How to Invest in Hollywood Movie Stocks

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Lights, camera, action, movie stars and mega bucks--these are the things that dreams are made of in Hollywood. While you may never get a chance to be a star in a big blockbuster film, you can nonetheless invest in the companies that make them with a few dollars and a brokerage account.

Step 1

Open up a brokerage account. E-Trade, Ameritrade and Scotttrade have all been around for more than 10 years and the minimum to open an account with one of these companies is around $500. All of these companies are a member of the Financial Industry Regulatory Authority (FINRA) and the Security Investor Protection Corporation (SIPC). These organizations regulate brokerage firms. Since the stability of many brokerages today are in question and things can change rapidly in this industry, make sure to check into their financial records before placing your money with any company.

Step 2

Find a movie stock. Here is a list of a few movie stocks worth looking at, along with their ticker symbols:

Universal Pictures is owned by General Electric (GE) Vivendi SA (VIVEF.PK). Warner Bros. Pictures and New Line Cinema are both divisions of Time Warner Inc. (TWX). Paramount Pictures is owned by Viacom, Inc. (VIA). Buena Vista Pictures Distribution is a division of Walt Disney Co. (DIS). 20th Century Fox is a subsidiary of News Corporation (NWS). MGM Distribution Company is owned by Sony (SNE) and Comcast (CMCSA), along with several other partners.

Step 3

Use the 200-day moving average to determine the trend of the stock. You will want to determine if the stock is in an uptrend or a downtrend. Many investors use the 200-day moving average as a benchmark to decide this. If the stock is trading above the 200-day moving average, then it is said to be in an uptrend and is likely to go higher. If it is below it, then wait until the stock has crossed the moving average. You can find this indicator on any charting site such as MarketWatch.com.

Step 4

Use fundamental analysis to decide whether to purchase the stock. A simple tool to use is Investors Business Daily. While it isn't free, it only costs $20 a month for a subscription to the website. This site gives grades, rating each stock from A+ to E. So ideally you will only want to buy a stock that is above it's 200-day moving average and has a grade of B+ or above. The grading system is based off of William O Neil's proprietary system detailed in his book "How to Make Money In Stocks."

Step 5

For fun, sign up with HSX.com. If you would like to play an investment type game that doesn't involve real money, then you can sign up for Hollywood Stock Exchange. In this game you are given $2 million Hollywood dollars which you can invest into individual films or star bonds, which is stock in an actor or director. While there is no actual money involved, you can win prizes. Movie executives actually use the data gleaned from the game to make box office predictions and marketing decisions.

Things You'll Need

  • A computer with Internet

  • A brokerage account

  • $500 US

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