Todd Harrison: The Stock Market Arrives at the Moment of Truth

By Todd Harrison  JAN 17, 2014 10:21 AM

Inflection points abound as investors digest earnings.

 


Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

And so it goes, as we edge through earnings and digest information, data, and interpretation in an attempt to map our forward path.  There’s a lot going on and we’ll get to all that; first, a bit of a sidebar.

My writing has evolved through various stages the last 13 years. There have been stretches that were intense and others more reflective; through it all, there has been a healthy dialogue and transparency.

I’ve always loved financial markets and what they represent: They are, in the most basic form, vehicles to reward foresight. Having traded 23 years, I consider myself well-informed on financial matters, which is entirely different than claiming to be this, that, or the other thing.

In the fourth quarter last year, for the first time in my career, I took a step back from actively trading risk. It wasn't because I was wrong, although I was too bearish. It was to clear the mechanism in an effort to view the world free from cognitive biases.

This isn’t a "Mission Accomplished" moment in terms of proclaiming the timing or direction of the next market move; there are many moving parts and competing agendas, and absolute clarity is elusive if not subject to change.
 
What is clear is that we're navigating one of the more profound eras in the history of financial markets, and we must pay attention to the "why" as much as the "what."

From the outside looking in, there is a notable disconnect as stocks rocket higher while the standard of living suffers. From the inside looking out, the boundaries of normalcy appear stretched as the vicious cycle continues, almost in slow motion.

As we enter the New Year, my intention is to trade surgically with an eye on capital preservation while keeping an eye out for longer-term opportunities.
 
I don't trust the tape, but I most certainly respect it; animal spirits have minds of their own and tend to pave the path of maximum frustration.

Random Thoughts:

 
R.P.

Twitter: @todd_harrison

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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