Reflections on a Decade of Financial Change

By Todd Harrison  JUL 02, 2010 9:30 AM

Sharing the journey, one day at a time.

 


Time can be measured in many ways but through a financial market lens, the last ten years have been nothing short of remarkable.

We witnessed technology stocks that rocketed to the moon crash back to earth.

We watched bipolar disorder come full circle in real estate; a manic craze followed by the depression phase.

China seemingly held the key to world prosperity before the devil of deflation brought the other side of globalization to bear.

Crude was viewed as a new paradigm until we discovered the difference between hiding spots and safe-havens.

Credit, the mother of all bubbles with total debt-to-GDP stretched towards 400%, reached the zenith of its elasticity and unwound with furious vengeance until the government saved the day and mortgaged our future.

And here we are, navigating perhaps The Last Gasp Bubble, that of quantitative easing with the full faith and credibility of governments hanging in the balance.

All Along the Watchtower

Broadening the aperture, the events of the last ten years have been astounding.

AOL (AOL) married Time Warner (TWX) in 2000, only to legally separate ten years later.

Mad Cow Disease panicked the population, as did Anthrax, SARS, and the Swine Flu.

Alan Greenspan concocted his toxic brew, only to be hailed as the greatest Federal Reserve Chairman in history.

The attacks of 2001 shattered our innocence.

Reactive regulation busted the likes of Kenneth Lay, Bernie Ebbers, and Dennis Kozlowski in the first iteration of corporate malfeasance.

Five years later, the same fate befell Warren Specter (Bear Stearns), Stan O’Neal (Merrill Lynch (BAC)), and Chuck Prince (Citigroup (C)), all of whom cashed in before prices collapsed.

We watched Goldman Sachs (GS) take over Washington, one by one until they ruled the roost. Hank Paulson sold upwards of $500 million in stock through a tax-free loophole.

We invaded Iraq after being told they possessed Weapons of Mass Destruction.

There was the blackout in the Northeast -- still yet to be explained -- Abu Ghraib Prison abuse, Hurricane Katrina, election shenanigans, the iPod, Anthrax fears, terror alerts, Patriot Acts, American Idol, “Mission Accomplished,” Martha Stewart, Madonna kissing Britney, Howard Dean going nuts, Janet Jackson’s nip slip, Facebook, YouTube, Twitter, ring-tones, Tsunamis, and steroids. The Soprano’s, 24, and Lost faded to black. The Red Sox finally won the World Series. Britney, Lindsay, and Paris captivated the mainstream mindset before falling prey to the trappings of success.

We’ve shared some great moments and some tough times, with moments of moderation sprinkled in for good measure.

Little did I know that I would embark on a journey to share those events in real-time.

Run, Run, Run for the Roses

History will describe the last decade as a stretch when most folks chased the pied piper of immediate gratification, losing sight of what truly mattered and why. When the dust settled, it was the single worst period in the history of financial markets.

While not everyone transgressed, few emerged unscathed as The Age of Austerity arrived. Many are still learning that lesson, some are experiencing it for the first time.

Flashback ten years today. I was running the trading desk at a $400 million dollar hedge fund when my partner at the time, Jim Cramer, readied for vacation. He was looking for someone to write his column in his absence and as it turned out, that someone was me.

I felt like I was doing him a favor at the time but with the benefit of hindsight, it was Jim that did me the favor. I had never written anything other then letters to my mother from camp and if not for that simple twist of fate, Minyanville would have never been birthed.

I’ve told the story before, or at least parts of it, and I’m in the process of writing a book that fills in the blanks. But today’s column isn’t so much about me as it is about us; what we’ve seen and shared, and how we’ve smiled and cried.

Old school readers will remember the bull and bear costumes from the bubble days as we navigated triple-digit moves in a single session. Who would have thought Uncle Buck and Microstrategy and Led Zeppelin could commingle into a cohesive stream of consciousness?

They’ll recall when I took a leap of faith and shared the tale of Ruby, my beloved grandfather, and explained the reasons behind my weekly trips to Del Boca Vista. I still have the thousands of emails my family read beside his bed as our patriarch passed.

They’ll remember the chilling post on Thestreet.com when, at 8:47 AM on September 11th, 2001, I wrote, “A bomb has exploded in the WTC. May God have mercy on those innocent souls” as I watched people hold hands and jump from atop the towers.

What followed wasn’t easy; post-traumatic stress, a deep-dive into depression, deciding to leave the only profession I ever knew to build some nonsensical community where an animated bull and bear could effect positive change through financial understanding.

While the vision was benevolent, the genesis was entirely selfish: to create a parallel universe devoid of the politics and pain in the real world. Dream Weaver

The ethos passed down from my grandfather permeated slowly at first, but was consistent throughout. All you have is your name and your word and honesty, trust, and respect are the foundational construct of any successful endeavor.

There were a lot of good people in the world: folks who believed there was a better way to do business, people very good at what they do but better at who they are.

You find out who your friends are when you stop paying upwards of $100 million a year in commission. It was a painful yet powerful lesson and I’m a better man for having learned it.

Through the years the mission has evolved from the ABC’s to the 401(k)’s, including Minyanland for kids, Minyanville as our flagship property, custom Buzz & Banter applications as community tools for institutions, and The Ruby Peck Foundation for Children’s Education, which has moved the needle on the philanthropic front.

Back to the Lecture at Hand

We like to say that the market writes the script and Minyanville tells the story but that only scratches the surface of what we’ve experienced together. It’s been more than a financial process, it’s been a human evolution that continues to continue with each passing day.

I’ve made my fair share of missteps, which would have been entirely easier if I wasn’t sharing them with the world in real-time. Mistakes became lessons; for me even still, and hopefully for some of you.

The last few days have been reflective as I took a trip down memory lane. As I chewed through the archives in search of a proper sampling, I remembered where I was and how I felt when I wrote the words for the first time.

Ten years -- it’s a heckuva run and quite hopefully, a solid beginning.

There is one thing I know with absolute certainty: without you, there would be no us and for that, I must express tremendous gratitude with sincere humility. As we’ve been known to say, a dream is only as powerful as those who believe in it.

With that, I offer this random sampling:

Brokedown Palace, September 11th tribute

Remembering Bill Meehan
, September 2001

The First Random Thoughts
, October 2002

Full Circle
, May 2003

Full Disclosure
, January 2004

Give Yourself a Hand
, May 2004

A Fish Called Kevin
, March 2005

Mother Morgan
, March 2005

The Ojai Chronicles
, August 2005

Minyanship
, November 2005

The State of the Art
, June 2006

Class Clown
, July 2006

Monopoly Peg!
July 2006

Five Themes of the Next Five Years
, August 2006

The Money Tree
, August 2006

The Vail Trail
, August 2006

The Critter’s Choice Awards
, December 2006 After the Gold Rush, June 2007

Land Shark
, August 2007

Redemption Songs
, August 2007

The Credit Card
, August 2007

Unusual Suspects
, October 2007

Fire on the Mountain
, November 2007

The Minyanville Festivus
, December 2007

Wall Street Confidential
, January 2008

Seems Like Old Times
, February 2008

Anatomy of a Recession
, March 2008

Chasing Liberty
, March 2008

The Cat’s Meow: The Other Side of Socialization
, March 2008

Oil of Oy Vey
, May 2008

Recipe for a Market Meltdown
, June 2008

Hanky Panky
, July 2008

Pirate’s Booty
, September 2008

The Upside of Anger
, September 2008

Martial Law for the Markets
, September 2008

Back in the U.S.S.A.
, September 2008

The Age of Austerity
, October 2008

Mickey Mantle Won’t Pay our Rent
, October 2008

Seduction, Corruption, Redemption
, October 2008

Casting Call
, November 2008

The Great Expression
, November 2008

The Emmy Award Winning Festivus
, December 2008

A Tribute to Bennet Sedacca
, March 2009

Memoirs of a Minyan, an 18-Part Series
, June 2009

Full Disclosure
, October 2009

Aspire to Inspire
, December 2009

Festivus
, December 2009

A Decade of Decadence
, January 2010

The State of Our State of Our Union
, January 2010

A Five-Step Guide to Contagion
, February 2010

The Mystery of History
, February 2010

Full Disclosure
, March 2010

Death, Taxes and Other Financial Certainties
, April 2010

Goldman Sachs; The Poster Child for Class Warfare
, April 2010

The 1000-Point Plunge, May 2010

The End of the Innocence
, May 2010

The Short-Sale of American Icons
, May 2010

The Ten Day War for Financial Markets
, May 2010

Will Europe Order a Code Red?
, May 2010

The War on Capitalism
, May 2010

The Eye of the Financial Storm
, June 2010

Thank you kindly for allowing me this ten-year indulgence. Have a healthy, safe and mindful holiday stretch, Do Something Joel (a random act of kindness), and I’ll see you on the other side of the fireworks.

May peace be with you.

R.P.
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 todd@minyanville.com.

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