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Event Staff

By

Strong like bull!

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Afraid of my own shadow in the face of grace
Heart full of darkness, spotlight on my face
There was love all around me, but I was looking for revenge
Thank God it never found me, would have been the end


(Stevie Ray Vaughn)


Alright Fokker -- if you so much as glance at my nose, I'm gonna unleash a wrath of fury on you like you've never seen before. You think the sushi fumble was bad? The travel disaster? The college girl blowoff? Do the readers a favor, kid, call me Rudolph -- I'm sure they can use the abusive entertainment!

As I sit here and watch the action, I wanted to take a moment and expand upon my thought process. My dilemma, in a nutshell, is that I "see" the upside trade but I don't "believe" it. Not in the "Holy cow, that's crazy -- I can't believe it!" way, but more in a "I've seen this movie before and it's not gonna end pretty" way. I'm simply trying to balance the two senses in a way that allows me to maximize reward relative to the incremental risk.

The bulls are clinging to the "look through" thesis and while that's proven to be false hope in the past, it'll work until it doesn't. Stocks, as an asset class, have become a vehicle in a larger game of financial chess and they're trading as a function of their macro brethren. As we've discussed, nobody is bigger than the market and we don't have to agree with what we're seeing, we just have to respect it.

There is clearly event risk in the world right now and it can come from any direction. If Iraq uses chemical weapons... if North Korea escalates... if SARS is discovered in New York City -- these are all possible events that would gap the market down appreciably. If NOTHING happens, however, these fears will be considered one of the steeper walls of worry (bullish) in recent history. That's clouding an already murky environment where the economy is seemingly getting worse and corporate America is hiding behind the excuse of war.

Are we having fun yet?

For my part, I continue to use this strength to scale into defined risk May puts and day-trade ETFs against them when the market feels dry. I'm operating under the assumption that we're trading on borrowed time but I'm also aware that timing is everything. I can accept being wrong -- it's happened before and it'll happen again -- but if I pile into the long side simply because everyone else is, I'll hold myself to task for losing money.

Anyway, I just wanted to communicate as it sometimes helps to talk it through. There's a heckuva lotta balls in the air and tensions -- globally and locally -- are high. Make unemotional decisions that are an extension of your thought process and always allow for a margin of error. Chances are, the end of the script has yet to be written.

As always, I hope this finds you well.
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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 todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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