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business newsVideo: It's Time to "Short" American Icons
The recession and society's recent cynicism toward athletes and bankers are connected.
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Over the past year, the public images of Tiger Woods and LeBron James, who aren't only professional athletes but lucrative brands, have been irrevocably tarnished. Likewise, Wall Street firms such as Goldman Sachs (GS), which were once revered, were helped by government bailouts, their ethics called into question.
Todd Harrison, founder and CEO of Minyanville, tells Tech Ticker that the perception of the American icon, particularly in the sports world, crumbled with the stock market. He tells Tech Ticker, the recession and society's recent cynicism toward athletes and bankers are connected.
See also, LeBron James and Deterioration of the Athlete Brand.
Socionomics
Harrison's argument is based on socionomics, a theory by Robert Prechter, a prominent stock market analyst and occasional guest on Tech Ticker. Prechter hypothesized that social mood drives economic and political activity, not the other way around as commonly believed.
According to socionomics, a person's decision-making process is influenced by what's happening in their environment and their choices impact the market. He'd say that the stock market crash didn't cause the recession, rather the recession caused the stock market crash. Furthermore, it was an overall change in public attitude, a rise of pessimism, and distrust in public figures, which sank the economy.
Americans Fed Up With Their Athletes
Sports traditionally provided Americans with an escape from turmoil going on in the country, something relaxing to watch for a couple hours. Harrison says that in today's tense social and political climate, the lurid scandals and massive paychecks that have become standard in professional sports are no longer acceptable. People are fed up with athletes and rejecting their wealth.
"When you have these high-profile brands like these athletes, that are going out there and grand standing for $100 million contracts, it's going to rub people the wrong way," Harrison says.
Rejecting Wall Street in an Age of Austerity
The social mood is similarly negative toward bankers. Once considered to be at the pinnacle of society, they're now regarded as reckless, greedy, and sometimes criminal. Warren Buffett, who for years was considered the patriarch of finance, has even come under question for his close relationship with Goldman Sachs and Moody's. Harrison says that this shift is part of a movement toward austerity.
"Money can buy a lot of things, but it can't buy public opinion," Harrison says. "Free will is going to be free will. That's endemic of a much larger shift for the economic social movement."
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.
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