The heroes of the boom times have seen some troubled months. A full year after they first told us "the worst of the credit crisis is over," we're reading monthly (sometimes weekly) news about big-name CEOs (et al) getting the axe. If anything, this trend is picking up steam, hardly a "worst is over" scenario.
These days, if you only get fired from your executive suite, you're one of the lucky ones. Having been convicted for cheating investors out of $450 million, former hedge fund billionaire Samuel Israel III disappeared earlier last week while on his way to prison. The scene he left behind apparently meant to suggest suicide, but police suspect flight. This comes three weeks after former hedge fund manager Kirk Wright hung himself in his jail cell, to which he was confined for bilking his customers out of $80 million.
Then there's Kobi Alexander, a frontrunner casualty of the credit crisis, who managed to make it all the way to Namibia: his continued lavish lifestyle there suggests no regrets.
Bull markets are rocked by markedly fewer scandals, and the relative few which make headlines see significantly less severe results. The reality is that crime -- or just old-fashioned failure -- is less a concern to people when everyone's getting rich. So what if that guy stole $25 million dollars, we're still up 30%!
How quickly the tune changes when "up" turns to a "down."
The Elliott Wave Financial Forecast can do more than help you to see what's coming in the market -- it will also give you insights into what drives cultural and social trends -- including why public reaction differs so greatly to the very similar events at different times of history. Learn more here.
We can't overlook the fate of James Cayne, the former CEO of Bear Stearns. After being dismissed from his post last month, he concisely apologized to 400 employees in a morning meeting:
“Fourteen thousand families were affected. I personally apologize. I feel an enormous amount of pain and management feels an enormous amount of pain… That which does not kill you makes you stronger, and at this point we are all like Hercules.”
Cayne paused several times for reaction during his comment, but was only met with an indignant, stony silence.
Other titans of industry have been removed, demoted or allowed to go quietly into the night -- including Ken Thompson of Wachovia, Stanley O'Neal at Merrill Lynch, Charles Prince of Citigroup, Erin Callan and Joseph Gregory of Lehman, and Martin Sullivan of AIG.
Even the Swiss are in an uproar. Recent reports suggest that UBS shareholder meetings have seen shouting matches regarding responsibility for the lending mistakes that saddled the bank with unprecedented losses.
Elliott Wave International anticipated the trend that produced the subprime debacle, both in cause and effect. Social mood dictates public reaction to events, not the other way around. That insight is what makes crises like this one predictable, and gives you the tools to get out of the way.
Consider this quote from the May 2008 Elliott Wave Financial Forecast, which revisits the old phrase trotted out again by a certain high-ranking financial CEO:
"After laying off more than 24,000 employees and writing down $54.2 billion in assets, the heads of Goldman Sachs, Citigroup, Lehman Brothers and Morgan Stanley say that 'the credit-market contraction is winding down.' 'The worst is behind us,' says Lehman CEO Richard Fuld.… The “worst-is-over” bullish sentiment that restores the bullish resolve of a long rise is the most dangerous kind of bullishness there is."
Steve Hochberg and Pete Kendall were among the first to refute the notion that the worst is over in the Elliott Wave Financial Forecast. You can be prepared for what's coming next and when it will arrive. Understand how right here.