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Minyan Mailbag: What Exactly is 'Bearish?'


Respect but don't defer...



Thanks again for your thoughtful reply. I've read and reread your response several times to try to climb inside your keppe, as you would say. It seems to me that you are saying that no matter what happens, you will remain bearish as doom is just around the corner (even if the market doesn't see it yet). Even if you are right (and of course we don't know), the timing is critical. If the 'problems' don't materialize for years or decades, there is no reason to be bearish here and I would think a bear should have a reason to believe that the day of reckoning is near, if one is going to bet on it today.

I'm not deferring to the price action when I mention that there have been no systemic financial problems despite a recession, a 70 year bear market, corporate scandals and record bankruptcies. It seems to me that the financial system has shown itself to be a very strong beast, capable of handling many problems, and that the burden of proof is on those who claim that that is about to change. I think an interesting question to ask yourself is whether there is anything that could happen to change your view. If not, maybe that tells you something. Hopefully, some food for thought.

Minyan Mark


This, of course, begs the question: what is "bearish?" I've been steadfastly bullish on the energy complex for the meat of the move and opined in Ojai that the leadership baton would be tossed to the metals as those two sectors jockey for top dog status. In the context of that discussion, I was referring to the "longer-term" side of my book and I continue to believe that they have secular winds at their back.

On the trading side, I'm much more nimble and entirely more defined. Being "bearish" on the big picture has hindered my ability to capture the lion's share of the move in tech and financials but it doesn't preclude me hanging with Hoofy. I'll trade anything seven ways till Sunday but, as a function of my broader concerns, I've been quite tight on the long side of those sectors. I think that was demonstrated by my constructive stance in October-as well as my premature evacuation from my bull costume (into S&P 1225).

You won't get any argument that timing is everything-it's something I've repeatedly stressed to ye faithful through the years. My point, lest it be lost in translation, is that there are more risks imbedded in stocks than most seem to believe. The disconnection between perception and reality is where profits lie and I think that dichotomy is growing-not dissipating-as a function of time and price. Yes, Mark, the action is fabu and the ability to absorb negatives is a sign of a strong tape. The "respect but don't defer" statement was a simple acknowledgment that by the time the negatives "matter," it will be baked into a supply soufflé.

Thanks for taking the time to write and, as always, I wish you all the very best into the holiday season.


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

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