Reflection Paper: The Wolf of Wall Street

By John Arlo F. Sanchez | C43B

The Wolf of Wall Street is based on the actual story of Jordan Belfort, a rags-to-riches
stockbroker and entrepreneur who began with an OTC brokerage business utilizing pump and dump
techniques before becoming a major figure on Wall Street, where he led the IPOs of numerous huge firms.
This drama film depicts Belfort's ascension to the high-life and excess of Wall Street, followed by a
precipitous fall including crime and corruption - all while being highly amusing. In this paper, I would
like to express my insights on the film. Particularly, how the film helped me understand the technical
aspects of business finance, how I can be a more financially literate investor, and how I can personally use
the lessons learned in my daily life.

Personal Reaction

I was at first uneasy viewing the film since it has a lot of nudity and drug scenes. Also, I don't
seem to relate to the movie since I am unfamiliar with the corporate world. However, because it was
connected to Business and Finance, which is relevant to my course, I was able to get more familiar with
corporate words and how these things were implemented in real life. There is an illegal act disclosed in
the film The Wolf of Wall Street that violates the law. The first is money laundering, in which he conducts
fraud while making it appear that everything he does has a lawful foundation. In actuality, it stems from
criminal actions, implying that every penny earned from this activity is corrupt money. The second type is
stock manipulation, in which they utilize deception to raise or deflate the price of equities based on the
statements of investors. It is illegal since they deceive others in order to profit. The film The Wolf of Wall
Street is exceptional in some ways, fascinating but also disturbing. You may wish to be a successful
businessman like Jordan Belfort at first, but you will soon realize that he is not a successful businessman,
but rather a successful fraud artist.

Foundational Business Mathematics and Finance

By watching the film, I was able to remember what I’ve learned in my FDNBUSF class. For
instance, I recall the goal of a financial manager. Although Belfort was not a financial manager but rather
a stockbroker, he possessed the same goal, or at least he pretended to. This goal is to maximize the
shareholder’s wealth, and it was famously used when he convinced prospects over the phone to invest in
their fund. Of course, this was generally a scam using Pump and Dump techniques, which I will discuss
later on. Another concept I remember was equity securities. A security is a negotiable instrument of
financial value that represents ownership in a corporation, such as stocks. Unlike debt securities, equity
securities issue dividends more often, are less capital intensive, and require no fixed repayments. It was
nice to see these equity securities being used in the real world throughout the film. Lastly, I recall laws
and regulations. Throughout the movie, Belfort had to face several law suits, charges and regulations
issues. As someone who will take part in the financial sector, it’s important for me to be familiar with the
law, as I might end up like Jordan if I act carelessly. This film highlighted the importance of following the
law and being ethical.
Financial Concepts

I also learned some financial concepts by watching this film. The first is penny stocks, which are
low-priced equities that do not trade on major stock exchanges and are issued by businesses that do not
normally disclose financial statements. These trade for a fraction of a penny to a few dollars, and since
their market capitalization, stock price, and daily volume are so little, they are extremely sensitive to
manipulation. A sudden big volume of buy or sell, for example, might lead the price to plummet by triple
digits in a single day.

Another example is ‘Pump and Dump’ schemes. These are defined as market manipulation by the
amassing of shares from penny stocks or other firms and storage in secret accounts. Investors are then
'cold phoned' to persuade them that these firms are worth investing in. The inflow of purchase orders
would quickly increase the price, persuading investors that the shares are performing well. Belfort's
company was a form of boiler room, with a crew that pressed investors to buy extremely speculative
products. At its peak, the firm is said to have employed approximately 1,000 stockbrokers who were in
charge of more than $1 billion in investments.

Lastly, I learned the differences between sales advisors and financial advisors. While employed at
L.F. In the 1980s, Belfort was swiftly taught that the primary purpose of a stockbroker is to generate
money for himself. Brokers appeared to be more concerned with selling stocks and earning sales fees than
counseling customers on the financial risk of an investment or its appropriateness for their portfolio.
Belfort and his team are portrayed as sales professionals, not financial professionals, who are trained to
sell investments at the client's expense. It is still debated today whether financial professionals should be
held to a fiduciary standard, which requires them to act in the best interests of their clients rather than
simply providing a product.

Investing Lessons

I also learned key insights for investing. Firstly, if it’s too good to be true, then it is. I should be
my own investment expert. As the saying goes, if something seems too good to be true, it most often is. It
is especially crucial for newcomers to the stock market to stay objective in their investment selections and
conduct their own research. Many of Belfort's victims trusted him and put their whole life savings into
'guaranteed' stocks. Even if you have an adviser, it is beneficial to grasp financial markets and techniques,
possibly by starting small and diversifying your portfolio.

Secondly, I should know the difference between legal and ethical standards. Legal standards are
the norms that regulate the financial industry; yet, what is legal may not always be ethical. When it came
to selling penny stocks, Belfort's organization was within the law, but failing to properly disclose the
speculative character of the products was entirely immoral. While he began by simply blurring this line,
Belfort quickly crossed it and was convicted for violating securities regulations. Ethical business practices
are the basis for trust and goodwill; it is critical to accept responsibility for your actions.
 Lastly, I learned about the true road to success. While not the finest role model, Belfort
demonstrates that long-term success is not easy. Before reaching the pinnacle of his career on Wall Street,
he had both failures and accomplishments. After losing his job, he became a stockbroker, and even after
going bankrupt and serving time in prison, Belfort completed his sentence and turned his sales and
communication skills into a career as a motivational speaker. Financial mistakes can be corrected and
turned into lessons for future success. The next step is the most important one a person can take.

Personal Reflection

By the end of the film, I understood that I will soon graduate with a degreeand face the truth that
money and fame are not the only measures of success. Extrinsic goals such as the money I make, and the
status I have are all secondary to what truly is important: my values. I will strive to be honest. I will strive
to be empathetic. I will strive to have integrity. I learned to not be deceived to pursue easy unethical
riches; but instead, to set my own goals and work hard to get them. The film The Wolf of Wall Street
gives me a glimpse into the various business strategies. The most beneficial aspect of watching this film is
that it allows me to learn more about sales through Jordan Belfort. It even inspired me to buy the book,
‘Way of the Wolf’, which taught me about sales techniques such as tonality, body language, state
management and the straight-line method. Unlike Belfort, though, I plan to use these techniques for more
ethical causes. I will use these techniques to empower people, to start my own business, and to lead
people in improving the world.

“Sell me this pen”