A new stock exchange might give you the chance to make (or equally, of course, lose) money betting on the performance of the latest Hollywood blockbuster.
Hollywood Stock Exchange is a new venture from Cantor Fitzgerald, a big player in US stockbroking, so although it sounds like a dubious idea, it has some big backing. The Guardian has more information:
Punters choose from a huge list of “movie stocks”, priced on the exchange according to market expectations of their box office success. Each $1 of the stock’s price represents an expected $1m in box office receipts. For example, units in Hot Tub Time Machine, a sci-fi comedy opening this weekend in the US, were trading midweek at around $72; in other words, the market expects it to gross around $72m. If you buy it at $72 and it grosses more than that, you’re in the money. If it takes less, you’re out of pocket.
So why are Cantor Fitzgerald doing this? Is it aiming to take a load of movie off gulible traders who think they know a thing or two about the movie market?
In truth, the exchange has been designed for big studios to hedge their risks, in much the same way that farmers can take out forward contracts on everything from pork bellies to orange juice. And it comes at a time when, in spite of the success of Avatar, film producers are wary of falling DVD sales (down 12% in the US last year) and illegal downloads.
Critics have suggested that this new market could be open to insider trading, but I guess that particular argument could be used against most trading (and gambling) markets.
The Hollywood Stock Exchange website is currently running in beta, with no real money involved as yet, and is currently not available to the UK market, but Cantor are hoping to change that in the near future.
I don’t think I’ll be rushing to have a go.
photo credit: Eva Luedin