With the Market's so Risky, Maybe Film is Worth Rethinking

The news keeps rolling in -- Washington Mutual, Lehman Bros., IndyMac Bank, Fannie Mae, Freddie Mac and so many more have made the traditional and stable investments in the U.S. suddenly seem like Las Vegas at 5:00 a.m. when we should have gone to bed at 3:00.

Against this level of uncertainty and chaos, investors are left with few safe investments and a great deal of angst. And as we learned during the Depression, the Silver Screen serves as a counter-cyclical investment. Audiences gravitate towards escapism when jobs become uncertain and the economy stalls.

This time, the movie business will be joined by the online and videogame industry as escapist opportunities of choice. Savvy business investors might just realize that in comparison to mortgage-backed securities or venture capital based funds, entertainment products might be a good buy at the moment.

Independent films and start-up videogame companies remain as risky as ever. I would still require filmmakers to insert clauses in securities offerings warning that only an idiot would really expect a return on this investment -- nicely written in much more poetic legalese. Still, investment in independent films have a tremendous upside that makes the analogy to Las Vegas seem appropriate. When traditional investments have nearly as risky a downside and only a limited upside, these opportunities suddenly look enticing.

What I would like to see is a mutual fund for independent films (and a similar fund for games). In such a fund, investors would pool their investments to be spread across a larger number of films vetted by the fund but produced separately. If the fund took only twenty percent of any particular film, it would leverage the chances of success. In turn, films financed by the fund would likely be able to open more doors to distribution deals and cooperative resources among the filmmakers.

The film fund might take away a bit of the Las Vegas risk but it would provide a much more interesting home for the high-risk investor. Of course, don't expect that this fund would receive any bailouts if things go wrong. Only an idiot would really expect a return on investment still applies. So grab a golden parachute and jump right in.