• If you haven't sniffed Pepe Depew's Five Themes for 2009 Midyear Scorecard, have at it Hoss!  He is, in my humble opinion, the best financial writer on the Street.
  
  
• I'll revisit my ten themes on the other side of the holiday stretch after I've had a chance to step back and breathe.
  
  
• If I had to pick theme that will step up and stand out on the back nine it would be the migration of pain to state budgets and municipalities. Minyan Peter touched on this today and we'll have more foresight on the subject in the weeks ahead.
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• Citigroup (C) and JP Morgan (JPM) jacking credit card fees is probably "dead last" in terms of what the struggling consumer (representing 65% of GDP) needs right now.
  
  
• The savings rate has averaged 5.5% the last three months, the highest rate in 14 years.  While Hoofy sees "dry powder" that will fuel the next bull-run, Boo believes the uptick is a bearish hoarding of cash. The truth, as is typically the case, likely lies somewhere in the middle.
  
  
• I loaded up the Amazon (AMZN) puts three different times today but didn't pull the trigger ($85 remains nice and tight defined risk and it feels laggy vs. the tape). I'm tempted like the fruit of another downside try and may again dip a toe—but the quack count concerns me.
  
  
• What's a quack count? It’s when your ducks align. As it stands, the tea leaves are snazzy—NYSE internals are 5:1 positive, banks hold a bid and Snapper is knock, knock, knockin' on S&P 930 (the level of the day).
  
  
• I would also note the weaker greenback, which is a necessary precursor to--but no guarantor of--higher asset classes.
  
  
• With the ranks thinner than Kate Moss on Atkins, be alert for swings unseen since Terry Woo’s Hedonism vacation.
  
  
• Gun to head I wanna fade rallies (read: make sales into strength) and I continue to cast an upside eye towards S&P 950 as the most important level of the year.
  
  
• I guess there are worse songs that could be stuck in my keppe.
  
  
• Do you remember after 9/11 when Wall Street banded together in an act of unity only to sharpen their knives a few months later? I get the same sense today and months after begging for their lives, those mistakes failed to morph into lessons.
  
  
• Memoirs Chapter 4: War Stories is familiar fare for Old School Minyans but a necessary element in the overarching theme. Crazy thing is, I remember that feeling--the moment I realized what happened—as if it occurred yesterday. Wouldn't you?

Minyan Mailbag

Toddo,

You often talk about limiting your losses and defining your risk.  How do you handle a gap down of 30% in a core holding?  Do you rip off the Band-Aid or is there another philosophy I should know of?

Thanks,
MC

MMC,

It depends--has the story materially changed?  If so, cut and run and don't rationionalize.  As I shared this morning--and many times in the past--every trader worth his or her salt has taken a Henry Hill style beating at a point during their career.

If the story hasn't changed, the goal is to be in a position to use price to your advantage.  Trading. at it's core, is the attempt to capture the disconnect between perception and reality.  If the street has "over-reacted," lick your chops as you pick up your prize on the cheap.

And of course, if you don't "know," you can always  trade "in between," which might include peeling out of partial exposure to take some of the pressure off.

No blanket answers--there never are--but hopefully this helps at some level.  Know this--you aren't the first to experience that punch to the gut and you won't be the last.  The key will be how you respond and what you've learned.

Best,
Toddo

R.P.