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Freaky Friday Potpourri: Where To Hide if Cash is Trash?

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Will we wake up and find the dollar significantly lower?

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There's been a ton of feedback on this particular segment, which speaks to the polar opposite consequences of Our Wishbone World. Inquiring Minyans want to know what options are available to protect them from a potential seismic readjustment in the currency markets.

This keeps me up at night--wait, could that be the cause?--as there is risk to waking up one morning to find the dollar significantly lower. It makes intuitive sense through the lens of maximum frustration. The market (or those involved) screwed most investors and the last remaining hiding spot is cash. Punishing the savers is a wicked and twisted cherry on that sundae.

Late last year, after we got the dollar rally we were seeking, I explored moving some cash overseas. My cause for pause was the realization that if the schvitz hit the fan, I likely wouldn't have access to the money. As such, my hand was forced to sit, hang tough and hold greenbacks.

There are, of course, some options-the FXY (Japanese Yen) for instance, as we said a few months and 13% ago-but it boils down to trying to time an unforeseeable, binary catalyst. Either the dollar drops and asset classes pop or the greenback rallies (deflation) and asset classes continue to suffer.

This has been going on since 2002 and Minyans have watched in real-time. The difference now is that, following a 40% haircut in our currency, foreign holders of dollar denominated assets have had enough. As soon as they can figure out a way to decouple from our system without destroying themselves-if that's possible-they most likely will.

There's been active debate in the 'Ville regarding the timing of this shift since it became clear (when the bailout bill passed) that the government would throw good money after bad at this crisis. We've long said that there is a huge difference between markets taking medicine (as a function of time and price) and being injected with drugs with hopes of masking the disease.

We, the people, are now wandering the scorched earth in a drug-induced haze whether we like it or not. It's very scary and quite sad, not only for us but for our children.

The best I can offer is that we-the collective we-have much higher odds of success if we stick together as we find our way. As it stands, I've got two buckets (trading and long-term) and I'm trying to make hay in the first while preserving the second. Easier said than done, that's for certain, but it is what it is and we'll do what we must.

Together as one, forever as Minyans.

Some Random Thoughts:

  • ZZ Top? I legged into the energy vs. financial trade when crude was down 3% yesterday and Goldman (GS) was up a deuce. This was, of course, discussed in real-time on the Buzz & Banter.

  • I'm a Tiny Dancer on both sides but my hope is that the directional bias-or the thought process shared therein-is helpful to ye faithful.

  • To Television JeffMacke's® point about staying humble or the market will do it for you, I will trade around exposure and keep a tight risk stick. Tomorrow is promised to nobody, particularly given the geopolitical vibe and the potential for a seismic readjustment.

  • Is it me or is there an inordinate amount of stress out there?

  • Is it me or does Daisy look like Michael Jackson in this pose?

  • Is it me or is trying to explain Minyanville to someone who hasn't experienced it akin to trying to explain the sunset to a blind man?

  • Mother Morgan (MS) continues to trade dry. I'm not touching it on the long side but I most certainly respect the price action.

  • You should never be one trade away from hanging 'em up.

  • I've begun to recruit Minyans from around the country who are interested in joining our underground safe-house network. And yes, I'm kidding (lest they're watching).

  • Wouldn't it be great if people saved during bubbles and spent into downturns?

  • Dryships (DRYS) is up almost 300% since December. Is that the other side of "hit it to quit it?"

  • Is it true that the president can suspend the transfer of power in the case of national emergency?

  • Is anyone else very excited to kick it and watch the games this weekend?

  • Are the Chargers this year's Giants?

  • You think I'm kidding about the underground railroad?

  • Both Wal-Mart (WMT) and the BKX, as different as they are, traced out similar pennant formations. As the former broke in the direction of the prevailing trend, I wanted to draw your attention to the latter matter as it hugs the underbelly of the same pattern. See the chart here and forgive me if I'm reaching (and I very well might be).


    Click to enlarge


  • See you on the Buzz, Minyans (and if you're not on the Buzz, you're missing out. Take a free 2 week trial). TGIF.


R.P.

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