Financial Myths: “Don’t Laugh, This Isn’t Reality TV” Part I

Michael McTague |

financial myths, business myths, financial myth busters, insider trading sac

Jack Nicholson’s line from The Departed has caught on with many executives and offers a myth that needs examining. Reality TV mimics what happens in some sizeable companies. Is it any wonder that most people know Mark Cuban for his stint on Shark Tank rather than for his business prowess?

The recent conviction of Mathew Martoma for insider trading resembles reality TV. Two aspects of the outcome contain the Jerry Springer/Naked and Afraid factor. One is the long sentence. He was guilty but a nine year sentence smacks of some type of outlandish retribution, not just against him but against his whole company. The government appears angrier than Judge Judy perhaps because its threat of Truth or Consequences failed to get Martoma to spill the beans on his boss, Steve Cohen.

Wheel of Misfortune

The second afternoon TV element was the outlandish efforts of the government to get the goods on Steve Cohen, the SAC founder. In addition to turning the heat lamps on Martoma, they tapped phones. In a Candid Camera-type stunt, they also did this to Mr. Shark Tank, Mark Cuban, in the curious insider trading fiasco in which Cuban fought the charges and prevailed. It cost him more to defend himself than the potential fine. The Canadian search engine ( is not exactly a household word. It sounds as if the wheel of fortune spun to “lose a turn” and lose a chance at a million dollar payday. Is it time for lights to flash and a bell to ring? The wheel spins – and look where it stops. As Martoma gets ready for a long stint in jail, SAC Capital has a new hedge fund spinoff (Point 72 Asset Management) and SAC Capital will apparently wind up paying $1.8 Billion in a “settlement.”

These cases are thought by some to show that American justice reaches into places of power and wealth. Let’s face facts: such proceedings also trivialize justice. It is more cost effective for people to plead guilty or to accept a financial settlement without guilt being proven. Next contestant, please!

Come On Down!

A second example of reality TV at work can be found at the fledgling Sears (SHLD) . Revenue falls; profits evaporate and the stores appear empty. For some years, they claimed to have a smart strategy of spinning off valuable brand names such as Lands' End ($LE). Now nothing works.

The reality TV factor calls up a long-standing problem with big retailers: no strategy. What makes the Sears situation so painful is that it looked like they had a strategy. For example, they have been trying to shift to selling products to members, and reported that membership was growing. Then someone spun the wheel. Their many large, mall-type stores are empty and appear overpriced. Home Depot (HD) and Walmart (WMT) easily outpace them. Sears membership is growing, but from a tiny base.

Got Self Esteem?

Sears would be a bad candidate for reality TV. Imagine a grey-haired host with a microphone. “OK, Sears, your customers say you are doing a lousy job with overpriced products and a bad sales staff. Audience! Does Sears deserve a second chance?” Audience: “No!!!”

You may find the link between business and reality TV ridiculous. Why would someone compare challenging financial and marketing decisions to angry girlfriends humiliating former boyfriends with help from the audience -- the antics of afternoon television. The host’s solution to every problem is self esteem – you have it or you don’t. The rare guest who has it looks smug and the audience hates you. If you don’t have it, you are ridiculed. There is no plan to give someone self esteem, only to point out its absence. Maybe this is not far off business reality.

A Dating Game/Extreme Hoarder reality TV parallel can be found in the bizarre story that Yahoo’s stock went up shortly before the Alibaba IPO because Yahoo owned a large stake in Alibaba (BABA) . After the IPO and after Yahoo earned about $9 billion through the IPO, Yahoo’s (YHOO) stock fell along with its flagging image as a serious competitor in the search engine arena. So, maybe self esteem offers a good litmus test.

According to a Gallup Survey (State Of The American Workplace), “70% of American workers are ‘not engaged’ or ‘actively disengaged’ and are emotionally disconnected from their workplaces and less likely to be productive.” The other 30% may be the real worker bees but the 70% who make up the disengaged and are more than double the size of the engaged cannot be brushed off. These are the devotees of reality TV many of whom work at hedge funds, big retailers, search engines, even reality TV shows.

For the disengaged, shock value – long sentences, defendants who faint, government agents who tap phones and bully defendants – tie closely to their opinions of their own bosses, their companies and the industry that employs them.

So, Jack Nicholson appears to have been onto something. Beyond the ridicule of reality TV a serious element exists – hence the “Don’t laugh” part of the myth. Do you really feel like getting a job in a restaurant, becoming an apprentice, hooking up with a real housewife or becoming a national singing idol? Don’t laugh!


Michael McTague, Ph.D. is Executive Vice President at Able Global Partners in New York, a private equity firm.


DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


Symbol Name Price Change % Volume
BABA Alibaba Group Holding Limited American Depositary 103.73 -0.49 -0.47 694,552
HD Home Depot Inc. (The) 123.01 -0.33 -0.27 492,790
LE Lands\' End Inc. 15.75 0.00 0.00 1,109
SHLD Sears Holdings Corporation 11.29 0.08 0.71 31,302
WMT Wal-Mart Stores Inc. 69.39 0.03 0.04 201,087
YHOO Yahoo! Inc. 42.35 -0.20 -0.47 402,544


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