The new film Boiler Room has the trappings of our time--the hip-hop soundtrack, the kinetic camera, the awareness that if you want to explain something to someone, the quickest way to do it is to refer to a movie you've both seen--but its economics and its characters have almost nothing to do with the 1990s. Unlike Wall Street, which centered on a phenomenon--corporate raiding--that was at the core of the business world in the 1980s, the world of Boiler Room exists only on the margins of today's economy. Boiler Room's "brokers" spend their time peddling worthless stocks to people who have apparently never heard of the Internet or watched CNBC. These guys are not the dark side of the stock-market boom of the 1990s. Instead, they're the descendants of the characters in David Maurer's The Big Con. If they were ripping off gangsters instead of family men, you could have made The Sting about them.
One of the many good things about Boiler Room is that for the most part it seems aware of its own marginality, and tries not to be a parable about the New Economy. Those moments where the movie does try to make some broader connection between the boiler room and the real economy are when it seems the weakest, as in Giovanni Ribisi's opening voice-over, in which he says, "Nobody wants to work for it anymore." If there's been a less accurate description of today's economy, I've yet to hear it. It's not just that all those dot-com millionaires, however lucky they've been, have unquestionably worked like dogs to build their companies. It's also that this stock-market boom, whatever its excesses, is the fruit of an astonishingly productive economy in which technological innovation and ceaseless competition have become the baseline. I don't know if everyone wants to work for it. But everyone is working for it, or else they're getting left behind.
Ribisi's voice-over, in fact, is a useful reminder of how quickly things can change. He quotes the Notorious B.I.G.'s immortal lines, "You're either slingin' crack rock or you've got a wicked jump shot," but that record came out in 1994, when a lot of America was still living through the hangover--cultural as much as economic--from the 1991 recession, and when the Web was just being born. Biggie's lines are still too apt a description of life in much of urban America, but as a slogan for the son of a judge they don't wash. It's not that places like Boiler Room's J.T. Marlin don't exist, because they do. But they existed before this stock-market boom and they'll exist after. (Check out the chapter in The Big Con on bucket shops.)
What's really interesting, in fact, is that firms like J.T. Marlin are still able to thrive in today's investing world. The unsolvable question at the heart of the movie, after all, and an excellent question for someone from the rational-choice school of economics to answer, is "Why would anyone invest thousands of dollars just because some guy from a company you've never heard of calls you up and tells you he's got a hot tip?" Let's accept that the characters in Boiler Room are brilliant salesmen. It's still not clear why, with the deluge of information readily available to investors, people will shell out their money without doing even the most cursory check.
The successful con always relies, of course, on the greediness of the mark, and his willingness to use inside information to make a quick buck. And it's plausible that as people watch the Nasdaq and Dow soar, and heard about these immense one-day gains on Internet IPOs, the idea that there's easy money for the taking becomes easier to implant in their heads. But in the past, shady brokers have always been able to rely on the fact that the stock market appeared to be--and in many ways was--totally an insiders' game, where information was disseminated only to those in the know and the only way to make money was somehow to get inside the inner circle.
Wall Street is, of course, still too much of an insiders' game for anyone's good. But it's much less so than in the past, and everyone--you would think--knows it. You can now go to the Motley Fool or Yahoo Finance and get the lowdown on any obscure stock. The info won't always be good, but at least you can find out if that drug the Boiler Room guy tells you is in Stage III of the FDA approval process even exists. And it'll take you about 10 minutes. The fact that somehow firms like J.T. Marlin are able to stay in business, even for a few months, seems completely mysterious to me.
It seems even more mysterious if you consider that for the past four years, making lots of money in the market has been pretty simple: You buy big, profitable companies that are growing fast, and you sit back and wait. That's why another moment that rings false in Boiler Room is when Ribisi, trying to convince a client that he can make a ton of money in this no-name stock, asks the guy what his portfolio of blue-chip stocks has done over the past eight years. "Not very much," the guy says. The real answer, of course, would probably be: "Oh, it's up around 250 percent." Click.