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Todd Harrison
Jan. 13, 2010, 12:01 a.m. EST · Recommend (1) · Post:
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Super Bowl ad fall bodes badly for TV sports
By Todd Harrison
NEW YORK (MarketWatch) -- Earnings season is upon us and the world is watching with bated breath.
The leader of the procession was Alcoa Inc. /quotes/comstock/13*!aa/quotes/nls/aa (AA 15.52, -1.93, -11.06%) , which missed guidance and took a 10% hit. Given the 35% rally into the report, investors can't help wonder if the "sell the news" reaction will serve as a microcosm of what's to come.
There's more to this story than meets the eye. Chief Financial Officer Charles McLane Jr. offered on the conference call that the company willingly sacrificed earnings to preserve cash. That effort cost 21,000 employees their jobs and slashed capital spending in half.
That shouldn't come as a shocker for readers of my column. A year ago, Alcoa executives famously said they would "identify and implement effective responses that strengthen market competitiveness and financial staying power during the economic downturn." See Financial Staying Power
That's been the underlying theme this past year: to bet, or not to bet. We saw a similar scenario unfold when Morgan Stanley /quotes/comstock/13*!ms/quotes/nls/ms (MS 31.13, -0.91, -2.84%) pulled in the risk reigns at the same time Goldman Sachs Group /quotes/comstock/13*!gs/quotes/nls/gs (GS 167.82, -3.74, -2.18%) unleashed the hounds. Each were rewarded in relative terms and, as regulatory headwinds stiffen and the populous backlash permeates, both will likely be punished.
This isn't an Alcoa story, however, and it's not about the battle of the bulge-bracket firms. That very same mindset, the final frontier of denial-migration-panic, swept through society last year as the point of maximum pain provided enviable entry levels across an array of asset classes -- along with ample doses of frustration. See Chasing Liberty
Time horizon, risk appetites and pain tolerance shaped trillions of dollars worth of decisions. For some, it was a gateway to revival and redemption; for others, it served as a vicious reminder that cornered and caged animals will do anything to ensure survival, particularly when backed by the balance sheet of the United States of America.
Mean Street columnist Evan Newmark tells WSJ's Dennis Berman that the White House's proposed bank fees means it is reneging on the deal it made with banks over TARP.
It was the emergence of Government.com and in many ways, the end of our innocence.
Fast-forward one year from that famous proclamation of "financial staying power." The fear of missing is again dictating decisions, from performance anxiety on Wall Street to social stress on Main Street. Cash, once worn like a badge of honor, is now considered anathema in the investment community.
Minyanville professor Jason Goepfert of Sentimentrader.com noted last week that individual investor exposure to stocks is the highest since October 2007 while exposure to cash is at levels last seen in August 2000. It's amazing really, almost like the financial crisis never happened at all.
While I don't profess to know the timing of the turn, I'm quite certain history will rinse and repeat the cycle of fear and greed. We touched on these crosscurrents last week -- the buff credit markets squaring off against ever-present cumulative imbalances -- and that war continues to wage under the seemingly calm financial surface. See Ten Themes for 2010
One thing is for certain; in the battle for the bottom line, moderation has been sacrificed at the altar of opinion as raging bulls and grizzly bears offer variant views. It's one thing to have an inclination -- I believe, for instance, the next 10% will be lower -- and another to be held hostage by it.
The trick to the trade is to make decisions within your comfort zone that aren't beholden to reactive rationalization. If you constantly try to keep up with the Dow Joneses, you'll spend the rest of your life chasing your financial tail.
- dont-get-it | 12:09 a.m. Today12:09 a.m. Jan. 13, 2010
Is nothing sacred? For only the second time in Super Bowl history -- dating back to 1967 -- the economic slump "appears to have taken a toll on the Super Bowl ads, pushing the price down," according to CBSSports.com. The rates are still the most costly on TV.
4:57 p.m. Jan. 12, 2010 | Comments: 31
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