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How to Invest Like Gordon Gekko

Gordon Gekko is the infamous antagonist of the amazing Wall Street movies. He mislead Bud Fox and Jake Moore on two investment adventures. He ended up in jail and lost the love of his family due to his massive greed, but there is something that can be learned from the stories.

Greed is Good

I have two finances degrees. I have written about selling your soul for money in the past, but Gordon Gekko is the best example of this I have ever heard seen. Gekko teaches us the possibilities of what you can do if you put your ethics aside.

I recently did this with my purchase of Phillip Morris International (NYSE:PM). I am not a fan of smoking or tobacco companies, but I know that people are going to smoke regardless of how I feel. In fact, they are going to smoke no matter how any of us feel. Someone is going to profit, it might as well be me.

Once Warren Buffet, the greatest investor of our time, spoke about why he likes tobacco investments.

I’ll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It’s addictive. And there’s fantastic brand loyalty.

Some people might not buy in, but I own tobacco and I am not losing any sleep at night.

It Takes Money to Make Money

You don’t need to always invest your own money to get rich, but you need someone’s money. Carl Ichan is a real life example of the power of the corporate raider. If you have enough money to buy out a company and a board, you can make millions more from the target company.

In a corporate raid, such as the Ichan raid on TWA in 1985, investors buyout the controlling stake of a company, often through a hostile buyout. From there, they can value the assets of the company and decide whether it is worth keeping the company alive or stripping it down and selling it off in pieces for a big profit.

Gekko uses a similar technique in Wall Street on the fictional Bluestar airlines. Gekko had no problem using his massive wealth and influence to turn money into more money. He also had no problem putting thousands of jobs on the line in the process.

Learn from Every Experience

In one tough talk conversation, Gekko tells Bud Fox that he still has a lot to learn. Never stop reading. Never stop educating yourself. And learn things that will help you in life. An English degree will not make you rich. Learning the ropes on Wall Street, however, has different implications.

The richest one percent of this country owns half our country’s wealth, five trillion dollars. One third of that comes from hard work, two thirds comes from inheritance, interest on interest accumulating to widows and idiot sons and what I do, stock and real estate speculation. It’s bullshit. You got ninety percent of the ::::American public out there with little or no net worth. I create nothing. I own. We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip. We pick that rabbit out of the hat while everybody sits out there wondering how the hell we did it. Now you’re not naive enough to think we’re living in a democracy, are you buddy? It’s the free market. And you’re a part of it. You’ve got that killer instinct. Stick around pal, I’ve still got a lot to teach you.

What Did You Learn From Wall Street?

If you are as big of a finance nerd as me, you have seen both Wall Street movies at least a few times. What did you learn from Gordon Gekko? Do you feel bad using it to get ahead? Please share in the comments.

8 thoughts on “How to Invest Like Gordon Gekko”

  1. Marina Villatoro

    Interesting fact. Warren Buffet also started without his own money and grew the fund to insane proportions!

    1. I have read about the founding of Berkshire Hathaway and love the story. He did throw some of his own money in the pot, but the bulk of the assets came from OPM – other people’s money.

  2. Jeff @ Sustainable Life Blog

    Great point eric – loved both of those flicks (think I even own one) and great lessons.  Good point about the tobacco – I dont care about the smokers (I’m not telling them to smoke) and if they still smoke after everyone telling them not to, may as well make some money off of them.

    1. I have had great returns on that investment. I don’t smoke myself and find it kind of gross, but if someone is doing it anyway I should make a few bucks.

  3. A couple good movies, though I liked the first one better.  Stone tried too hard to tie in the market crash in the second.  

    Nice work on PM.  The good thing about sin stocks, you can always make a donation if you feel bad about owning them.    

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