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Random Thoughts: Bears Dig in Their Paws


No accident that asset classes retreated as dollar found some footing.


Editor's Note: The following was posted in real time on our premium Buzz & Banter. It's being shared here for the benefit of the Minyanville community. See also Five Potential Surprises into Year-End.

Gate Sniffage! - 10:05 am

Strapping into my turret after our weekly Wednesday ExCo (Executive Committee) breakfast, the following vibes are "top of mind" as I begin to assimilate the flickering ticks:

  • The Dollar. Pepe touched on this Monday and I circled back to it this morning in my "Five Surprises into year-end". While a lower greenback is no guarantor of higher equities, it's a necessary precursor through the lens of "asset class deflation vs. dollar devaluation."

  • My early morning trades include some nibblage in the energy space, including Weatherford (WFT) and the USO, a small call position in Sears Holding (SHLD) and an odd lot of Google (GOOG) and Goldman (GS) calls (with a stops below the recent low. All trades, all defined and all through the lens of "hit it, quit it and sit it."

  • Research in Motion (RIMM), on any pullback towards $40, remains on my laundry list.

  • I continue to hear "credit horror stories" and we must remember that while equities are the world's largest thermometer, credit is the backbone and you can't walk without vertebrae. That remains the single biggest risk in the entire financial machination.

  • Consistent with the aforementioned morning missive, Home Depot (HD) and Lowe's (LOW) in the teens are potential vehicles of the Matador Crowd as well, if they're so inclined.

  • Look for hedge fund term structure to dramatically shift (for the 50% or less of existing funds that will survive. I foresee a three year "aggregate" return schedule where managers won't get paid annually on their high water mark.

  • Festivus is filling up fast and furious as we're outpacing last year's sold out event. If you're planning on joining us--and I think you should--please lock your spot for the critter trot for children's education before Hoofy and Boo hang the "SOLD OUT" sign on the door. Please and thank you.

  • Lemme get this out there in a timely fashion. Fare ye well as we hike up the hump and remember, friends, profitability begins within.

Macrimony and Cheese - 11:41 am

A coupla Minyans, loyal as we are, brought to my attention some sour remarks on the MarketWatch message boards in response to my morning missive. I typically don't read the boards---call it time management or proactive avoidance of societal acrimony--but I'm curious (and naughty) by nature so I decided to sniff it out. Now, having spent 20 minutes crafting a response (which we'll post on the 'Ville in a bit), I've turned my attention back to the task at hand.

Some top-line vibes as Boo turns the screws:

  • It's no accident that asset classes (crude, equities) pulled back as the dollar found some footing. I don't profess to know if the greenback action is a cause or an effect but I'm keeping close tabs on it. As we've been saying all year, if the dollar rallies, all bets are off for Hoofy.

  • My early morning trading tries? In the red, Zed, which negates my preferred trading approach (catching a cusp and setting my stop below the entry point). I'm approaching them on a case by case basis but I'm viewing lower energy as an opportunity to add exposure given how coiled and compressed the sector is.

  • The other side of that trade? Each time a support (resistance) level is tested, it absorbs a layer of demand (supply). A pure peek at the charts finds more tests than an NFL locker room and hands over eyes, that's worrisome.

  • Every time I hear another Russian data point, I'm brought back to 1998 when I flagged this risk and my boss undressed me in front of the firm and screamed "Russia doesn't matter!"

  • I've dipped a small wick back into Dryships (DRYS) (as a hat size) through the common stock. How small? Small enough that if the stock went to zero, I can still feed my cat. I almost wanna put it away and not look at it for a few months but that won't (can't) happen.

  • I am keeping dry powder in my back pocket. If and when General Motors (GM) and Ford (F) get fitted for toe tags--given the field position is here or lower--I plan to count to 100 backwards (by primes) and buy 'em for a trade. Just puttin' it out there Yo.

  • As always, I hope this finds you well.

Channel Checks - 12:10 pm

The following message was my response to several prickly peeps on the MarketWatch message boards following the postage of my weekly syndicated vibe. I share it with ye faithful as that's how we roll in the 'Ville--together.

And I quote...

I rarely chew through the message boards of my articles as a function of time management (or lack thereof). I will, however, take time to chime given the pervasive negativity and seemingly sour social mood.

I have no agenda in offering these thoughts other than helping folks navigate this environment. My motivation isn't monetary-writing doesn't pay-nor do I want "fame."

I stepped down from big money management in 2003 to affect positive change through financial understanding and help children through the Ruby Peck Foundation, which I started to honor my grandfather. I share this in response to the folks who think I've got some master plan to manipulate prices (as if anyone is bigger than the market).

I empathize with the societal acrimony as I've seen it brewing for years. Those familiar with Minyanville know we "mapped" this, for lack of a better word, and Minyans were (and are) better prepared than most for this capital market destruction.

We fight that good fight each and every day. It's what we do, and we do it for the greater good, tirelessly and together. I take great pride in the Minyanville community and you would be hard pressed to find a Minyan who doesn't wear our fare as a badge of honor.

I'll ask those who are quick to cast stones or rush to judgment to look at the similarly one-sided commentary on these boards after other "against the grain" views, including:

There are many more instances, as seen in this column.

For those unfamiliar with Minyanville, we were "out there" for years highlighting the risks in the financials, the card games at Fannie (FNM) and Freddie (FRE) and the likelihood of a prolonged period of socioeconomic malaise (while the market was at all-time highs).

That's certainly not to say we haven't been wrong-everyone is wrong at times-nor was this column intended to be a Pollyanna view of the world (the disconnect between credit and equity is a massive risk to global financial stability).

There's a lot of anger and resentment in societal circles and for good reason.

As we often say in the 'Ville, however, if you're not part of the solution, you're part of the problem. The onus is on each of us to do our part as we edge our way through this most difficult world. We are, for better or for worse, in this together.

Eric Clapton once said "Before you accuse me, take a look at yourself."

As I won't be revisiting these boards again (there's only so much "I hope you're destitute and homeless and have to cook rats to feed your starving children" one man can take) so I'll leave these thoughts for you to hash amongst yourselves.

I sincerely wish you all the very best as we find our way.


Did you know the doors to Festivus 2008 are officially open? Have you yet locked your spot for the critter trot as last year's soiree sold out? (This is our annual event to commingle our professors, partners and Minyans while chowing down and listening to live music. The very best part? It's for the kids in the good name of my grandfather.)

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Positions in USO, WFT, SHLD, GS, GOOG, DRYS
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