Margin Call

Life is a matter of choices as you have to choose what you want but you can’t have both at once. The board of directors from the movie of “Margin Call” were in a hardship of whether to sell the valueless financial products to their customer or to keep their reputations. In the meantime, it is worthwhile to argue that should the company keep their reputation while they are on the verge of bankruptcy? Yet, should the employees keep their professional ethics towards the customers in the situation where they might lose their decent and high paying jobs? In the virtue of moral responsibility and obligations, the answer is yes because the reputation of company would be destroyed if they sell it all to their customers. In contrast, the answer is undoubtedly no because they would have to protect their self-interest in order to prevent the company from bankruptcy. From my point of view, the movie had formed a polarized situation and it is very difficult for the board of directors to make a choice. However, it is understandable that they eventually encourage their employees by providing high bonuses to sell the valueless investment products to the unsuspecting customers. After all, the so called “investors” or buyers of the products were buying it with the assumption of they can purchase it at a cheaper price and make profits out of it without considering the risks nor morality.

Furthermore, I am concerned with the level of job security that reflected on “Margin Call”. In the beginning of the movie, a number of employees including an employee who were with the company for 19years were sacked for the welfare of company. This shows that loyalty of employees towards a company is no longer able to for them secure their jobs. In fact, these miserable events happened not only in the movies, it can be seen often in the real-world situation as well where employees are lay off in the process of company downsizing and bankruptcy. The outcome is that many people are jobless and their living are dramatically impacted.  I personally think that this is quite ironic because it is inverse with the concept instilled by our parents and society since we were born. Most people are told that getting a flying colors results for academic, graduated from university with high prestige would secure a decent job and life would be much more easy. The fact is that unemployment rates of graduates are increasing at an alarming rates and not to mention the unemployment rates worldwide. On the other hand, the 99% of wealth are controlled by the 1% richest people thus the wealth distribution is imbalance severely and it had created a scenario of the rich are getting richer and the poor are getting poorer. Many people are trapped as they worked their ass off just to pay their taxes and debts such as car and housing loans.

Consequently, it is believed that securing a decent job is no longer the priority to pursue for us. A recommended solution from a famous book “Rich Dad, Poor Dad” by Richard Kiyosaki is that employees should start “paying themselves first” as soon as possible. This simply means that employees should retained around 10% of their pay once they receive their salary monthly and when the savings had increased to a certain amount, they then able to generate more passive income using their capital. For instance, they can use their free time to start a business such as an online store or investment like stocks and bonds market. However, starting a new business consists of a high risk thus they must develop a business strategy and risk management in order to sustain and grow their business. In contrast, stocks market also posted a certain level of risks hence they must understand the business and company in order to avoid losses. For example, they can gather and analyze tons of useful information from company’s annual and quarter report, such as the balance sheets, cash flow, profit and loss table as well as company’s future prospects. “Don’t put all your eggs in a single basket”, therefore it is advisable to distribute capital into other financial instruments as well. A great example is to invest 60% of their capital in stocks market and 40% in bonds market.

In short, when the passive income generated monthly from their business or investment is greater than the expenses, employees are no longer depending on their job to survive, they are able to make a living even if they had lost their jobs. After all, it is much more easy to say than doing it realistically, thus we must start carrying out the strategy as soon as possible in order to get out of the trap.