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There's No Risk in Tape Town


It's an environment where nearly everything works and works immediately. In a word it's easy. Easy money, easy profit.


So I took a big chance at the high school dance
With a missy who was ready to play
Wasn't me she was foolin'
'Cause she knew what she was doin'
And I knowed love was here to stay
When she told me to
Walk this way


Last night my four-year-old daughter came into my office while I was cruising some charts (she thinks money comes out of the computer and is looking forward to the toy store this weekend).

Looking at a chart of the DJIA, I said to Bridget, "What do you think of this?" She said, "Papa it's going up."

No denying it, the market is moving from the lower left-hand corner of my screen to the upper right hand corner. "What about risk?" I asked her. "What's that?" And to be sure for a minute I felt like Tom Hanks in A League Of Their Own, "There's no crying in baseball." Well, there's no risk in Tape Town. There's no snow in Malibu.

Sure, on a day-to-day basis, stocks pull back a bit – but they come right back and they come back hard. They come back with a vengeance – AKA the February to March shakedown.
It's as if in order to be part of the momentum team, a stock has to do a stint in Green Bay and get Lombardi's DNA ingrained – "It's not whether you get knocked down, it's whether you get up." The market's gone from walking to galloping.

It's official; the momentum game has gone from euphoria to mania to orgasmia. Stocks get whacked on bad earnings, no problemo, they get bought and they come back. Stocks explode on good earnings, no problem, buying 'em up 5 or 10, as on day two after earnings they go up another 5 or 10. Witness Mastercard (MA) this week and Amazon (AMZN) last week.

It's an environment where nearly everything works and works immediately. In a word it's easy. Easy money, easy profit.

And one reason may be that the hedgies, who in the past have been rewarded for stepping into a bulge of buying frenzy when they think something is overpriced, are stepping aside – they've been burned taking a chance in this dance.

Maybe it's just that those who have been around for more than one cycle are haunted by the memory of what happens when you "walk this way," when every day is Pamplonatown, where the roar of the crowd and the smell of the uh --- excitement pales only upon the goring.

It's okay to play the momentum game as long as you know how to run like this.

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Position in MA

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