Someone told me when I started trading that sometimes you're gonna be the windshield and other times you'll be the bug. As I watched my hind legs fly by my ears late yesterday afternoon, I was reminded of that adage.
Nobody—and I mean nobody—is smarter than the market.
The time stamp on my bull costume was in and around S&P 785, NDX 1065 and DJIA 7820. That, coupled with some small nibbles on Wednesday, made for a rather unpleasant 24-hour P&L.
I share this in the interest of forthright communication and to remind Minyans that it’s that hard out there. In the immortal words of Sean Maguire, "It's not your fault. It's not your fault. It's not your fault."
Into yesterday’s close, as the skies opened and capitalism cried, I slowly shook my head in amazement. Schlumberger (SLB) in the thirties. Citigroup (C) at four. General Electric (GE) and Intel (INTC) pre-teen. General Motors (GM) and Ford (F) a few days from decimals.
While the Dow Jones Industrial Average organically split in the last thirteen months and $8.3 trillion in stock market wealth evaporated, many once impenetrable corporations have virtually vanished altogether. We’re not talking about Mom & Pop shops, we’re talking about cornerstone corporations that defined American business machismo.
I couldn’t help wonder to myself that if someone who “saw” this coming was having sticker shock, what must the school teacher in Des Moines be thinking? This savage once-in-a-lifetime stuff and the societal reverberations will be pervasive and profound.
As such, and as I’ve got a lot going on in my crowded keppe, allow me to funnel my thoughts through in a random manner:
The potential for social unrest is perhaps my greatest fear but I suppose that’s a discussion for another time. In order for us to navigate this journey, we have to take it one step at a time. That step, right here and right now, is to chew our way through the dew and arrive safely into the weekend.
- Chatter swirled yesterday that foreign central banks cried Uncle Sam and redirected capital to the fixed income markets—you saw the long bond up 7 ½ points, right?
- I made the conscious decision to carry my risk overnight. That's a shift in my stylistic approach (hit it to quit it) but, after hoarding cash for quite some time, I was (cough, wheeze, biting lip) comfortable with that. Famous last words, right?
- A Ship With No Captain? Hammering Hank stepped on stage yesterday and left without sharing “something seismic." In fact, the meat of his speech was somewhat shifty, saying it's "naive" to believe the Lehman Brothers failure caused a deeper crisis.
- Further to that, he punted Fannie (FNM) and Freddie (FRE) into the lap of the next administration, saying their fate is in Obama's hands, while assuring investors that regulators have the tools necessary to maintain stability.
- Whew, and we were worried...
- Perhaps the most ironic element of this whole mess is that Warren Specter, Stan O’Neal and Chuck Price sold their holdings higher and netted hundreds of millions of dollars before their respective firms collapsed.
- We asked in early October whether the proposed Citigroup-Wachovia (WB) deal was in fact an FDIC bailout of the former rather than a rescue of the latter. When Wells Fargo (WFC) wrestled away control, we wondered if Citigroup was still circled as a survivor. It seemed far-fetched at the time but not anymore.
- Meow Mix? This is both adorable and very disturbing.
- Minyan Emmanuelle (aka Minyan Sloan) is asking ye faithful to help Raise Hope For Congo by signing a petition to the President. You never know what type of ripples a positive pebble in the pond can create so I’m only too happy to pass it along.
- Sur-prise, sur-prise, sur-prise! You can learn a lot just by watching and along those lines, Wal-Mart (WMT), Target (TGT) and Sears (SHLD) were giggled green in yesterday’s late day Art Carnage.
- Wear sunscreen and read this when you can.
- I don't know about y'all but I, for one, could use a break from this shake. I'll be scooting to
Baltimore Wednesday for some turkey time as a start. There's something about the laughter of little kids that takes the edge off reality.
- Was Carly Simon a narcissist?
- Remember in 2006 when we said that our biggest concern was that we were at all-time highs but nobody felt like we were at all-time highs as we juggled concentric bubbles?
- This is the other side of that trade, when we're swimming in the abyss and nobody feels like it'll ever get better. Make no mistake—this will take time and it will take work—but to get through this, we needed to go through this. That will fall on many deaf ears but we, the Minyans, need to remember that. Sometimes, perspective is all we have to sustain us.
- Jenny said turn off the radio. Jenny said turn off the light. Jenny said turn off the video. If only we listened to Jenny, maybe we we could let it go, let it go, let it go. Let it go, let it go, let it go.
- Have no fear, Jack Bauer is here.
- The semis were the first sector to flip the upside switch yesterday and that’s worthy of a mention as we map our forward path.
- Of course, that sword swings both ways. Banks? Swvft! 10%. The drillers? Thump! 16%. Remember, in a counter-trend rally, you flip the switch on conventional wisdom and buy the beaten down, oversold sectors for a trade.
- Market psychology is a funny beast, eh? When we were 50% higher last year, the bears were taking stabs and covering the first pullback (as the news was generally constructive). Now, the bulls are taking stabs and selling the first rally (as the news is grim and grimmer).
- The only difference between a mistake and a lesson is the ability to learn from it.
- 330 Minyans cut a rug at last year's Festivus and we're on pace to eclipse that this year (which is a testament to our community given the economic climate). Word to the wise, we'll prolly close registration as we approach the 3-handle.
- Speaking of the community, I would like to take a quick moment to offer a hearty congrats to Team Minyanville for having the second highest year-over-year traffic growth of any financial website on the planet.
- Disney (DIS) as a teen is on my laundry list. Ditto Yahoo (YHOO) as a hat size, particularly after sidestepping the meat of the downside heat. Perhaps there's some serendipity in that?
Answers I Really Wanna Know…
Do you think folks will be bummed if we don't serve roasted rat at Festivus?
How much of yesterday’s midday rally was due to the chatter that a three month short sale ban would be soon be implemented?
Right before the September expiration?
If you were running an emerging media concern and they asked you to do a television spot on Sunday at 5 pm—right in the middle of the afternoon games—what would you say?
Did I really miss another week of physical therapy on my knee?
I have a 9:00 AM cross-town meld so I’ll likely miss the opening but I’ll be back on the Buzz shortly thereafter. Take a deep breath, understand that we’ll see some wicked two-sided volatility today—it is expiration—and we’re a scant seven hours from our requisite two-day respite.
Fare ye well into the dwell and remember, Minyans, profitability begins within.
Did you know the doors to Festivus 2008 are officially open? Have you yet locked your spot for the critter trot as last year's soiree sold out? (This is our annual event to commingle our professors, partners and Minyans while chowing down and listening to live music. The very best part? It's for the kids in the good name of my grandfather.)
Position in SHLD
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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