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The Anatomy of a Profitable Process

By

Affecting positive change through financial understanding.

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  • No matter what you're view of the next 20% is, that doesn't mean you need to lug huge overnight exposure. The markets will be open tomorrow and opportunities abound on a daily basis. Discipline over conviction.

  • How bout some SRV? No matter how busy we are, there is always time to remember.

  • As always, I hope this finds you being the ball rather than Marsha's nose.

Other, Tertiary Random Thoughts…

  • One of my primary concerns at our current juncture is the notion of social mood and risk appetite. Remember, the lion's share of the 2008 financial carnage occurred in the fourth quarter and for many, that point of recognition will arrive when the latest investment statements arrive in the mail.

  • While it's entirely too early to issue an all clear in crude, we must respect the potential that, if Texas Tea continues to lift, investors will point to the "double bottom" with the benefit of hindsight. Yes, I still have my place-holder in the USO as ghosts crowd this young child's fragile, eggshell mind.

  • Old school Minyans remember that "excess breeds excess" and that dynamic applies to both time and price. Keep that in mind regardless of which way this fray sways as a matter of perspective.

  • Talk about a mirror image of our prior scrimmage. Back in 2007, when we flagged the financials, the analyst community was uniform in their optimism. Now, after the 80% crash, a quick sniff finds the following:

    • Citigroup (C): 13 of 18 analysts have a hold or sell rating.
    • Bank (BAC): 14 of 25 analysts have a hold or sell rating.
    • Wells Fargo (WFC): 12 out of 24 analysts have a hold or sell rating.
    • JP Morgan (JPM): 7 of 18 analysts have a hold or sell rating.
    • Goldman Sachs (GS): 12 of 21 analysts have a hold or sell rating.

  • Remember, I'm in the rental-not storage--business. While my inclination is to give my exposure in the financials some room, risk management must always trump reward chasing. That means something different for each of us and therein lies the art to the science. When in doubt, trade "in between" and no matter what, respect the elephants.

  • Microsoft (MSFT) misses estimates and cuts jobs. Nokia (NOK) lowered its dividend for the first time in seven years and cut the industry outlook. General Electric (GE) trades like it has the black lung. Yes, the news is bad… but it always is, near a low.

And Finally, the I shared the following vibes on The Exchange recently and thought ye faithful might enjoy it. It was in response to a healthy and respectful debate regarding our current societal juncture:

I've long believed the friction between opinion is where true education lies. I thank each of you for adding to that equation.

I have to believe that there's a better way to do business; a place where a handshake means something and integrity counts. Perhaps it's the old school Ruby in me but there's innocence in purity.

That point of recognition has passed-we saw martial law in the markets in 2008-but the specter of change is a powerful thing. The easiest thing to do is to point fingers-trust me, as old school Minyans know, we were loud when it was of no benefit of us to be so, but we were steady in our message. The writing may indeed be on the wall but the paint isn't dry... yet.

The only way to affect positive change is to do so individually. If society is indeed a sum of the parts, change must begin within. For many, it is underserved. For others, warranted. Be that as it may, it is what it is and we'll do what we must as we have no other choice.

My greatest concern moving forward isn't financial, directly, but rather societal and geopolitical. People are angry and rightfully so. If you were a foreign holder of dollar-denominated assets (down 30% from 2002, still), you'd be pissed too. This storm has been percolating since the word 'recession' became anathema.

Cumulative. Remember that word.

As I've tried to espouse-channeling the Minyanville professors who are far smarter than I-"Financial Staying Power" will emerge as the catch phrase of 2009. Not in so far as the market itself, but with regard to dynamic and lucidity. The fat is dripping from the bone as we speak and it's splattering all over the place.

Apologies for the ramble but yes, there is a point. By being here-as part of our community-you've demonstrated an awareness and empowerment that most folks still can't see. They will, and it's not too late to start.

Yes, I'll plug here-Minyanland is a free site for kids to teach them how to earn, spend, save and give-as education is the key to our future.

Thank you for sharing the critter adventure and know that Hoofy and Boo are right by your side.

R.P.

No positions in stocks mentioned.
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