I'm having a hard time sitting down after yesterday's spanking!
Good morning and welcome back to the funhouse. The Minx was doing her best Eve imitation yesterday and changed faces more often than a deck of cards. When the music stopped, we were thisclose to another breakdown and you could almost hear her chuckling in the background. While this tape is no joke, my friends, you just have to smile sometimes at how hard it's become. Day after day, week after week, month after month...the amusement never seems to end!
Longtime readers know that I've feared this grizzly bear for a few years now. Still, I can tell you with absolute certainty that talking about it and living it are two entirely different endeavors. It's one thing to discuss the ramifications of a bubble and opine that it's going to be a long, hard road. When you're living it, however, and watching the carnage unfold on a daily basis, it's a sad and sobering reality.
When we discuss the (potential) deflationary environment, it's important to note that it's not a concept predicated on war. It is, quite simply, a reduction in available currency or spending power. When that happens, asset classes across the board fall in value and nothing's safe. Of note is the recent rip higher in gold.com. Many have fixated on this asset as a "safe haven" and naturally, as a function of price, there is a method assigned to the madness. "War protection," "hard assets," "safety!" My (humble) opinion--and I'm no metals analyst-- is that gold, and all it's derivatives, have downside risk.
In the broader picture, there are no magic tricks or quick-fix solutions that will save the day. However, that doesn't mean we're helpless in our continual search for financial control. Contrary to popular opinion, it's NOT too late to take proactive steps in bettering our financial standing. The entire ride down the slippery slope was littered with hope and, to this day, our business leaders are banking on the "inevitable recovery." If you believe in the business cycle, as I do, you know that there will be a peak on the other side of this trough. We've just got to make sure we're around to see it.
This column is devoted to the "education of navigation" and I spend most of my waking hours focusing on the flickering ticks. I'll (cheerfully) discuss the day ahead with the prospects of Snapper, Boo and the rest of the Menagerie in my next piece. First, however, I want to first ask you some serious (and unwelcome) questions. Are you prepared for the worst-case scenario should it unfold? Where will you be if the S&P trade at 300 in 2010? If you do sock money away for a rainy day, are you mentally prepared for the opportunity cost associated with a stiff rally?
I don't have the answers for you but I'd be remiss if I didn't ask the questions. There's an entire spectrum of potential outcomes possible over the next few years and ALL OF THEM should be factored, at some level, into your decision making process. The market is a tremendously difficult dynamic, my friends, and chances are that it's not going to get better anytime soon. Ignoring the Minx isn't going to make her go away--it's only going to make it worse.
I pen this with hopes that it creates the absolute bottom for equities and sparks a bull market that enriches us all beyond our wildest dreams. I think we both know that's not gonna happen, though, and wishes, while wonderful, are best left for birthdays. Ask yourself some hard questions now so you can spend your time focusing on what actually matters. There's only one thing that's worse than losing money and that's losing time. Money is gained and lost-- time can never be recaptured.
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 firstname.lastname@example.org.
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