In the January issue of Money magazine, there was a small little feature which showed the correlation between the movies coming out of Hollywood and the following devestation on the markets portrayed in the movie.  While the snippet focused on how hedge funds are going to meet their turmoil soon, it portrayed a very interesting way to forecast problems in any market.

The article showed how back in April 1987, the movie Wall Street started filming.  For those of you who do not remember this movie, it portrayed a young stockbroker who was seduced by the wealth and the "get rich quick" mentality and ultimately gets caught.  If you remember later that  year, October to be exact, Black Monday occurred, where the Dow Jones Industrial Average dropped 508 points in a single day.

The next correlation shown was how in Spring of 2000, production on two TV shows about finance was started.  The two shows were The $treet and Bull.  So, was it coincidence then that during the Summer of 200, the S&P began its two year slide?

The along came the real estate frenzy.  After the real estate craze had been hot for a while, two shows about making money quickly in real estate debuted in the Summer of 2005.  They were Flip This House and Flip That House. Ever wonder why som many people who shouldn't be flipping houses were?  So is it a surprise that by Fall of 2006 we saw that existing home prices fell 3.5% year over year, the biggest drop on record?

Well the article was highlighting the fact that Hollywood usually gets around developing shows or movies around the time that particular market is about to see its correction, and usually a major one at that.  So, does this type of forecasting work?  Well, we will see in the near future if the hedge funds see their markets go from hot to cold (or even sub zero) now that Hollywood has announced plans to do a series on HBO about a hedge fund trader.

Whther or not this is an accurate gauge remains to be seen, but history has shown that it does work at least three of the times in the past (probably more if we do our own research).  If nothing else, it should at least be good conversation pieces for our clients.