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Minyan Mailbag: Perception vs. Reality


Trading, at its core, is the attempt to capture the disconnect between perception and reality...



Your continued statement that one of Boo's supporting arguments is the disconnect between perception (low VXO) and reality presents a dilemma. Who is to say what reality is? It is only what we perceive it to be. It is all in the eye of the beholder. A bull will say the risks are low and that it is accurately reflected in the low volatility readings. A bear such as yourself or Succo will say the risks are high and not accurately reflected in the VXO.

Who is right? Nobody knows, of course, and that is what makes a market, but I think there is a lot of hubris involved to state categorically that perception doesn't match reality. It just doesn't match your perception, but your perception may be wrong. I await your comments.

Thanks, Minyan Mark.

Minyan Mark,

A few thoughts. First, "hubris" (defined by Mr. Webster as "overbearing pride or presumption; arrogance) isn't exactly fair. I've repeatedly expressed that my thoughts are personal opinions and are "sometimes right, sometimes wrong but always honest." I've never told Minyans what to do--how could I without knowing their risk profile or time horizon? I've simply expressed--day in and day out--what I'm doing and how I do it, a shared learning process that is a subtle yet important distinction from overt advice.

I will also offer that branding myself (or Succo) as a bear is misguided. I've been quite bullish on energy and metals, which have responded in kind, while remaining cautious on tech and financials (which have underperformed those other sectors). And as I often dabble in the guts of the intraday tape, I read and respect the tea leaves to help guide my steps towards the big picture. John, for his part, trades volatility and has never--not once--suggested others to short stock. So again, I think you've gotten a little lost in semantics.

With regard to your observation that my perception of reality is wrong, time will tell. Trading, at its core, is the attempt to capture the disconnect between perception and reality, be it through stocks, volatility, asset allocation or, sometimes, doing less. Only hindsight will provide clarity to your question but I will continue to offer foresight in an attempt to illuminate the "other side of the trade." For by the time reality arrives, my friend, the financial markets will have it baked into the cake.

Have a good day.



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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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