The orange juice crop report:


Episode 471: The Eddie Murphy Rule, also known as The economics of Trading Places 

Source: NPR

Hat tip: kottke

Category: Commodities, Film, Video

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7 Responses to “Saturday Night Cinema: What Actually Happens at the End of Trading Places?”

  1. nofoulsontheplayground says:

    The thing that jumped out to me in the movie was the fact that there were no curbs, circuit breakers, or limits in the daily price changes on the Frozen Concentrated OJ.

    Of course, if the OJ market had curbs put on it after only a 5-cent a Lb. move (I think that was the limit back then), the ending would have been a lot different. The price could have only moved up or down $5.00 in the real world (and the Dukes would not have been bankrupted, and the heroes would not have gotten rich), but the movie moved it something like 20-times the price limit.

    I also like how prices moved up exponentially, but trading ended at a few minutes after ten in the morning, and not because of curbs or limits. That’s where the script said it had to end.

    Oh, I also liked how Murphy and Aykroyd’s characters could just go into the commodity pit and trade without any seat or known trading house affiliation. I also like how Eddie Murphy didn’t need a license to trade in the movie.

    Oh, I also liked how Billy Ray and Winthorp could buy millions upon millions of dollars of futures contracts using only the savings from a hooker and a butler to leverage. Those trades could never be processed in the first place due to lack of margin cash.

    However, overall I did like the movie. You just have to suspend your disbelief quite a bit of the time.

  2. vachon says:

    Haha! Terrific look at Trading Places. I hadn’t seen the movie in years and I also thought what they had done was illegal. Great find.

  3. RW says:

    Okay, I think I understand the Trading Places deal better, but here’s one I don’t get.

    How Does This Commodities Scam Work?

    …in recent years, regulators have allowed banks that do commodities trading to also own companies that are involved in the transportation and storage of physical commodities. David Kocieniewski has a long investigation into this, particularly focused on the alumnimum (sic) industry, in which he seems to allege that Goldman Sachs uses its control of aluminum warehouses to increase prices to end-users by billions of dollars.

    And yet having read the piece twice, I don’t understand how the scam works. The basic idea seems to be that by shuffling aluminum around rather than delivering it promptly, Goldman can charge more rent and boost its profits.

    But this (a) doesn’t appear to have anything in particular to do with Goldman Sachs’ well-known investment banking activities and (b) sounds like far too ridiculous a scam to actually work. …

  4. [...] What Actually Happens at the End of Trading Places? – The Big Picture [...]

  5. Livermore Shimervore says:

    The social commentary in this movie is superb. It reminds me of what Michael Lewis once said in an interview or maybe it was Liar’s Pokers. Most of the wealthy professionals in the financial services industry are nothing more than highly compensated toll takers. Very, very few take any real risks and even those who do are closely watched (usually, unless your a JP M trader or an I-bank exec).
    So when Mr. Valentine says “it sounds to me like you guys are just a couple of bookies” it’s spot on and little has changed since Jamie Curtis was young enough to go topless or when making black-faced Jamaican impersonations was not considered highly offensive.

  6. [...] previously discussed what actually happens at the end of Trading Places (July 20th, [...]