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The Wolf of Wall Street: Money lessons & financial scams to avoid

Kate Campbell and investment scam expert Wadzi Nenzou take a look at the infamous movie, The Wolf of Wall Street, and discuss what we can learn from it.

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Did you know that The Wolf of Wall Street movie is based on a true story?

Today, Kate Campbell and investment scam expert Wadzi Nenzou take a look at the infamous movie The Wolf of Wall Street. The duo discuss the perils of wanting to get rich quickly as an investor, letting someone’s confidence sway you, and how money lets you (appear to) be a better person.

IMBD: Based on the true story of Jordan Belfort, from his rise to a wealthy stockbroker living the high life to his fall involving crime, corruption and the federal government.

Was it real? What happened to Jordan Belfort?

  • Very true story, dramatised, of course
  • The movie “The Wolf of Wall Street” is based on the memoir of the same name by Jordan Belfort.
  • Belfort was convicted of fraud and sentenced to four years in prison.
  • Belfort served 22 months of the sentence at the Taft Correctional Institution in Taft, California, in exchange for a plea deal with the FBI for running pump-and-dump scams that led to investor losses of approximately $200 million.

What is Jordan Belfort doing now?

  • Life worked out alright, only served 22 months in prison, negotiated his financial settlement down to $10,000 per month and making plenty of money from books, royalties and the speaking circuit, inspiring 2 million people on Instagram, oh and he just published a brand new book on investing.
  • Guess this is why we learn the wrong lessons…

College students see this movie as inspiration for criminal behaviour

  • Episode: Inside a Fraternity’s Multimillion-Dollar Drug Ring with the Journalist Who Uncovered It — Millennial Money with Katie
  • Investigative journalist Max Marshall, spoke about the multimillion-dollar fraternity drug ring scandal at the College of Charleston
  • “In the story, a lot of the guys that I talked to, they loved the movie, the Wolf of Wall Street. They even printed out shirts. They called themselves the Wolf of King Street. The Kas had Wolf of King Street T-shirts with a photo of Leo on them. There was another Xanax dealer who also called himself the Wolf of King Street. And when I was hearing that, I was like, damn, you guys really took the wrong message from the Wolf of Wall Street. You just see. They were like, yeah, I mean, it’s awesome. He had this really brilliant fraud, made a lot of money and hot girls on his boat, and isn’t that crazy?”

Our key takeaways from The Wolf of Wall Street

Money lets you (appear to) be a better person

  • Philanthropy is much easier when you’re wealthy 
  • You can buy the impression that you’re a good person through generous donations
  • “See, money doesn’t just buy you a better life — better food, better cars,— it also makes you a better person. You can give generously to the church, or political party of your choice. Save the fuckin’ spotted owl with money.”

Matthew McConaughey (character Mark Hanna) explains how investing can be gambling

  • Mark Hanna is the senior stockbroker at L.F. Rothschild, who worked with Jordan Belfort before its closure in 1987.
  • “Number one rule of Wall Street. Nobody — and I don’t care if you’re Warren Buffet or if you’re Jimmy Buffet — nobody knows if a stock is going to go up, down, sideways or in circles – least of all stockbrokers. But we have to pretend we know.” — Mark Hanna
  • “The name of the game: move the money from the client’s pocket into your pocket.” – Mike Hanna
  • (From Kate’s book, Buying Happiness): When you gamble, you’re playing a random game of chance in which the system is set up for you to lose. You can invest with a gambling mentality, which is where things get dicey. We call this ‘speculating’. You’ve probably heard of a friend sinking a huge portion of their savings into an investment they heard about at a party or on Reddit without doing any research (think about the crypto craze that swept the internet). They might have struck gold and made a small fortune, but it’s much more likely that they lost a significant amount of money.
  • Takeaway: Engaging in speculation is a reliable way to lose sleep and part with some of your money – hardly the best way to buy happiness! But that’s not going to be your story. You’re going to take a slow and steady approach to investing and focus on diversifying your portfolio, investing on a regular basis and making sure you understand where you’re putting your money.

Demonstrates that you can say anything with confidence and people will think it’s true – sales script teaching scene

  • “Every person around here, they want to get rich and they want to get rich quickly. They all want something for nothing.” — Jordan Belfort
  • Example: Aerotyne International – the story versus reality – sales pitch
  • Much easier to sell to people who already want to get rich 
  • They played on people’s emotions of greed and desire
  • Wolf of Wall Street dialogue may be fictional but boiler room fraud is real | Financial Conduct Authority | The Guardian
  • In The Wolf of Wall Street, sharp-suited Jordan Belfort, played by Leonardo DiCaprio, makes calls from a scruffy strip mall in Long Island.
  • “Good morning, Jordan Belfort with Investors’ Center in New York City. The reason I’m calling is that an extremely exciting investment opportunity crossed my desk today. Typically our firm recommends no more than five stocks per year: this is one of them. Aerotyne International is a cutting-edge tech firm out of the Midwest, awaiting imminent patent approval on a new generation of radar equipment…”
  • In reality, Aerotyne is a worthless, dilapidated garage in Dubuque, Iowa. But Belfort hooks the investor with “research” that indicates the 6c-a-share stock could rise to a dollar “or go much, much higher – your profit on a mere $3,000 investment would be upwards of 50,000… That’s right, you could pay off your mortgage.”
  • An example of how Jordan Belfort encourages sales people to use these emotions against you in his book Way of the Wolf: Straight line selling: Master the art of persuasion, influence, and success
  • “This is why you introduce pain in two spots: first, during the intelligence-gathering phase, you want to identify where your prospect’s pain lies and, if necessary, amplify it to ensure that your prospect listens to your presentation from that perspective; and second, you’re going to reintroduce that pain right now, at the beginning of your third loop, using a language pattern that sounds something like this: “Now, Bill, I know you said before that you’re worried about your retirement in terms of Social Security not …” and so forth, and then you’re going to raise the level of pain by asking your prospect what they think is going to happen with the situation if they fail to take action to fix it.”
  • Act as if you have unmatched confidence, and people will have confidence in you. Act as if you have all the answers, and the answers will come to you.”Jordan Belfort, Way of the Wolf: Straight line selling: Master the art of persuasion, influence, and success

✅ Key learning points

  • Investing can be gambling if you don’t approach it with the right mindset
  • Australians are falling for investment scams every day – take a moment to question motives and sale techniques, especially if you’re being pressured to act quickly
  • Just because someone/a company is charitable or speaks with confidence doesn’t mean they have good intentions

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