The “Oversold” Tiger Woods:

Back on December 15 in an article titled “Contrarian Trading”, I wrote:

“These analyst predictions can cause investors and traders to jump in at the end of a run-up, or panic and get shaken out of a selloff. More often than not, when the “experts” are bullish on the market, sector or stock, most of the buying has been completed and downside risk is significant. Conversely, when most investors and traders are told to be bearish on the market, sector or stock, chances are that most of the selling has been completed and upside potential is significant.

I have previously written that “Fear and Greed” drives the markets and that is exactly what often fuels the “herd” or “sheep” effect. Remind yourself to step back from markets that technically are overbought or oversold. Regroup, check the charts and prepare a strategy to take advantage of these huge swings. Many profits can be made by being a lone wolf while all the sheep are being slaughtered”.

Of all the articles I have written, this one expresses a recurring theme of mine; a constant reminder by me to warn you to be aware of “overbought” and “oversold” stocks; to not follow the herd and panic into selling or rush to buy in. I am sure that along with me you have been fascinated with the recent Tiger Woods story and as I continue to read and view TV reports of this sad story, my mind drew parallels to my “overbought” and “oversold” theories .

I am painfully aware that his family has been destroyed, and millions of fans have lost a role model. We know that these are the victims of Tiger Woods’ foolish and selfish acts, but they are not the losers. The real losers in this whole affair will be the corporate sponsors who’ve just dumped a golden goose after what amounts to just another fat-headed, star athlete scandal.

I realize this sounds insensitive and callous but I believe that Tiger Woods is just like an oversold stock and should be considered a huge value play right now.

Look at Tiger Woods the golfer:

* His winning record continues to build the case to crown him the “Greatest Golfer Ever”
* The Tiger Woods television effect is substantial. Network TV ratings fell by almost 50% when Woods didn’t play in a given tournament during 2008.
* The Tiger Woods attendance effect at golf tournaments is substantial as 15% to 25% more spectators show up to tournaments when he plays.
* Tiger’s ability to sell products is substantial.
* The golfing industry has annual revenues of around $76 billion and Tiger has contributed to those numbers significantly.

Only Michael Jordan has so dominated a major professional sport as much as Tiger. They both have proven that they have vast commercial appeal, and are precious resources and should not be disposed of hastily. And yet this is precisely what some of Tiger’s largest sponsors have done — apparently without consideration of what it will cost them over the long term.

Big mistake!

What Tiger did was horrific and completely unacceptable. But assuming Tiger doesn’t forget how to play golf by the time he returns to the sport, I suspect that the massive Tiger Effect is unlikely to diminish any time soon.

We must realize that it’s only a matter of time before he does return to golf and does so with a vengeance! Do you really think an athlete of his caliber is not going to come back with a huge point to prove? You thought he played with total focus before? Watch out!

From Bill Clinton and John F. Kennedy to Charlie Sheen and Kobe Bryant, we’ve witnessed numerous individuals who have not seriously suffered the long-term reputational and commercial destruction that is broadly and immediately assumed to follow a scandal of this magnitude. New England Patriots quarterback Tom Brady ran off with a supermodel as his ex-girlfriend announced that she was having his baby. No one even talks about that anymore.

Tiger could easily be even more popular in his return to golf than he was before he left it. P.T. Barnum said, “Any publicity is good publicity.” And that is what is important, at least from a commercial standpoint.

That’s why I seriously question the decisions of companies like General Motors, Procter & Gamble (NYSE: PG), PepsiCo (NYSE: PEP), and Accenture (NYSE: ACN) to drop (or heavily marginalize) Tiger as a sponsor of their products. And just like my comments on contrarian thinking, the companies that just dropped him bought Tiger “high” and panicked and sold him “low.”

Unlike other contemporary professional athletes, Tiger hasn’t killed anyone. Tiger did not ruthlessly abuse helpless animals. As far as I know, he hasn’t pumped his muscles full of illegal substances either. Tiger just had a wandering eye. And that is something that plenty of people can relate to personally.

You didn’t see Nike (NYSE: NKE) running for the hills, did you? As far as athlete-related scandals go, this one is relatively tame. That was a smart decision, because Nike, along with Electronic Arts (Nasdaq: ERTS) and a few others, now have an under-valued asset nearly all to themselves. They obviously believe the public has the capacity to forgive Tiger and unlike those that dumped him, they did not respond like “sheep” and panic.

If Tiger were a stock, I’d buy him right now, I’d get long up the wazoo, not because he’s a great guy and certainly not because I feel bad for him, but because he’s been “oversold.” He’s a discounted and valuable economic asset that has a huge, serious long-term upside.