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Minyan Mailbag: Knowing When to Be Greedy


I would prefer not to, too!


Editor's Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interactive dialogue among the Minyanship. We share this next discussion with that very intent.

Good morning Kev,

"The less you bet, the more you lost when you win".....I spent the whole day thinking about this from your article on Wednesday. Gotta tell you I really found this very, very fresh and an important message, especially for the underclassman in the Minyanville "University."

Most of us are still trying to perfect our preservation of capital tools and money management skill; that is what most of Minyanville professors have been talking about lately, and rightly so. However, this is where a pupil can become a Maestro of his own... BY KNOWING WHEN TO BE GREEDY.

Stanley Druckenmiller was once asked by a reporter what was the single most important thing he learned from George Soros. He replied: "Know when to be greedy." I guess once you learn that then you can be a Maestro in your own right!

I am not sure this is the right time (with Zero Volatility and all) to ask how to be greedy...but this is more of a general question or subject that has interested me for a while, and you brought up it yesterday which I thought was very refreshing; a tough subject to ponder.

Best regards,
Minyan Jackson

It is indeed a tough subject to ponder. Risk comes in many forms. Most of the time people associate risk with the potential for loss when a position goes against them. Under certain circumstances, however, losses can be made manifest as a lack of return based on a failure to risk enough, which is what I hoped to illustrate with Minyan Chuck Gall's quote, "the less you bet, the more you lose when you win."

Indeed, now may not be the time to let greed be our guide on either side. John Succo's Zero Volatility article illustrates quite well the problems Hoofy faces. Meanwhile, although the contextual indicators I use are positive, the field position of many of the short-term indicators are simply not conducive to Hoofy stepping up to the plate looking to score, not to mention the big picture concerns we all understand are out there. On Boo's side, the positive context is enough to keep him looking for singles instead of doubles or triples as well.

So far this year, I call this the Bartleby the Scrivner market. You might remember Bartleby the Scrivner, Melville's character from the story by the same name, who shortly after accepting a job as a clerk in a lawyer's office decides to stop doing anything he's asked to do. "I would prefer not to," he says to every request. This market has been saying that to Hoofy and Boo alike since December. I would prefer not to.

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