Let the games begin!
State of the Tape...
Good morning and welcome back to the saddle. The pressure is mounting as we edge to '06 and traders attempt to steal a quick fix. The performance anxiety that engrossed popular perception, morphing mindsets as we reached higher off the October lows, abated last week when Hoofy got flanked. During Tuesday's lopsided lean, when the city was giddy and the bovine were brazen, our buddy Boo caught the Matador Crowd leaning the long way (how do they know where we're leaning?). The absence of acne turned white towels into yellow flags, catching critters offside and forcing them to wait in a bottleneck to leave the stadium.
I slipped into my bear costume as we edged towards S&P 1270 as my risk was defined and the mood was a tad toppy. When folks realized that Hoofy may have extended himself, we scurried in a hurry to S&P 1250 and alotta bulls reset their bets against S&P 1245 (where the Minx previously broke out). The tetherball remains in play as we toggle between that range. And as a function of the two-sided junction, I slipped out of my remaining fur with some jingle in my jeans and toothpicks in my eyes.
With psychology--the most intangible of our four primary metrics--sitting atop the trading totem pole, an element of uncertainty will remain through year-end. There are cases to be made both ways--Hoofy, ever the optimist, will point to looming support (textbook technical analysis calls for a retest of the breakout level) and the relative traction in the semis (in the face of Intel's 5% slippage last week). Boo believes that folks are still trapped in the fear-of-missing mindset, with energy prices ratcheting higher and the consumer on the ropes. Both critters will be watching Elmer's last hurrah on Tuesday, when he's widely expecting to nudge rates and sneak off into the sunset.
Frustration Station begins to mount...
"Toddo- Business was once fun, now impossible. The daily grind has gotten to me. Feeling like a loser because I can't figure out the market is no way to go through life. 15 years down the drain... Minyan "name withheld"
I want to share your email because I've fielded a slew of similar stories this year. We've been talking about the Long Hard Road since 2000--the notion that the financial dynamic would become increasingly difficult as we weed through the post-bubble industry overcapacity. Multi-year highs in the averages and record Wall Street bonuses cause many to shrug their shoulders at such a statement but for most of us--those in the trenches and duking it out every day--we know that the game has indeed changed.
The combination of technology and regulation--coupled with seismic shifts in the secular winds--has created a chasm in the street of dreams. Yes, aggregate bonuses are up, but they seem to be a big top heavy and skewed by outsized rewards for top managers. Whereas the rising tide of compensation used to trickle down from the chiefs to the indians, it seems that the pow-wows have become a bit more particular.
Wall Street and the capital markets aren't going away but they are surely evolving. Just as our society is edging towards a two-class system, the financial industry may be headed in the same direction. Program trading, low-cost execution platforms, the commoditization of information and excess human capacity are all culpable causations but they aren't necessarily to blame. As with trading, the onus is on us to adapt to the evironment and recognize where and how we can add relative value to our firms, processes or P&L's.
I would offer that the last 15 years aren't "down the drain." Experience is one of our greatest gifts and nestled in those long days and sleepless nights are a solution. There are opportunities to seize (albeit more selective) or there is a realization that there is a better way to live your life. If you hate waking up or spend all weekend dreading Monday, there is a powerful message there. Life is too short to waste--you just need to recognize whether you're simply frustrated (and need a break) or ready to turn the page to a new chapter. Either way, focusing on the solution rather than the problem is an intuitive first step.
And on the philanthropic front...
The all-star guitar auction will continue through Friday with the proceeds to benefit the Ruby Peck Foundation for Children's Education. We remain hopeful that the recent Buzz will generate additional interest as we push forward in our effort to give something back. The critters are starting to make a splash, with articles last week in CNN Money, Morningstar, Hollywood Reporter, Luxist, Yahoo! Finance, MarketWatch, Finance Canada and, yesterday, with this nice little ditty in the New York Times business section:
BUFFETT GOES ELECTRIC Investing buffs, ready your pocketbooks. Through Thursday, those with cash to spare can bid on a white Fender Stratocaster guitar signed by Warren E. Buffett, George Soros and other legends of the investing world. The online auction is sponsored by Minyanville.com, a financial Web site.
Todd Harrison, the founder of Minyanville, said he is raising money for children's education. (The publicity for his subscription-based Web site is a nice side effect). According to Mr. Harrison's spokeswoman, a "notable hedge manager" called the guitar "the Wall street version of a baseball bat autographed by the 1927 Yankees." On Friday, the high bid was a cool 30 grand, but Mr. Harrison boldly predicted that the winning bid would be "well into the six figures."
Please remember, for those looking to bid, the winner will receive a receipt from the RP foundation for the tax deductible portion of the bid in the amount that exceeds the fair market value of the guitar. So, in other words, all but (roughly) $800 is tax deductible!
Good luck today!
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 email@example.com.
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