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Minyan Mailbag Grab Bag


Minyans ask, we answer...



Came across this article, not sure if you have seen it. This guy is probably not the only person who acted in this fashion but so far he appears to be the only one coming clean. Not sure if the feeling I get in my stomach is from breakfast or the thought of all the others in the same predicament. Peace, Minyan MJE

Minyan MJE,

Thanks for bringing this to our attention. No, he most certainly isn't the only person to fall prey to the sexy sirens of real estate wealth. Our intention in sharing his story is to hopefully help others who might be in a similar spot. Minyans should be immune to these risks--we've been highlighting them for years--but if sharing this tale helps one person, or a Minyan can forward the link to someone it will, it's worthy of the space on this page.


Working for Merrill on the retail side of the Business, the theme over the past five years (fear, greed, etc.) has been that of diversification. Every 21 year old is told he should own some fixed income. This is very different from when I entered the pre-bubble business in 1993. I manage about $50 million in clients assets and as far as I can tell, everyone is happy outperforming CD's and money markets. My question to you is, as far as the stock markets are concerned, are we just beginning the migration phase that began in 2003 and not even close to the panic stage, when customers start demanding to take more risk? Minyan Brad.


Good question as it speaks to the prevalent anxiety currently on the Street. I remember in 2003, my grandmother Dorothy---Ruby's wife, who is already prepping for our December 1 affair--called to tell me that she was considering an investment in a hedge fund. That, with rates as low as they were, she wasn't realizing the returns she wanted. This hit home for me, for obvious reasons, and spoke to the "Elmer squeeze," which was the hard push to increase risk appetites.

You may be correct--we may not have reached the panic stage of "get me in"--but I'll remind Minyans that this is a double edged sword. When the tape turns lower--and it is a "when," not an "if"--capital preservation and positive, if meager, money market returns will look pretty snazzy on a relative basis. This won't be a popular stance right now, not with everyone trying to keep up with the Dow Joneses, but please bookmark it and we'll revisit it at a later date.

Hey Toddo,

When you say "don't short charts your can't ski" What exactly do u mean? An ascending or descending chart--or both? I guess a chart that is going parabolic is ski-able to the left anyways. I just wanna avoid double black diamonds! Thanks for the great site, Minyan Brian. P.S.- Is there any chance you could get that Bull to quit knocking on the window every minute?


That's an old adage on the Street that talks to the risk of trying to "catch a cusp" or call a top. Ask Julian Robertson about this one. As sharp a cookie as he is--and he's a brilliant trader--he saw the bubble brewing into 1999. Alas, he was a tad early and, if you're not there to cash in your chips, it's the same thing as being dead wrong. He capitulated on his short-side bet immediately before the bubble popped, leaving more money on the table than most of us will see our entire lives.

I will offer that this isn't absolute. That, if you're disciplined and implement the proper strategies, it's possible to define risk and use prices to your advantage. I've done this plenty in my career--both winning and losing--through options, particularly when vols are as cheap as they are now. The point is, nobody is smarter than the market. Drawing a line in the sand and defending it with all your ammo is a dangerous--and potentially fatal--strategy. Waiting for the chart to top and setting a stop at the top of the slope is a viable strategy if it's an extension of your view.

And, yes, if you insist on caging the Critters, click on the "hide movie" tab on the top right of the home page module. Be forewarned, however, PETA could come knocking instead!

Hi Toddo,

Your ten trading commandments are an excellent compilation of trading wisdom passed down through the years; great stuff Yoda! I would add the following rules that I have read and learned from other traders over the years. Numbers 1 through 7 are classic Livermore (I am a big fan of his must read book) and numbers 8 through 13 are from numerous current traders.

1) Don't sell stocks when the sap is running up the trees.

2) Be free of speculative prejudices. There is only one side to the stock market. It is not the bull side or the bear side, but the right side.
3) No one can outsmart the stock market ALL the time. When you know what not to do in order not to lose money, you begin to learn what to do in order to win.
Never argue with the tape, our sole concern should be making money and not insisting that the tape agree with them.
Wall Street does not owe you any money.
It is not always the best to buy as cheap as possible or short at the top, but to buy and sell at the right time.
Don't try to play every fluctuation; focus on the big swing at the right pitch.
"The Thrill is gone baby": Don't let the craving of excitement get the better of your judgment. Want thrills from fancy graphics and computers? Forget trading and buy an Xbox!
Stop looking at your P&L; execute the trade correctly and the money will follow.
Don't spend time criticizing what you don't understand.
You don't need a lot of fancy software, back testing systems, loads of indicators to be a great trader. Learn to read the tape. Ability to read the tape, experience, logic and some good ol' common sense is worth more than thousands of dollars of fancy software and equipment.
A trader's worst enemy is within. Know yourself and your limitations.
Don't break the rules!

Rock on! Minyan Medha

Minyan Medha,

Thanks for sharing M&M! M&M's makes friends---and hopefully helps other Minyans trade a bit better.


What's up man? Hope all is well. Wanted to send some positive feedback. First, Props to Michael Nathanson's sharp call on ClearChannel Comm (CCU) from
the media breakout at Minyans In the Mountains 3. More than paid for the trip. Also, thanks to "the new guy"
Jess Thompson's "String of Pearls" article yesterday, I nailed another stock where the long-term trend superseded yesterday's short counter-trend reversal. I guess that's immediate gratification. Good stuff mon frere. BTW, Mr. Krueger and I have plans for you next year in our hoops rematch. Better start working out. Minyan Adam B.

Minyan Adam,

Hey boss--great to hear from you! I wanted to post your Mailbag as snaps to Michael and Jess , as well as call attention to the fact that we'll soon be hosting Minyans in Manhattan and the Critter's Choice Awards on December 1st. We'll be featuring an afternoon of financial vibes as we cast a glance to 2007. Steve Galbraith, Jeff Saut, myself , Jeff Macke , Jeff Bernstein, Phil Erlanger, Stephanie Pomboy, Michael Santoli, John Succo , Bennet Sedacca , Steve Shobin, Scott Reamer and Greg Weldon will spend the afternoon vibing with keynotes and interactive panels. At night, we'll be honoring Trent Tucker (formerly of the NY Knicks) with the first annual "Ruby" and have thus far received RSVPs from Patrick Ewing, Charles Oakley, John Starks, Howard Cross and Emmanuelle Chriqui (that would be Sloan from Entourage). Please contact Vanessa for more information. It'll be held at the Carlton Hotel and Country Restaurant, which was just tabbed one of the best restaurants in the entire country by Esquire Magazine.

So come on in Adam, Oak and I will match up against you and Kru any day!

Mr. Harrison,

I enjoyed
your article on the risk of reward, heading into the end of the year. Everyone seems to be excited by the fact that the Dow surpassed its previous high from several years ago to set a new high this past week. Such excitement is unwarranted at this point. Why? Because inflation needs to be factored into the figure. Factor in inflation and the Dow is still far below its past high point . In fact, using the CPI (Consumer Price Index) as a proxy for inflation, the Dow is still 19% below its high of over half a decade ago.

The Dow, however, is not the best proxy for the economy. That honor belongs to the S&P 500, which comprises roughly 90 percent of the economy. The S&P 500 is 12% below its previous high, which was reached in spring of 2000. However, that also needs inflation factored in, and when it is, the S&P 500 is some 33% below its all-time high water mark. That's a big percentage.

And then there is the NASDAQ. The NASDAQ hit an intraday high in early 2000 of 5400, and closed just under 5100. Currently the NASDAQ is 60% to 70% below its inflation adjusted high (intraday or closing point, your pick), still tremendously under water from where it was. Looking at the markets from this more realistic angle gives better perspective on all the frenzy about the Dow, which consists of just a few companies, hitting a high number mark. Thanks, Dwayne (Idaho State Tax Commission).


Thanks for sharing this food for thought. I've never been to Idaho but i hear it's fantastic! Maybe we'll host Minyans In the Mountains 4 in them thar parts!


When you say "metals," we're not sure whether you mean precious, base, or both. It would help us, maybe others if you specify or clarify? Thanks, Minyan Jerry.


I typically refer to metals and metal equities as a class. I own specific stocks but I trade 'em a lot--in and out like a California burger chain. I've got some 'core' holdings, which I wanna keep, both as my upside exposure and as a dollar hedge. I've written before about the metals vs. metal equities (hoarding, nationalization) so that's something to think about for those looking to gain exposure. Thanks, and sorry for any confusion.


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