Understanding the tremendous risk involved with investing money in Hollywood film, here are some of the tactics used when investing.
Some of the hedge funds will invest in one studio and underwrite the films they will be producing for that year; essentially operating like a mutual fund. Others may pick a certain type of film, like comedy or romance, and invest in that specific genre.
Now here's another kicker that Hollywood does to those looking to invest: many times they will not offer the films that they are certain will be bring huge returns. The most recent is "Pirates of the Caribbean: Dead Man's Chest." Investors weren't offered an opportunity to make money on this sure bet.
Like I've said throughout this series: Don't get caught up in the glamour of Hollywood if you're thinking of investing your money there. They take away the sure bet, don't want you interfering in their decisions, and look for you to invest in the most risky of their ventures. What company could as that of the people backing up their money. Yet this is how Hollywood has always operated.
There is only one reason for all of this, and its that people simply think with their egos, rather than their brains, when making decisions concerning this type of investment. It's almost like they may see their name in the credits and it doesn't matter that the project may have lost millions of dollars. Millions of dollars to see your name, or you company name, on the credit line.
Just make sure that your money isn't being spent for vanity reasons alone, unless that is all you're really looking for.
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