Here’s a fun fact:



The biggest losing movie of all time is The Adventures of Pluto Nash. This 2002 film starring Eddie Murphy and Randy Quaid cost over $100mm to produce and only returned a measly $7mm at the box office- that’s a $93mm loss!



Furthermore, in 2010, Eddie Murphy received the Razzie Award for “Worst Actor of the Decade.” In his defense, his 80s movies were excellent- Beverly Hills Cop, Trading Places, Coming to America.



Perhaps Eddie should have pursued music instead.



So why are we discussing a terrible movie?



Although The Adventures of Pluto Nash wasn’t released until 2002, it was actually financed in April 2000, coinciding with the exact month the tech bubble peaked.



Remember, when the stock market is at all-time highs, some investors are buying stocks and others are selling stocks. For every $700 share of Apple AAPL you bought, someone else has $700 in cash. The money must go somewhere.



The sellers must take the cash they receive and either put it into a bank or invest it elsewhere. When there is an abundance of capital chasing a limited number of investments, you get films about a futuristic nightclub owner starring overpaid actors not in their prime (aka above referenced film).



Fast forward to our current investing landscape, where Quantitative Easing has crowded out investors from safe assets (like US Treasuries) and forced them to take on more risk (high yield bonds and stocks). As the stock market has moved higher, the sellers can take their cash and put it into even riskier investments, such as film finance.



And that’s how movies such as Batman vs Superman, starring Ben Affleck as Batman, get the green-light.



Now this may be purely anecdotal on my part, but if you went to the movies over the holiday season- did you also notice some pretty terrible previews? Yes, I would agree that many current films are just regurgitated ideas of the past (The Lone Ranger), but the release calendar this summer looks even more terrible than ever.



This is the QE world we live in, where there’s an abundance of capital but a scarcity of investment ideas. As the stock market has rallied, higher valuations have pushed investors into other alternative investments, like terrible movies.