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The Cinderella Bear

By

Sour Puss!

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Good morning and welcome back to the comeback track. Down on his luck and on a soup line, most folks thought Boo was a washed up ursine. Imagine their shock at the end of last week when the sneaky south paw flexed his furry physique. "Some of my fans had left me for dead," he said as he held the belt overhead, "But I shocked the world and painted it red and managed to make a nice slice of bread!" Will the Red Dye supply allow Boo to defend or will he get caught into quarter-end? Let's keep it clean and please trade to win as we ready to take a few on the chin!

As you may have supposed from the opening prose, I ventured to the movies this weekend and caught the latest Ron Howard flick. It was a thought provoking saga, although the boxing sequences weren't the catalyst for the pensive ponder. Instead, it was the backdrop of the Great Depression and the two-class system of society that once divided our great nation. We touched on this topic last week and while it seemed foreign to many, there is precedence that offers ample food for thought.

While I don't claim to be an authority on the roaring 20's, I have always been a big believer in the business cycle. If excess breeds excess, it makes intuitive sense that the other side of mania is depression. Think about it for a moment, even if it makes you a bit uneasy. We lived through the most magnificent financial bubble in the history of mankind--a period that made the 20's look conservative-- and rather than endure the other side of that scary ride, the tape was given adrenaline shots and artificial stimuli with hopes that another purse would arrive.

And it has. Stock jockeys far and wide have identified the new game in town and headed over to HOUSDAQ.com. And while there are plenty of fans still in the crowd, it would be myopic to ignore the internal bleeding under the surface. We're debtors on every level-consumer, corporate and government-and we've become dependent on foreign investment to sustain our perceived right to a preordained quality of life.

Minyanville has taken great strides to present both sides of "the trade" and map out the reasons why the stock market can indeed climb higher. And we certainly understand that profitability and opportunity lie in the journey rather than our ultimate destination. But the simple fact that the notion of a prolonged and powerful economic malaise seems so unlikely is perhaps the very reason that it has a higher probability than most believe.

Price is the ultimate arbiter of the minxy equation and the chickens will stay little as long as the screens are green. But blinders are rarely profitable, particularly when they obscure the information necessary to make balanced and well-informed financial decisions. When I read columns like Norwood, hear the fear from guys like Volcker or read about the evolving isolationism, I feel like I'm watching a drama unfold in slow motion, hoping against hope that I can Tivo to another ending. And while I'm not certain how long this movie will last, the ability to maintain perspective and the understanding that capital preservation is the first step towards prolonged profitability will ultimately serve us in good stead.

I didn't start this column with the thought of painting the big picture conundrum and I will most certainly focus on our path while scribing vibe on the Buzz & Banter. But as I look around at the lifestyles of the rich and sheltered, it's become increasingly apparent that we're again focused on the reward with little respect to the underlying risk. The shallow nature of the market pullbacks may indeed speak to the stealth bid and portend that we've got some juice left in our tank. But with sentiment skewed and volatility compressed, Minyans would be wise to keep their right hand up as the big picture comes into focus.

Good luck today.


R.P.
No positions in stocks mentioned.
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