Academy Awards for the Real World

by Susan C. Walker

Best Picture – Little Miss “Stock Market” Sunshine. Clearly, 2006 was the year for the stock markets that just couldn’t stop smiling. The Dow Jones Industrial average, S&P 500, and NASDAQ all ended the year on uptrends. Fortunately, their dysfunctional families haven’t caused any major problems – yet. But 2007 is a new year and a new pageant, and this past year’s winners may have a tough time repeating their performance.

Lifetime Achievement – Warren Buffett. He’s beloved and he’s not dead yet (à la Monty Python), but he sure knows how to give his money away, having pledged $30 billion to the Bill and Melinda Gates Foundation. Charitable giving has been on the rise the past few years, just like the financial markets. My colleagues here at Elliott Wave International make an interesting observation, though: “The end of a long bull market is the only time when people feel so confident in their future earnings that they are willing to part with more than usual amounts for charity. We have nothing against charity, it’s just that when so many people are being mobilized to give by powerful social forces, society is operating under the blissed-out influence of a long advance.”

Best Director – Gerald Grinstein, Delta Air Lines. When most of the business world figured Delta was down and out in bankruptcy court, U.S. Airways figured it could steal a march on other airlines by acquiring Delta. But Delta’s CEO, Gerald Grinstein, directed his executives and employees in a major effort that rebuffed the hostile takeover attempt. For being able to part the waters of what looked like a slam-dunk takeover bid, you might call him the Cecil B. DeMille of the corporate world. Like DeMille, he also can blow a budget: Delta’s stock price has lost about 65% since December 2006.

Best Foreign Film – China Stock Market.  The Shanghai Composite Index filmed a beautiful screenplay in 2006, rising exponentially from around 1100 to nearly 3000. But there’s something to be wary of in this movie, as the February issue of the Elliott Wave Financial Forecast points out: “Chinese stock-buying frenzies are getting to be like ‘Rocky’ movies; they keep coming and coming. Of course, there is a very important difference; they don’t end happily.” That refers to the original version of the movie, known as Red Chip Fever, that took place in Hong Kong’s main stock index, the Hang Seng, in 1997. After a strong rise, the Hang Seng topped a month after Hong Kong reunited with mainland China and fell 46% in three months. EWI’s analysts see the latest Chinese mania coming to an abrupt end, the same way the rise in housing stocks and copper did over the past two years.

Best Actor – Ben Bernanke, Federal Reserve chairman. Bernanke has done the superb acting job expected of Fed chairmen by making everyone feel good about the economy and inflation. Lurking under the surface, though, is the Sixth Sense that this happy melodrama could turn into a horror movie. How? Just imagine the result if the nations that finance U.S. debt decide to hold the gun to our heads by slowing down their accumulation of U.S. dollars. It could be an awful case of Cabin Fever.

Best Actress – Patricia Dunn, former Hewlett-Packard chairperson. Dunn must have thought she had walked onto the set for the new James Bond movie, “Casino Royale,” as the villain. Where else would you get such a juicy role in a movie with unknown contract players pretending to be board directors? They used that pretext to steal information about whom the directors were calling and allegedly leaking corporate information to. But Dunn claimed not to know whodunnit.

Best Supporting Actor – Ted Wells, Scooter Libby’s attorney. He injected drama into the end of the four-week trial of Scooter Libby, former top aide to Vice President Dick Cheney. Wells oozed sincerity and caring. He even choked up while delivering his lines during his closing argument. What more could we want from an actor in a supporting role? Only one question remains: Will the performance be enough to save his client from the slammer?

Best Supporting Actress – Secretary of State Condi Rice. She’s the rising star in the Bush Administration, despite having to jostle with the seasoned veteran, Dick Cheney, for her own close-ups on camera. The question is, will she take a chance on a bigger role as a candidate for president in 2008? Runner-up – Senator Hillary Clinton. Here’s another star whose time may soon come to take the limelight once held by her husband and former President, Bill Clinton. She’s had backing from Hollywood for quite a few years, but are the financiers growing tired of supporting someone who keeps trying on different roles as First Lady, senator from New York, liberal, moderate, conservative, hawk, dove?

Best Live Action Short Film – “Bonus Baby” by Lloyd Blankfein, CEO of Goldman Sachs. Why a short film? Because Blankfein has been CEO of Goldman Sachs for only six months, stepping into the top job after Henry Paulson left to become Secretary of the Treasury. Thanks to the mega merger-and-acquisition deals his company did in 2006, he received the largest bonus ever recorded on Wall Street — $53 million dollars.

Best Costume Design – John McCain. McCain wins for his quick costume change over the past year. He started by wearing the Western cowboy costume of an independent maverick, but now the Arizona senator has donned the mainstream Republican cloth overcoat for his latest role as frontrunner in the presidential campaign drama.

Best Original Song -“Patience” from Dreamgirls.  If you are trying to sell your house in one of the nation’s markets that’s gone sour, you have got to have patience in abundance. “There’s a river to cross, And a mountain to climb, Patience, patience, It’s gonna take some time.”

Best Film Editing -All the CEOs who backdated their stock option grants. Film editors know how to look at a long piece of film and cut it to make the action come out perfectly. These CEOs found that backdating was the best way to edit their stock option grants, so as to accrue more money with no work involved. As one shareholder group described in its lawsuit: “The backdating of stock option grants is akin to picking lottery numbers on the day after the winning numbers are announced.” Now, that’s some kind of slick editing, wouldn’t you say?

Best Makeup – National Association of Realtors. After a few great years of constantly expanding housing starts and higher home prices, the folks at the NAR have had to dig deep into the makeup kit to learn how to paint a happy face on each month’s increasingly negative housing statistics. The same goes for CEOs at the nation’s largest homebuilders. Just this week, Toll Brothers announced that its quarterly earnings took a dive from 98 cents a share a year ago to 33 cents a share this first quarter thanks to a slowing housing market.

Editor’s Note: Susan C. Walker writes for Elliott Wave International, a market forecasting and technical analysis company. A graduate of Stanford University, she has been an associate editor with Inc. magazine, a newspaper writer and editor, an investor relations executive and a speechwriter at the Federal Reserve Bank of Atlanta.