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Monday Morning Maui Back: Stumbling Out Of The '08 Gate


Once the year-end bid was alleviated, the market stumbled to her worst start since the Great Depression.


Aloha, and welcome back to the flickering pack. Following my rainbow respite in the Hawaiian Islands , I'm set to saddle up to this frisky '08 pup. Vacations serve many purposes, including finding a good book, trying new things (surfing), taking long runs (along the blue Pacific), eating like a king (Mama's Fish House) and assessing one's place and path in the grand scheme of life.

While I stole an occasional glance at the wild Wall Street ride, this trip was more about balancing, readying and steadying. I've taken these internal journeys before and, while looking within is difficult to do, it is certainly necessary. I arrived home late last night, having left angst, anxiety and select skeletons on the rocky Paia shoreline.

As I'm quite sure that you're not reading this column for mindful reflections, I wanna shift gears and turn my attention to the tape. And what a tape it is! When I last signed off, the banks were probing multiyear lows and traders were hiding in tech. Once the year-end bid was alleviated-and on the heels of back-to-back economic slaps-the market stumbled to her worst start since the Great Depression.

Given the fact that I'm juggling jet lag with information overload, I'm gonna edge back on track with a stream of consciousness and random thoughts. Please know that I'm (slowly but surely) crystallizing some themes for 2008 that I hope will offer insight comparable to last year's look ahead. Look for that later in the week but, in the meantime, let's chew through this:

  • You can't reference "The Great Depression" without being labeled a Doom & Gloomer. Yet, there are parallels. Last week, for instance, drew comparisons and the housing market, according to many CEO's in that industry, is already there. It is not something to fear, Minyans, it is simply something to respect. Preparedness is the first step towards capital preservation and wealth accumulation.

  • Remember that one week does not a market make. Last year at this time, the OSX endured a "blink-and-ya-missed-it" 10% decline before bouncing back to have a monster year. Last week was, in many ways, a reversion following massive year-end agendas and window dressing. Just a lil' perspective, yo.

  • Minyan Michael Santoli noted in this week's Barron's that the online betting market is forecast a 53% chance of recession in 2008 (it "peaked" at 55% in September). My take is two-fold:

    • First, for many, we're already in a recession, one that's been masked by a 37% dollar decline (since '02) and skewed by "the haves" (vs. the reality of a growing number of have nots).

    • Second, this, in my view, is a natural part of the denial-migration-panic procession that accompanies any market mindset.

  • My fear-and yes, it is just that, a fear-is that the probability of a prolonged socioeconomic malaise and the potential for something more depressing than a recession may remain much higher than most folks are currently factoring in.

  • That doesn't mean it will arrive, naturally, and it's certainly why we've seen historic interventions by global central banks, ECB liquidity injections, rate cuts, discount window collateral shifts, sub-prime rate freezes and attempted super-conduits. The market has been handed a liquidity baton. What it does with it remains to be seen.

  • Just remember Minyans-and this is important-FOMC rate cuts are not a panacea regardless of how it's portrayed by the mainstream media. Look back to January 2001 for proof positive on this front.

  • Levels of Lore include: S&P 1408, DJIA 12,800, NDX 1980-1985, TRAN 4350 and BKX 80, if and when.

  • The New York Times featured a story yesterday asking if this could be the year of the rising dollar. This is old hat to Minyans, along with the precept that we should be careful for what we wish.

  • One question that was eating at me my entire trip: Do you think Buddhists eat monkfish?

  • Many kind thanks to all ye faithful who weighed in on "Things I've Learned." It is my sincere hope that this list continues to grow in the years ahead.

  • I'll be rooting for LSU in tonight's BCS Championship game but that's just me. I was also rooting for Hawaii in the Sugar Bowl and they got thumped by Georgia Bulldog squad that is no joke.

  • Note that Japan closed at levels last seen in July 2006. Nikkei 14K is THE level to watch for those who care about such things.

  • I'm told there were buyers in the consumer non-durable space last week, including Coca-Cola (KO), Johnson & Johnson (JNJ), Proctor & Gamble (PG) and Altria (MO). This is consistent with our vibe that, in a slowing economy, these names (along with pharma) will out-perform on a relative basis.

Minyans by no doubt now know that we've beta launched Minyanland and The Exchange. Both of these initiatives will greatly enhance our community and we'll simply ask that you're patient as we iron out the wrinkles. We're also adding a few new professors to the mix, folks that, as is the Minyanville mantra, are very good at what they do and better at who they are. Thank you for sharing your journey with us, my friends, we look forward to a fantastic voyage!


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No positions in stocks mentioned.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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