Too Cool For School!
A big Minyan welcome to our new professors!
It's a cold, dark and dreary Thursday in Minyanville as a bevy of critters sloshed their way to work in the damp streets. Members of the Menagerie, shining brightly on the inside, had an extra pep in their step as they peeled off their rain gear and prepared themselves for the big day. It was, after all, May 1 and aside from the fresh promise of a new month, new beginnings of another kind brewing. As they settled into their digs for some oatmeal and fresh coffee, the conversation turned to the coming day. It went a little something like this:
Boo: Man, I'm so glad April's over -- I've been beaten more than Pee Wee Herman during puberty!
Daisy: There's no need for that type of language Boo, there's a lady, er, cow present. Have a little respect!
Sammy: She's right, Boo, you've gotta shake it off. Adversity doesn't build character, it's how you react to it that does. In the immortal words of Lou Mannheim: "Bear looks into the abyss, there's nothing staring back at him. At that moment, bear finds his character. And that is what keeps him out of the abyss."
Hoofy: (clearing his throat) Did you say abyss or a bliss? I don't know why you're bumming so much, it's been a stellar tape. Look at the Minx through my eyes, kids. An assimilation of the metric bases shows a discernable uptick in the fundies, good support at S&P 910 (then 900), Dow 8450 and NDX 1100 (then 1080), a pending breakout through Dow Jones 8521 and BKX 800, a constructive psychology that wants to buy dips, performance anxiety that will exacerbate the moves, the potential for a further structural allocation shift (alligators) and, in a sign of the times, players are chatting up that a weaker dollar is GOOD for equities as it improves "results" at the multinationals!
Boo: Hoofs, do you know the story of Sisyphus? He was that Greek dude who incurred the wrath of Hades and was punished with an eternity of frustration. As the story goes, he was forced to roll a block of stone up a steep hill and each time he reached the top, the rock slipped back to the bottom where he was forced to start again. Does this process sound familiar at all?
Snapper: A Renaissance Boo -- who woulda thunk it!
Boo: I'm serious guys, think about it. Each and every bear market rally is littered with false hope and empty promises. If people didn't believe that this time WAS different, stocks wouldn't be at these levels in the first place! The pervasive bullishness? FLAG! The widespread complacency? FLAG! The historically rich level of valuation? FLAG! The embedded debt, derivative maze and housing bubble lurking in the background? FLAG! And a drab dollar is bullish? PUH-LEEZE! If foreigners pull the rug, it's all over but the shouting!
Sammy: You've both got valid points but how you play it is a function of your horizon. Boo, you're dead right on all of your concerns but it didn't help you in April, did it? In other words, if you're a big-picture theorist, a day-trading methodology doesn't apply. Half the trick is matching your risk profile with your time horizon while allowing for a margin of error.
Daisy: Give the snake a break and listen to his take, Boo. Advantageous risk/reward scenarios don't present themselves every day -- you've gotta wait for your pitch. If you're so convinced of the looming doom, look at some long-dated downside paper, toss 'em on your sheets and remove the daily guesswork. The level of volatility is the most attractive it's been in a long time and you can define your exposure. That's always a good thing!
Boo: I'm not all that familiar with derivatives and plan on attending classes at the University of Minyanville. When IS that finally gonna open?
Sammy: I stopped by the registrar's office this morning and picked up a syllabus from Dean Tony Dwyer. Listen to this! Steve Galbraith, Morgan Stanley Chief U.S Strategist, will head the fundamental department! Professor Bill Fleckenstein will teach a course in short selling! John Brooks, co-founder of the Market Technicians Association, will head the technical department! Professor Kevin Depew from Dorsey Wright will teach a course in point and figure and Professor Charles Norton of GNI Capital will teach a trend/price momentum class!
Hoofy: HOLY GUACAMOLE!
Sammy: Wait, there's more! Jason Goepfert of Sentimentrader.com will head the trading psychology department, our very own Brian Reynolds will chair the fixed income and economic departments and John Succo, co-founder of Victus Capital and former head of Lehman Brothers Equity Derivatives, will chair the option department! It's quite happening, fellas, and it's freaking me out!
Daisy: Wow! That's insane! I'm also hearing that the University is gonna expand beyond finance and become a broader educational platform. I can't wait for that! Everyone knows that a well-rounded critter is a happy critter! Snaps to all the behind the scenes players who made it happen and, most of all, thank you to the Minyanship for their incredible support to date! We couldn't do it without you and that fact will never be lost in the process!
Snapper: Jazzy, man! We've got UMV coming soon and an all-star guitar charity auction that's gonna help a LOT of children. This is Minyanville at it's very best, guys, you should all be very proud.
Boo: Yeah, this is special. Nice job guys. Now, please, can we get back to the market? Life goes on and the flickering ticks are preparing to dance. Everyone and their sister is watching our levels so put them on your radar out of the gate. And think positive, guys, profitability always starts within!
A soft silence fell over the room as the critters let the news (and oatmeal) digest. While it was sure to be another hairy day, they knew that a lot of Minyans would benefit from their humble little town and that offered a calming peace. As they slowly rose from their chairs and made their way towards the door, Sammy turned to his fellow critters and gave them a "Ruby wink." Nothing more needed to be said.
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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