocks of dividend-yielding stock (since dividends are taxed preferentially to interest income) since the market is low right now. But hedge funds aren’t for the faint of heart – or even the middle-upper class.

Donald asks…

What stocks do celebs invest in?

Seems many celebs do a good job holding onto there funds – I’m sure some dont as well but for the most part do. What are the biggest investments in the Hollywood world?

Justin answers:

Many have money managers. Then too, there are many special situations that don’t get widely published. Some invest in things from movies to parts of a farm crop. There are tropical tree farms that have the names of various celebs where they bought a bunch of teak trees, for instance. I know a corporate farm in Arizona where raisins are produced (grapes dried on the vine) and a variety of doctors, lawyers, and actors have shares in the fields. Of course, wine and vineyards are close to the hearts of several, as are restaurants. I remember watching Johnny Carson one night and Peter Lawford was talking about his various restaurants that he invested in. It wasn’t a chain, just different restaurants and he solicited partners from others in the film industry. And, of course, lots and lots of hedge fund money comes from Hollywood. Listen carefully when one fails and you will almost invariably hear about this actor or that losing money in it. Finally, California real estate. Some of the actors slowly flip houses, trade out of a mansion in order to get some cash to put down on the next bigger mansion. Everyone from Roy Rogers to George Lucas buys a ‘spread’ somewhere. Julia Roberts bought one and when she started appreciating the results of maternity and the comparative normalcy it brought her, she started spending more time there–it became home instead of just an investment. Roy Rogers reminds me that he followed another ‘singing cowboy’–Gene Autrey. When he died, Autrey was one wealthy, wealthy man. I saw him once, his wife almost ran me over in that big Mercedes as she drove him away from the stadium after an Angels game (he owned the team). Gene sat in the back, apparently doing a little backseat driving himself as she made her way through the crowd.

Not all of their money is in the stock market. A good chunk is out doing stuff that interests them. Jay Leno and his cars for still another example. He puts a bunch of bucks into them. And when they sell, they don’t go for cheap. Red Skelton had a nice house and didn’t much care what his money managers did, as long as he had money for his paintings and music. While he was a so-so composer of marches, his paintings of clowns were worth more than all the rest of his estate when he died. It was something he put his heart into that brought the most value–but then that was why he was respected as more than just a teller of jokes.

William asks…

How does one invest in motion pictures & television? Not in a studio but invest directly intoa particular film

Id like to put money into big budget films if possible and get good returns……….. How do i do it? who do i talk to? many thanks!

Justin answers:

I’m a producer who’s currently working for a 38 year veteran in the television and film industries. His restless creative spirit eventually drove him away from lucrative directing jobs for the major studios (he pioneered the “making of” film genre.) He started his own production company twenty years ago, spurred on by a group of investors egar to have him produce and direct a hit film. He made the film and- you guessed it- it was a great financial success, both for him and for his group of investors. He set up the opportunity correctly the first time out, and continues to do it the same way to this day. Here’s the secret for all movie investors- direct copyright ownership. In today’s digital world, he who retains copyright wins the via the “long tail” revenue stream. Avoid, at nearly all costs, “net profit participation.” What that translates into: after we (say the major studio execs, the ones who basically invented this form of creative accounting) recoup all expenses related to the production (ie., first class plane tickets, party expenses, an actors pet tiger boarding, etc.) you the investor will get paid- LAST. Never mind that the film cost 20 million to make and it went on to gross 200 million, I’m sorry but really after all is figured in we can only pay you back on your initial $100,000 investment but hey wasn’t the premire and afterparty fun??
Those kinds of shananagins are what have kept many potential investors away from this truly great business. And all the better this business is now at the dawn of the digital age. Films are cheaper to make and easier to distribute, there are more ancillary revenue sources than ever before and growing rapidly (think how many dvd players will be sold this year alone, and think of those emerging countries like India and China) and remember- the movie business is one of Americas last great export businesses where “made in the USA” has a worldwide positive impact. FIlms can now gross over 1 billion dollars. Returns have been as good as 60 to 1. Imagine if you had even $50,000 in “Passion of the Christ.”
So again, no net profit participation. Same goes for stock ownership in the studios. ONLY invest if you get direct copyright ownership in the actual film. Another perk of copyright- you are intitled by international law to full disclosure accounting in over 180? Countries now. You will not be ripped off this way. AND make sure the production has all insurances built in- completion bond, key-man policies, etc.
I hope that these pointers help, and please e-mail me for further explanation. I will NOT steer anyone wrong. I have seen investors make real $ in this business. You will get rich if you get with the right people. Remember that many of the smartest investors in the world (Ebays Jeffrey Skoll, Philip Anschutz, etc.) love this business, along with some of New Yorks biggest hedge funds. What is it that they know about this business that most dont? I am willing to show you.

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