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Randoms: Three Ways to Manage Risk


Where you stand is a function of where you sit.

  • As a matter of course, I'm long meritocracy and short entitlement.

  • As per my recent missive, there are two possible paths into year-end. The credit markets are pointing higher, the weight of the world is pointing lower. These disparate situations won't last long so please, see both sides and manage risk accordingly. You should never be one trade away from hanging up your cleats.

  • We can, of course, fulfill both destinies with a pullback (to say, S&P 950, where we broke out) and then a year-end ramp. Gun to head, there is something entirely too conventional about that scenario that doesn't sit quite right.

  • Have you read Mr. Practical's take on the state of our union and the fate of the dollar?

  • China got smoked like a Cuban cigar overnight, down almost a full finski (5%). While much is being made of the double bottom break (which "confirms" the double top), I would note that we're just now sitting on the trend line from the February low. That's right, China bottomed before us-could they be topping before us as well?

  • Domestic demand is unlikely "to provide a full remedy for the sharp contraction in external demand," the Chinese commerce ministry said in a statement today.

  • Here's another perspective on Shanghai, that it's a "big fat tail risk for world markets."

  • How can you not smile while watching this?

  • Why have I been focusing on the NASDAQ while everyone and their sister is staring the S&P? That's where the set-up is.

  • Consistent with that, I slipped an arm out of my metaphorical bear costume yesterday (in real-time on the Buzz) with the NASDAQ trading at 1970, leaving three appendages, or 75% conviction on the short side.

  • There are a few ways to play moving forward:

    • Continue to operate with the game plan in place (the stop on my remaining exposure is 2% above where I initiated my risk.

    • I could roll my stop down to NDX 1600 (2% lower than where I initiated my risk) and 'trade for a credit.'

    • I could use NDX 1600 as a partial stop (on another 25% of my exposure), leaving 50% of my risk with the original stop, which would make my worst-case scenario a push.

  • In addition to "past support is future resistance," please note the downward sloping (short-term) trend line that intersects at NDX 1600. See it, regardless of which way your chips are stacked.

  • You call that a bear costume?

  • Have you turned your mini-Minyans on to Minyanland, where almost 500,000 kids laugh while they learn earning, spending, saving and giving?

  • Shallow Hal is trained to buy dips, which will work...until it doesn't. Respect, but never defer.

  • If we were to take a snapshot-right here, right now-where would we be on the curve of psychology?

  • The MV Litmus test: Are you "OK" if the market is 5% higher or lower?

  • Bank of America (BAC), Goldman Sachs (GS) and Citigroup (C) (in that order) are my mainstay financial tells. When they're all pointed in the same direction, they qualify as the macho, macho-tell.

  • Speaking of which, I sure wish MV Editor Matt Theal would stop playing this video!

  • In terms of the digital media model, I'm a firm believer in tiered content and letting the consumer shape an information profile dependent on their unique needs. The interesting twist is that this approach might only work in the financial vertical, as it's tough to up sell other categories.

  • We've said it since we've launched and we'll say it again-the Internet is the most deflationary invention in the history of the world.

  • I used to think finance was the most vicious industry until I got into media. Man-oh-Manishevitz, agendas run deep in the rat race for eyeballs!

  • I will say this, if we look back at this juncture and muse, "Geez, social mood and risk appetites really do shape financial markets, "tent cities and town hall acrimony" will seem obvious with the benefit of hindsight. Just sayin'.

  • This market is unforgiving and we're in the middle innings of a multi-year weeding out process. Financial Staying Power, now more than ever, will pave the way to profound opportunities. True.

  • Please circle Friday, December 4th for this year's Festivus to support The Ruby Peck Foundation for Children's Education. And don't say we didn't give you a long enough lead-time-it's for the kids!

  • So it's said (again), Memoirs isn't meant to hurt anyone. I'm simply sharing my tale and recounting my steps. As you'll soon see, they're not all steps that I'm proud of but they're most certainly steps that I've learned from.

  • Is it Memoirs or Memoir?

  • You say "CIT (CIT)" and I'm immediately brought back to the imagery of the financial dike springing holes faster than the government can invent fingers. I know, I doesn't "matter."

  • If you haven't signed up for the (free) Minyanville Daily Feed, give it a shot. It's our take on the pertinent topics in the world of business, culled and curated just for you!

  • More meetings than J-Date! I'm a firm believer in using "down time" to gain market and mind share so the summer months are traditionally barn burners in the 'Ville. As we're an inclusive community, I wanted to share that fare for those that care.

  • Good luck, Minyans, and let's jump this hump!


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