Michael

Nearly 24 million people have watched Matthew McConaughey accidentally destroy the entire stock-picking industry. He did it in 2 minutes, over lunch with Leonardo DiCaprio. Over 15 years, about 90% of big US stock funds still lost to the index they charge you to beat. The scene is from The Wolf of Wall Street, 2013. He plays Mark Hanna, a senior broker taking a kid out on his first day. DiCaprio asks the question every client thinks is obvious. If you make the client money too, that’s good for everyone, right? “No.” Then comes the line that should be printed on every brokerage statement: “Nobody knows if the stock is going to go up, down, sideways, or in circles.” He says it applies whether you’re Warren Buffett or Jimmy Buffett. “It’s all a fugazi.” His whole method fits on a napkin. Your client buys at 8. It hits 16. He wants to cash out and go home. You don’t let him, “because that would make it real.” You call with another special idea, and he puts it all back in, plus more. He gets rich on paper. You take home cash, in commission. “We don’t build anything.” It’s a movie. But it’s based on the memoir of Jordan Belfort, a real broker who pleaded guilty to securities fraud. And the real Warren Buffett ran the test. In 2008 he bet $1 million that a plain S&P 500 index fund would beat a group of hedge funds picked by a professional over 10 years. The index made 125.8%. The hedge funds made 36.3%. In the video below, wait for the chest thump. It wasn’t in the script. It was McConaughey’s own warm-up before takes, and DiCaprio told him to put it in the scene. Here’s what I think. I don’t believe every adviser is Mark Hanna. But when someone calls you with a special idea right after you made money, I’d ask who gets paid if you say yes. I said in my Kevin Federline post that the camera always keeps the receipt. This receipt comes with a chest thump. The scene is free. The fees aren’t.