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The Dangerous Crowd

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The trick to trading is seeing both sides of the ride and allowing for a margin of error.

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So come on Virginia
Show me a sign
Send up a signal
I'll throw you the line.

(Billy Joel)


Good morning and welcome back to the party shack. I had a spiffy Real Estate Mailbag set to roll this morning but it didn't seem right with everyone dressed to the nines. With Breaking News to our left and Breaking News to our right, I thought we should follow up yesterday's Confetti Randoms with some forthright vibes. Minyans know that they'll get a truthful scoop in the 'Ville--right or wrong--and given the mindset of the market, some of our critters are bound to be bitter.

We know the drill--quarter-end is around the bend and there's a performance anxiety that would make Bob Dole blush. Further to that, alotta folks will be absent on Monday to kick off the new month (present company included). That begs the question and warrants the thought of "what if and what then?" Thin tapes lead to big moves and cumulative tension, coupled with media moxie, could make for a toxic mix.

I'm not smart enough to know whether this particular push by the Matador Crowd will turn the trick. In the four frames of trading--cycles, phases, trends and nuances--the latter matters are always toughest to game. But given the incessant bent of the headlines, my intent is to provide some balance for ye faithful. We've touched on the non-confirmations in the marketplace---here....here....here...here....and we've talked about some particularly delicate topics with regard to behind the scenes agendas. And while we know that the only right answer is found at the bottom line, my concern is that risk management has been forsaken in the chase for reward.

It's a familiar scene for some--we saw it in May and, for old schoolers, we remember it from years of yore. I'll again say that we all have a lot to gain from a bull market--the critters included--and I sincerely hope we share that journey. But I will simply say this---there's a massive difference between a legitimate economic expansion and higher equity prices. To understand where we are--and where we're going--we must appreciate how we've gotten here. Fat, drunk and stupid is no way to go through life, son, and debt, dependency and derivatives are not the stuff of sustainable trends.

I've shared my current positioning with Minyans so please understand that I'm not talking my book. I'm entering today's fray much the same way, with one eye on the tape and the other scanning the path for potential trap doors. Minyan Michael Santoli is always quick to remind me of something I said a few years ago. That if we look hard enough, we'll always find reasons to support any particular view. The trick to trading is seeing both sides of the ride and allowing for a margin of error. That's a good reminder at this particular juncture so thanks, Mike, on behalf of ye faithful.

Good luck today.

R.P.

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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 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.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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