“Dumb Money” Review: A Worthy Addition to the Classic Finance Movie Roster?

Whenever I watch a new movie or TV show, I always try to go in optimistic – even if I have doubts about the premise, writing, or production values.

Unfortunately, my initial instincts are often correct: If I have a bad feeling about something, it usually has issues.

And that is exactly what happened when I watched Dumb Money, the movie about the GameStop short squeeze in 2021, the other day.

There are some entertaining moments and good performances, so I wouldn’t call the movie “bad.”

But the story is thin, there’s no real character development, and even if you ignore these issues, the filmmakers do a poor job of explaining the GameStop story.

I understood it because I knew the companies and people involved, but the movie might confuse the uninitiated.

I’ll cover all those points here, but I want to start with some context first:

A Long Time Ago in a Stock Market Far, Far Away

To understand the premise of Dumb Money, you need to return to late 2020 and early 2021, which now seem like a lifetime ago:

• There was a global pandemic. I wrote many articles about it. It sucked.
• Everyone was locked up inside, and many turned to day trading for entertainment and money (in between binge-watching shows on streaming services).
• The Fed and other central banks cut interest rates to 0% and printed massive amounts of money to support the “fiscal stimulus” that was allegedly required to counteract the pandemic; this created a bubble in the financial markets.
• SPACs, cryptocurrency, and other junk went “to the moon” as people piled into risk assets. Remember when Chamath was on CNBC all the time?
• Oh, and lots of M&A, IPO, and SPAC deals were happening, so banks made plenty of “COVID hires,” often ignoring qualifications and recruiting norms.

I wrote about the GameStop short squeeze back when it happened in February 2021, and it turned into the most popular article of the year.

I later removed it because of annoying trolls, but I’ve restored it if you want to go back and read my initial comments.

In short, the media portrayed this event as a populist uprising against Wall Street, as retail investors on Reddit joined forces to bid up GameStop’s stock price while hedge fund Melvin Capital was heavily short the stock.

This led to a “short squeeze,” where Melvin had to cover its shorts by buying shares, further pushing up the price.

This huge increase in GameStop’s stock price led to many normal people becoming wealthy on paper – but popular brokerage firm Robinhood then blocked buys of GME shares, and the stock price fell back down to earth (it’s now down ~80% from the top of the squeeze).

In the original article, I explained the problems with this narrative: Retail investors acted as a catalyst, but if you look at the order data, institutional investors and huge trend-following funds were responsible for most of the price increase.

And yes, Melvin Capital and Robinhood emerged as losers following these events, but other big firms, such as Citadel and Silver Lake, became winners because they made different decisions.

Dumb Money: Characters and Story

As you can probably infer from the summary above, this is a thin premise for a movie because there isn’t much to the story.

In a traditional story structure, the protagonist has strengths and weaknesses and must overcome challenges to achieve their goals; this protagonist makes movies, the antagonist responds, and the protagonist succeeds or fails by the end.

The original Wall Street from 1987 is a good example of this structure, with the relationship of friends-turned-enemies Bud Fox and Gordon Gekko forming the movie’s core.

Dumb Money has none of this.

Things just… happen, and the protagonist – “Roaring Kitty” on the Wall Street Bets sub-Reddit, who started hyping GameStop in 2020 – is poorly defined.

Sure, he wants to make a lot of money and “stick it to the man,” but these goals could describe 99% of the human population.

By the end, he’s the same person, but he’s $34 million richer because of his GameStop stock.

Despite that, we’re supposed to feel sorry for him because he got grilled in front of Congress for his role in the short squeeze.

The antagonists – Steve Cohen (Point72), Ken Griffin (Citadel), Gabe Plotkin (Melvin Capital), and Vlad Tenev (Robinhood) – are even worse because they barely do anything.

Their scenes reminded me of fantasy novels where the evil wizards sit around discussing their schemes in the prologue… but then never enter the story directly.

We never understand why these billionaires cared about GameStop or Redditors so much, given everything else in their lives and portfolios.

Ultimately, Dumb Money falls into the same trap as many other “money movies”: it focuses too much on the money and not enough on the personal motivations.

This can work if the characters are entertaining or crazy things keep happening, but this film didn’t have nearly enough of that to keep me invested in the story.

Dumb Money: The “Finance” Parts of the Story

The filmmakers wanted to convey a “Wall Street bad; populist/rebel retail investors good” message, and that’s fine.

The issue is that they went a mile wide and an inch deep and didn’t properly explain the key relationships, companies, and personalities.

I will give them credit for covering concepts such as “payment for order flow” and the deposit requirements set by the Depository Trust & Clearing Corporation (DTCC), which forced Robinhood to limit GameStop buying activity.

They could have skipped all this, but they added more nuance by including these points.

But if you asked the average non-finance person to explain the relationships between Robinhood, Citadel, GameStop, and Reddit after just watching this movie, I doubt they would be able to do it.

The film needed an “explainer scene” that connected all the dots and explained how Citadel emerged as the big winner due to Robinhood’s order flow and why so many retail investors started day trading due to zero-commission trades, lockdowns, and the market bubble.

The Big Short did an excellent job explaining the 2008 financial crisis with a few key scenes, and Dumb Money could have done something similar – maybe during the Congressional hearings toward the end.

Dumb Money and Dumb Conclusions

Besides the lack of connecting dots, the other big issue is that the film reaches some unfounded conclusions in its final moments.

Via on-screen text, it states or implies the following:

1. Robinhood’s IPO flopped because of the bad press around GameStop and the trading limits the company imposed on customers.
2. The GameStop short squeeze “changed the industry” forever because hedge funds could no longer ignore retail investors. Now, they scour the internet for ideas as well.
3. Robinhood and Citadel colluded to limit GameStop trading activity.
4. Melvin Capital shut down because of its losses on GameStop and other meme stocks.

I agree with point #4, but this was entirely Melvin Capital’s fault; any short squeeze would have melted down the fund, even if retail investors hadn’t catalyzed it.

On point #3, some leaked text messages later emerged that pointed to collusion, but a judge threw out the lawsuit due to the lack of credible evidence.

I completely disagree with points #1 and #2: Robinhood’s IPO flopped because it was a bad company poorly suited to a post-pandemic world, and the GameStop story did not fundamentally change the finance industry.

Hedge funds have always scoured the internet for ideas, and quant funds have always used internet data to train their models. Maybe these funds pay more attention to retail traders now, but I don’t think it’s a night-and-day difference.

In short, many of the film’s conclusions are off the mark and represent a romanticized view of the real story.

Dumb Money: The Final Verdict

Despite all my criticism, I still wouldn’t call Dumb Money “bad.”

To me, it’s in “mid” territory: There are some funny scenes and good performances from a great cast, but they’re marred by underdeveloped characters and a paper-thin story.

If you’re interested in trading or the markets, you might want to check it out when it arrives on the streaming services, but I’m not sure I’d recommend a trip to the theater to see it.

If you want an educational finance movie that explains complex ideas well, watch The Big Short.

If you want an entertaining finance movie with drugs, crazy people, and models, watch The Wolf of Wall Street.

And if you want everything above, plus excellent writing and characters, watch Succession.

There may be other good finance stories waiting to be discovered, but they’ll need a much stronger premise than Dumb Money – one that lends itself to real character development and the twists and turns of a traditional story.