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Random Thoughts: Wall of Worry or The Berlin Wall?


Nothing comes easy in a bear market.

  • Me? I'm particularly wary of Q's, P's, S's and L's.

  • I returned to my turret following an off-site management meld this morning to find an on-site market melt. Well, maybe not a melt in Minyanspeak-to quote BTO, if the perfect storm comes to be, you ain't seen nothing yet!

  • I'm evidently not the only one with concerns, as evidenced by the Royal Bank of Scotland's global stock and credit crash alert. Geez, way to steal my thunder Braveheart!

  • Seriously, where's the love? We've got famine, flood, locus, blood, vermin... it's downright biblical out there. I suppose that, in and of itself, could be construed as a positive as there are precious few reasons for optimism right now.

  • Is this setting up for a wall of worry whoosh higher? Perhaps, but it's times like these when our tea leaves are most useful and looking at the banks (-3%), breadth (3:1 negative), and the semis (-2%), the risk/reward is skewed decidedly to the downside. That doesn't mean we can't rally, it just means that the odds don't support it.

  • At the risk of being accused of trading backwardization, I scooped some S&P puts on the close yesterday after reading the Hindenburg post by Adam Michael. It was part hedge (against a spate of core calls, including Gannett (GCI) (ouch)) but my net delta favored Red Dye. I peeled off 25% of those puppies into the early abyss (discipline) and will trade the leaves as a function of time and price.

  • Dry eyes include Goldman (GS), Research in Motion (RIMM), Applied Materials (AMAT) and the homebuilders, which I highlight for those looking for potential upside vehicles. IF (big if) Snapper can stake his claim to fame, those should lead the upside speed. I'm not betting that way, I'm simply trying to see (and share) both sides of the ride.

  • Cereal killer? Maybe, maybe not, but while Kellogg (K) is making headlines today, Pepe Depew was way ahead of the mainstream curve on box deflation.

  • Toss this in "so it's said" department but I can't stop looking at that Google (GOOG) gap (below) that works to $460.

  • Further to previous comments, the single biggest upside risk is that the downside seems oh so obvious and nothing comes easy in a bear market.

  • It suddenly occurred to me last night that Halloween is the LL Cool J of horror flicks.

  • If the world's oldest profession is feeling the pinch--or lack thereof, as the case may be--you know times are tough.

  • While Boston sports are a core short of mine--and yes, I'm getting squeezed--it's hard not to feel good for Paul Pierce, KG and Jesus Shuttlesworth (along with the role players, most of whom I like). Congrats, you guys are the best team on the hardwood and deserve some snappage.

  • Lehman (LEH) down another 4%? Yep, but I'm still glad I covered my short on yesterday's close. Why? Discipline over conviction coupled with field position in the sector. The "easy" money (yikes) was fading the all-time highs on the back of Blackstone (BX).

  • It's worth noting that market internals did not improved on mid-morning Snapper attempt. While they can indeed lag that is classic non-confirmation.

  • Synch your time horizon with your risk profile such that you're in a position to use price to your advantage. Easier said than done, I know, but it's one of the most important dynamics to successful money management.


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Positions in GOOG, SPX, GCI
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