"May I have your attention please. Mr. Hunter has brought it to my attention that morale may be a bit low. That you may be a bit…on edge. So I suggest this. Any crew member who feels he can't handle the situation can leave the ship right now! Gentlemen, we're at DEFCON three, war is imminent. This is the captain, that is all."
-Capt Frank Ramsey, USS Alabama
Good morning and welcome back to the Crimson Tide. With the world on edge and traders tickling the trigger, we're asking Minyans to stand up, calm down and keep their cool as the tape torpedoes into the Laurentian Abyss.
Emotion is the enemy while trading - we've learned this discipline through bubbles and busts - and it only takes a momentary lapse of judgment to put a damper on our day.
It is with this collective call for calm—which is quite different from complacency—that we ready ourselves for battle. Proper preparation always precedes a profitable process. And junctures like this put that process to the test.
Chief of the boat, what say ye?
Alas, there's much more meat in there, but you get the point. While many in the mainstream media offer these thoughts as "breaking news," the conditional elements have been cumulatively building for years.
There is no quick fix on this long road, only awareness and redemption. If we each do our part and manage risk (rather than chase reward), the system will slowly alleviate the structural imbalances in place.
In other Random Thoughts…
Minyanville is "officially apolitical," which is to say that we steer clear of political rhetoric unless it has a direct effect on the financial fray. That relates to electoral influences on specific sectors or implications of the changing of the guard.
Last night, while at dinner with someone who knows quite a bit about the Beltway, I asked whether the cracks in the Washington cronyism—from Rumsfeld to Wolfowitz to Rove—was in anyway related to our current market crunch. His response was interesting. "When the generals are leaving the battlefield, the troops must fend for themselves."
After trading from the short side the last month, I punted my puts into yesterday's opening and proceeded to get nicked by a few paper cuts during the whippy trip. When that happens, I like to flatten out and take a breath rather than press, guess and otherwise stress.
While market breadth is 3:1 negative, the money centers (BAC, C) and Bear Stearns--along with Fannie and Freddie--are showing early relative strength. Watch these please as the banks test the double bottom at BKX 101.50. THIS IS THE TIGHTEST BOVINE BACKSTOP FOR BULLS LOOKING FOR DEFINED RISK.
Mea culpa on my late opener today as I've had some system issues. Do you have any idea how frustrating it is to write three columns and have them poof! into cyberspace? I do. You know what else? It could be worse and for alotta folks out there, it is.
Maintain perspective and keep your right hand up and remember that, no matter what your bottom line says, you've got it better than most.
Lemme hop the fence and join the Buzz. Fare ye well as you truck through the muck.
No positions in stocks mentioned.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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