Channeling Bennet Sedacca
Looking for dimes and bewaring the bulldozer.
Perhaps Michael Sedacca's 21st birthday stirred sentiments yesterday as the debt auctions were released. I couldn't help but wonder "What Would Bennet Do?"
I only saw my prickly pundit of a brother a few times a year, but we were each other's eyes and ears each trading day. If I were to venture a guess, my sense is that he would be debunking the green shoots theory with some witty repartee reminding ye faithful that this debt unwind will last for years. I could be wrong about that but... I don't think I am.
He would likely also link to that chart he liked to reference regarding the cycle of investor's emotions. You know... When optimism shifts to excitement, thrill, euphoria and "Wow, I'm smart!" right at the top before traversing down to anxiety, denial, fear, desperation, panic and capitulation before bottoming at despondency at the lows.
Rinse and repeat, over and over and over again.
While I traded two-sided yesterday, I communicated my "best guess" for the remainder of the year. That doesn't mean it's right but it's certainly honest and warrants a sniff given the bullish bent on mainstream media. I will also remind you that quarter-end is 13 sessions away and as Lou Manheim said, "The main thing about money, Bud, it makes you do things you don't wanna do."
For fund managers around the world, that adds up to one word: "performance," and explains why folks have been so very reactive. The buyers are higher and the sellers are lower as we shake our bones between S&P 920-S&P 950. See both sides and remember that the mechanics of the swing outweigh the results of the at-bat.
And please be careful. For as Mr. Mannheim also said, "you can't get a little bit pregnant."
He Said, She Said
With the Bank America (BAC)-Merrill Lynch-Government love triangle heating up, I wanted to circle back to some thoughts offered as we entered the merry month of May:
The back-and-forth between embattled Bank America CEO Ken Lewis, Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Hank Paulson has massive implications for the psychology surrounding the government's role and responsibility in the capital market structure.
As Minyanville offered in August 2007, "The Federal Reserve attempted to buy time on the back of the tech bubble with fiscal and monetary stimuli that encouraged risk-taking, reward-chasing behavior.
While debt is front and center, credit of a different breed-credibility-has emerged as the issue at hand. If and when investors begin to perceive that central banks are no longer larger than the markets, a crisis of confidence will ensue."
Some Random Thoughts
You can learn a lot just by watching! As detailed on yesterday's Buzz & Banter, I covered my Apple (AAPL) short mid-morning (initiated on the opening when it couldn't rally with the tape) and bet some house money with the bulls on Research in Motion (RIMM) (when it traded dry despite the crimson slippage) before peeling out of the position into the close.
Hoofy had a window to blow through resistance yesterday morning (and got stuffed) and Boo could have turned the screws once they failed (but ran into some serious bids). If it were a prizefight, it would have gone to the scorecards and declared a draw.
While sticking with the bigger picture "W" bent, a last gasp higher into quarter-end remains in play (for some reason, my sense is that would end three days before the quarter). Where you stand is a function of where you sit-along with your time horizon and risk profile-so see all sides and allow an ample margin for error.
The World Health Organization Emergency Committee will meet today at noon to discuss the flu outbreak. Don't be shocked if they raise the alert to global pandemic.
I scribed Memoirs specifically for an online audience and is about half the size of what's been written to date. Baby steps, with an eye towards laying it all out there on a future date.
There's nothing wrong with admitting it's hard, it's only wrong to pretend it's not. The "bright" side, if we put a positive spin on things, is that better days and easier trades await. Our goal, as Minyans, is to be in a position to prosper once they arrive.
I was humbled to share some time with William Goldman recently. The two-time Academy Award winner, best known for his brilliant writing-The Princess Bride, All The President's Men, Butch Cassidy, Marathon Man and the Sundance Kid-did me a solid, left an indelible impression and is very much a gentleman. Thank you sir, it was a true honor.
Good luck Minyans-let's hit 'em where they ain't!
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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