Additional References
October 2002, EWFF
CULTURAL TRENDS
Back in the fall of 1999 when the bull market was just a few months from its final highs, Martha Stewart’s public image became such a bankable commodity that Wall Street sold shares in it. The Elliott Wave Financial Forecast offered the following socionomic explanation for her incarnation as a high-flying IPO.
“Martha Stewart ‘struck stock market gold’ October 19 with the sale of 14% of her firm to the public. Stewart’s first book, Entertaining, came out in 1982 as the bull market was taking off. Since then, she has become ‘the queen of gracious living,’ a self-made billionaire ‘credited with creating a lifestyle industry.’ She is not the first bull-market hero to equitize her persona (the World Wrestling Federation went public on the same day), but she may be the most fully valued. The Martha Stewart company has a capitalization of $1.7 billion and earnings of $14 million, which makes her an excellent ‘role model’ according to one consultant, who added, ‘we need them because it gives women hope and desire to strive.’ Overvaluation is now a social virtue.”
Stewart’s stock, along with that of World Wrestling Entertainment (the former WWF), did not wait for the peak in the rest of the market to turn down. The chart at right shows that both were such delicate manifestations of the long-term uptrend that they ran to all-time peaks the moment they went public and have been working their way lower ever since. Their initial breaks foreshadowed the peak of the major averages in the first quarter of 2000, as EWFF indicated that it would in November 1999. The forecast was based on an understanding of the hero-making dynamics of a bull market. “The operative principle of social mood is that every bull market has its champions,” explained The Elliott Wave Theorist in 1998. “These heroes are of their times, and their images become vulnerable when the wind changes.”
The bear market has guided Stewart’s image with the same precision as the bull. In September, the now “tarnished queen of perfection” beat the NASDAQ to a new low when she refused to testify before Congress about insider trading charges and had her case forwarded to the Justice Department. “Everything negative that could happen has happened,” said the author of a Stewart biography. “A curtain has been drawn back in a way that is causing her excruciating and irreparable damage.”
But the curtain to “everything negative” has nothing to do with Martha Stewart. This is clear from the alleged offense, which would not even have been prosecuted in the bull market, and the fact that corporate executives everywhere face similar attacks. The more fully that they leveraged the benevolent effects of a rising social mood, the more likely it is that they now face the slings and arrows of angry shareholders, politicians and community activists. At the top of the ever-lengthening list of fat cat targets is Dennis Kozlowski, Tyco’s former chief executive officer. Three months ago, virtually no one had ever even heard of him. Now he is so notorious and such a threat to society that his bail was set at $100 million. The charges against him range from his forgiveness of $50 million in loans to himself and other Tyco executives and the purchase of items like a $15,000 dog umbrella stand. EWFF anticipated these strikes against the excesses of the old bull market at the start of the bear market. The backlash is precisely why we said GE’s former chairman Jack Welch would regret his decision to ignore GE’s mandatory retirement age and stay on after 2000 (see July 2001 issue). According to Newsweek, “Welch is no doubt wishing he could rethink this whole episode.” When his wife’s divorce filing revealed a “lavish lifestyle, Welch became the latest CEO in the cross hairs.” By staying in the spotlight long after the bull market, Welch opened his image as “America’s most revered CEO” up to the current series of unfortunate events.
The experience contrasts sharply with that of Jerry Seinfeld, another bull market icon who walked away from an offer of $5 million a show in May 1998. Seinfeld bailed out as the bull market was still rising. A September 14 New York Times story reveals that Seinfeld is living happily ever after in New York City. Unlike divorcee Welch, the man who tried to keep him on in 1998, Seinfeld got married and is now enjoying the fruits of his bull market labors. He works when he wants and has clearly retained his sense of humor. In explaining his decision to turn down the offer, Seinfeld demonstrated an innate feel for the powerful tides of social mood: “At this level, the amounts of money are huge huge! And that translates into strong feelings. Because people relate to money and they gauge themselves by money. So you’re dealing with primal forces.”
The financial markets and the Wave Principle reveal the true form behind these forces, but the essence of their existence has been known to keen social observers since the beginning of time. In 1896, Gustave LeBon was among the first to dig into their inner workings when he described the relationship between the leaders and the led. Men always “place themselves instinctively under the authority of a chief,” he said in The Crowd. He added that great statesmen know that “the popular imagination [is] the basis of their power.” A half century later, neuroscience confirmed LeBon’s observation. The selection of leaders is based in the limbic system, which is the brain’s emotional core (see Chapter 8 in The Wave Principle of Human Social Behavior). By observing history, LeBon saw that true genius, not just for politicians, but for religious leaders, soldiers and even entertainers, is rooted in an intuitive or conscious ability to understand the direction and intensity of group emotion. “All the world’s masters have always been unconscious psychologists, possessed of an instinctive, and often very sure knowledge of the character of crowds, and it is their accurate knowledge of this character that has enabled them to so easily establish their mastery.”
The big tip-off to this dynamic is what happens when the trend changes. “Stars” in totally distinct cultural galaxies go out, arise and are transformed to suit the new mood. By observing the heroic symbols surrounding the decline in Primary wave 4 in 1988, The Elliott Wave Theorist recognized, for instance, that bear markets bring more complex role models and anti-heroes. The current shift, which is three degrees larger, is now churning out many intense reflections of a downward reversal. This recent article from USA Today illustrates:
Actors Called To Traverse The Dark Side
Darth Vader is not the only one drawn to the dark side
A handful of actors known for their comedic talents or teen roles are embracing bleaker parts in movies hitting theaters over the next couple of months.
-USA Today, August 21, 2002
Jennifer Aniston gained fame over the course of the 1990s in the playful, upbeat role of Rachel on Friends. Her latest character is “an adulterous would-be criminal whose choices stem from depression and boredom.” Perennial funny man Robin Williams has played a bad guy in three films this year. His “biggest departure” yet is his latest role in One Hour Photo. “Not a hint of the fast-talking comic or the sentimental clown of Patch Adams is visible in his portrayal of an unbalanced photo technician obsessed with a handsome family.” Williams is “trying mightily to shake his upbeat image.” To play these roles, actors “mine painful emotions and face inner demons.” Aniston changed her walk and posture to convey a “loss of passion and vitality” and explored that part of herself “that isn’t always laughing and happy.” “Comic genius” Tom Hanks plays a hit man who murders a victim in front of his son and is himself gunned down at the end of Road to Perdition. The forward momentum behind this trend is signaled by the fact that critics love these movies. Actor Robert Downey Jr. is doing ads for Sketcher shoes even though he has been repeatedly arrested for cocaine and heroin possession. The company is not employing Downey in spite of his checkered past, but because of it. Newsweek explains that “bad-boy pitchmen” are now best for selling shoes. “Celebrity endorsers typically have been squeaky-clean family men like Cal Ripken Jr. But today’s sneaker ads often showcase figures known as much for alleged misdeeds as for their accomplishments. When a company attaches its brand to these antiheroes, it’s a way of saying, ‘We’re in touch.’”
Moviemakers are connecting with audiences by attacking bull market icons and featuring subjects that were taboo in the bull market. The response is shock and outrage followed by strong demand. When the movie Barbershop skewered Martin Luther King Jr. and Rosa Parks, civil rights leaders claimed that it “crossed the line between what’s sacred and what’s funny.” “There are some heroes who are sacred to a people,” said Jesse Jackson. “Why put cyanide in the Kool-Aid?” Because, Jesse, in a bear market, audiences like cyanide. With the help of the “backlash” against its cutting dialogue, Barbershop became the No.1 box office attraction. Another “furor” has emerged over one of the ultimate complex anti-heroes, Adolf Hitler. The Nazi dictator is “springing up in a number of cultural and cinematic projects.” According to USA Today, the outrage “centers on possible sympathy” in the new films. Two of the films cover Hitler’s early life and will show him as a lonely outcast. The Jewish Defense League is trying to stop one of the projects because it fears that it could appeal to neo-Nazis who might empathize with the young Hitler. They are probably right to worry.
Rosie O’Donnell offers a real-time view of one of LeBon’s “unconscious psychologists” rolling with a change in social mood. In the final years of the bull market, O’Donnell enjoyed a public reputation that was in synch with the rising social mood. In fact, it was so solid that a publishing firm changed the name of McCall’s magazine to Rosie and rebuilt it around her image. Circulation skyrocketed, for a while. By late 2001, it was sinking fast. Unlike Martha Stewart, O’Donnell went with the new trend. In May, she left The Rosie O’Donnell Show and did some off-color nightclub routines. When she went on to terminate her relationship with her own magazine, the publisher called the move “truly shocking” and accused O’Donnell of “abandoning her past. She walked away from her brand, her public personality, her civility.” In recent months, O’Donnell has come out as a lesbian. With a short haircut and male fashions, her mixed gender is the defining characteristic of her new identity. This swing represents a classic bear market makeover. Back in 1988, one of the first distinctions EWT made between bull and bear market heroes was “a preference for symbols of polarized sexual identities” in bull markets. “In bull markets, female symbols sport an extreme feminine image.” For O’Donnell, this meant cooing over the likes of Tom Cruise. “In bear markets, male and female symbols more readily sport mixed or integrated sexual identities.”
Believe it or not, World Wrestling Entertainment offers another clear manifestation of this shift. First, note that the WWE has fulfilled a February 2000 EWFF forecast for a downturn in its fortunes with a 20% reduction in TV ratings and 79% decline in earnings. Next, note the symbolic shift: In response to the slide, the pro wrestling group has added the gay tag team of Billy and Chuck. For five months of 2002, Billy and Chuck were actually the WWE’s tag team champions. They were married on a recent episode. The New York Times reports that “crowds have been responding” to the “ambiguous tag team.” Gay wrestling characters are not unheard of in the sport, but historically, they have been “thrown out there for the audience to hate. But Billy and Chuck are different.” One of EWFF’s reasons for saying that WWE was at the height of its popularity in February 2000 was that “mixed heroes accompany a bear market,” and pro wrestling has traditionally put forward well-defined good guys and bad guys. By playing off the traditional stereotype, Billy and Chuck won’t carry the WWE back to it old heights of “wrestle mania,” but their appearance reveals a level of adaptability that may help it survive until the next period of rising social mood.
HERE, WHERE A THOUSAND
CAPTAINS SWORE GRAND CONQUEST...TALL
GRASS THEIR MONUMENT
--BASHO
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The socionomic significance of Captain America’s assassination must be plain as a bunch of subscribers called and wrote to alert us of his demise. Captain America’s fate at the current juncture in social mood fits as he has no superhuman powers, but due to a Super-Soldier serum, he does have the unique ability to perform a variety of tasks at “peak human potential.” So, it follows that he has fallen within days of the Dow Jones Industrial Average’s all-time peak. He was born in March 1941 when the U.S. was on the verge of World War and a little over a year from a low of 92.92 that remains in place. 