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The Disconnect Between Perception and Reality



Our professors and partners have come from as far away as Australia to contribute their wisdom and guidance. Throughout the next two days we will be highlighting some of their ideas on managing risk and staying in the game as catalysts for discussion.


- A two-tier methodology that attempts to capture near-term trading opportunities while positioning for longer-term secular trends

- An assimilation of the four primary trading metrics (technicals, fundamentals, structural and psychology) to gauge the health of the market

- Using "trading tells" (market breadth, leadership, sector rotation, reaction to news) to help navigate the daily dance

- Proactive patience, capital preservation and identifying advantageous risk/reward set-ups

Key themes:

- Energy will ultimately overtake the financials as the top weighting in the S&P.

- Energy and metals will be the tech and financials of yesteryear

- Be wary of relying on a historic basis of comparison as we edge through the post-bubble world.

The dollar will remain an important variable juxtaposed against asset class buoyancy.

- Don't confuse debt induced largesse with legitimate economic expansion.

- The Wall Street model has begun to invert as the "commoditization of information" manifests and low cost trading solutions proliferate.

Outlook for the financial markets:

-Historic fiscal and monetary stimuli since the 2002 low have buoyed financial asset classes at the expense of the dollar. While this dynamic has decoupled in recent months (as a function of EU uncertainty), the basis of our investments (dollar) will continue to devalue or asset classes must deflate. The disconnect between perception and reality will be alleviated as a function of time or price, mitigating the tails of return in the years ahead. Capital preservation should remain a focus as we weed through a confluence of risks that have yet to trigger downside causation.

Thoughts on controlling risk and staying in the game:

- Make sure that your risk profile and time horizon are in synch.
- Diversify your portfolio with non-dollar denominated assets.
- Allow for an ample margin of error when initiating risk.
- Stay out of debt.
- Remember that discipline always trumps conviction.

If I could give one piece of advice to attendees...

-Don't let your net worth dictate your self-worth and remember that the purpose of the journey is the journey itself.


No positions in stocks mentioned.

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

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.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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