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Random Thoughts: Is This Capitulation?


It occurs when you don't care and stop trying.


Editor's Note: This content was posted in real-time on our premium Buzz & Banter and is being shared here for the benefit of the Minyanville community. See also The Upside of Anger, It's a Market of Money, Not a Money Market, Random Thoughts: Viva La'Merica! and The Sandman Awakens.

Bye, Bye Miss American Pie - 11:23 am

  • How you doin' General Mills (GIS) (+2.3%)?

  • The VXO is is trading at 35. It's a step in the right direction but far from previous pain fulcrums.

  • How do you shoot the devil in the back--what if you miss?

  • If "I" were Hank Paulson, I'd be really psyched I sold all my Goldman (GS) stock tax free.

  • I mean, er, wait--that's not where I was going with that. Uhh... if "I" were Hank Paulson, I would pull a bunny out of my magic hat into expiration, which is Friday.

  • Can't you just picture the scene at the Treasury? Hold... hold... hold...

  • Other green beans (trying to see both sides of the trade)? Sears Holding (SHLD) (which I can only assume is because you can't borrow the stock), Pepsi (PEP), Campbell Soup (CPB) (note the 'theme' there), Johnny John (JNJ) and Pfizer (PFE) (drugs are typically a safety play).

  • Remember the Sandman? I honestly don't know which side of that line Citigroup (C) will find itself when the dust settles.

  • I will say this again because it's my single best thought. Remain lucid--we have a helluva hard road ahead but the greatest opportunities are bred from the biggest obstacles.

  • I don't know if it's a cancer or a car crash but I know that on the other side of that process, there will be unbelievable opportunities. We simply need to get there.

  • How am I playing this? All cash. Sorry, but I'm long serious, short sexy.

  • I reserve the right to fight, mind you, but I'm exercising my constitutional right to do less. That is, at least, until they take that away from us too.

  • As I mentioned last week, I DO see a Resolution Trust Company "type" of initiative on the horizon. It's just a shame that it's taking "this" for the boys on the Beltway to see the same.

  • THIS is one song that seems to sum it up, eh?

The Market will do what the Market will do... - 12:17 am

I'll be honest, I was tempted to buy some Goldman (GS) when it ticked towards $100 the first time but, pulling up the call option string, laughed out loud at the premiums.

Minyans know me--I pride myself on being a contrarian, which is to say I sell blips and buy dips. Still, with the DJIA down 300 and the Spooz off 40, I'm not touching 'em. Perhaps that's THE signal that a bounce is coming but opportunities are made up easier than losses.

I've consciously traded the potential to profit for the knowledge that my powder is dry during this perfect storm.

I know one thing--it doesn't "matter" who was right in this particular instance. We've monitored these imbalances for years, spoke of crash potential on September 3rd, asked last week if "The Big One" was coming and wrote the script last night of the "how's, why's and when's".

I feel horrible and excited all at the same time. Horrible for the livelihoods lost and families affected. Excited we're taking the painful pill we've long awaited, which is a necessary step towards the eventual recovery, one that will have monstrous opportunities for those properly prepared.

There is indeed a new world order and we have a long way to go.

We must accept that time is the arbiter of fate and this period of price discovery will persist.

Is "this" capitulation? Not through my lens. Not with the VXO at 37. Not with the BKX 35% above the July lows. Not with everyone asking if it's a capitulation. I've lived through capitulation, my friends--it occurs when you don't care, when you stop trying, when you wet your pants.

That doesn't mean we won't see rallies--we most certainly will--but the sooner we go through this, the quicker we'll get through it.

Good luck--and remember, there's a massive difference between self worth and net worth. I learned that lesson the hard way and share it with hopes that you won't have to.

Be strong. Be a Minyan.


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