YOLO Trade…
Many money movies feature unscrupulous, unethical traders marauding in market manipulation. Quicksilver, starring Kevin Bacon, is an anomaly; casting the trader as a hero. Within the first few minutes, Bacon’s character, Jack, bankrupts his firm and loses all of his parents’ savings in one spectacularly risky day trade. YOLO (you only live once) has become associated with trading your entire portfolio - the equivalent of going all in. The strategy may pay off big if it works, but can wipe out all your assets if it goes bad.

Without a Hedge
Ironically, it’s very unlikely a professional would place all their money on a single trade. Pros don’t expect all trades to work, so hedges are used to reduce potential losses. Hedges are counter-trades that will pay out if the main bet goes awry. Even more bizarre than placing a firm’s entire holdings on a single trade with no hedge - Jack also risks his parents’ entire savings, which is nothing short of inexplicably irresponsible.

Stock Rocky
After his colossal loss, Jack shuns stock trading and goes to work as a bike messenger. He then returns to trading, this time risking (and quickly losing) his co-worker’s money. Then Jack asks his old partner for cash. After reluctantly agreeing, Jack tells him “I think you should know, I have nothing, okay - just a feeling.” Back at the trading floor, Jack gets quotes for 3 stocks; picks one and goes all in. It drops after he buys. He's urged to get out before losses mount. Emphatically, Jack says he’s “sticking with it.” Miraculously, moments later, the stock surges. Though he didn’t know what stock to trade seconds before he YOLOs, he picked a stock that skyrocketed moments later. The odds are astoundingly astronomical.

Ponzi Pyramid…
Previously, we talked about investing versus gambling, and Jack’s trades can only be described as gambling. Picking a stock at random based on a feeling, with hope of immediate profit is akin to a slot machine pull. After losing his co-workers money, he borrows from his previous partner to stay in the game. Using newly invested funds to pay off earlier investors is basically a Ponzi scheme. Ironically, Bacon himself fell victim to the largest Ponzi scheme in history when he invested money with Bernie Madoff. When talking about it in an interview, he recommended being “cognizant of what’s happening with your money.”

August 3, 2022

Other Quicksilver Facts:

Box Office Bust
Quicksilver received poor reviews, and Kevin Bacon himself feared it would slam the brakes on his career.

Location Goof
There are multiple and extensively documented goofs in the movie, such as the kind of bikes being ridden often changing within the same scene. Also, Bacon’s hair length and clothes change randomly.

Another inconsistency I found relates to the location of the stock exchange where Bacon’s character traded. In 1986, the exchange in San Francisco was called the Pacific Stock Exchange. Although the trading floor scenes were filmed at the exchange’s actual location of 301 Pine St, when Jack enters the exchange, the building exterior has an address of 1 Sansome St. Only a block from the actual exchange, perhaps the directors thought the new skyscraper at 1 Sansome St, just completed before filming, would provide a better visual backdrop.

Important Note:
The transactions portrayed in Quicksilver would be considered trading activity. Click here to read our views on trading versus investing. Though active traders such as hedge fund managers may use hedges for their short-term trades, long-term passive investing is not typically associated with the use of hedges. Aesop Advisor LLC does not use or recommend hedging or active management strategies, including frequent selling, short-selling, or the use of derivatives for the average retirement-focused investor.

Markets Demystified is published the first and third Wednesdays of each month,
and explores how stock market investing can relate to personal finance.

Thanks for Reading!

Jonathon Oden
Owner | Aesop Advisor LLC

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