Clash of the Critters

Should I stay or should I go now?
Should I stay or should I go now?
If I go there will be trouble
And if I stay it will be double

(The Clash)


Good morning and welcome back to the Hump Day shack. After weeks upon weeks of upside attraction, the Red Dye supply has caused a distraction. We’ve spoken at length about the Matador motivation—strong leadership, technical moxie, seasonality, credit spreads and, lest we forget, performance anxiety. And we’ve touched on the cause for paws—the flattest yield curve since January 2, 2001, uber-twisty stochastics (not timers but worth watching), structural headwinds (massive debt), the tapped out consumer, softer housing and confidence caveats. All that’s left now is to figure out how to piece it all together.

One of the reasons that I have “issues” with the advice often found in the mainstream media is that it doesn’t incorporate time horizon. A stock that’s “good for now” may not be “good for the long haul” and vice versa. The market is a confluence of motion and movement that often overlap. There are secular cycles, broad phases, trading trends and noisy nuances. Before we assume risk—and before anyone can tell us what we should or shouldn’t own—we must first know what type of trade or investment we’re looking for.

For my part, and as most of you know, my portfolio is split into two buckets. On the left, I have my speculative stuff, capital that I strategically deploy with hopes of making hay while the sun shines. On the right, I’ve got my “savings,” a portion of which is invested in what I believe are secular long-term winners (metals and energy). As I’ve chronicled my thought process repeatedly, I’m not gonna waste your time again walking through the particulars. The point of this column is to draw attention to the dichotomy between the two approaches.

There are different strokes for different folks as Minyans are unique in their subjective situations. While I’ve shared many thoughts with regards to year-end agendas and big picture beliefs, the simple truth is that nobody knows which way the fray will stray. Our task, should we choose to accept it, is to assign probabilities to the spectrum of possibilities and position ourselves with an advantageous risk/reward. Inherent in that process is implementing safeguards that provide a cushion if we’re wrong, an inevitable occurrence that will litter the path of our collective journey.

With respect to the current tape, Boo recently opined that turnaround Tuesday would provide an ursine foothold and he successfully toed the line. That raises the stakes for today’s tape as the bears attempt to further the fur while Hoofy tries to limit the cries to  “one and done.” We’ll likely see some early downside probage and, given the unforeseen expiration crosscurrents, the critters will rely on their tells to show them the way.

Good luck today.


R.P.