The truth, the whole truth and nothing but the truth.
Old school Minyans might recognize the title of this column. It was used in January 2005 after a spiritual awakening in Arizona. When I walked into the desert that day, I operated from a place of finality; I knew where I'd been, what I made and whom I was with. There was comfort in being able to define myself but that security arrived with a cost of containment.
When I returned to my room, I no longer measured myself by 35 years of experience; I was genuinely excited for the vast unknown that lay in wait. I envisioned a pyramid-an upside down "V," if you will-and immediately felt the image invert, as if I suddenly understood the world would be shaped by my next set of decisions rather than the choices of the past.
I offer this walk down memory lane for a reason. While I've fulfilled a plethora of personal, professional and philanthropic obligations, this year has been laborious to say the least and it has nothing to do with the performance of my portfolio, the lifecycle of Minyanville or the efforts of The Ruby Peck Foundation for Children's Education.
Why then, do I bring this up? Let's call it a nod to the cumulative consciousness as we together find our way.
Market swings aside, this prolonged period has been the definition of a never-ending Gobstopper. Between our capital raise (adding capacity into a downturn defines the winners that emerge), incessant travel, shifting social mood and close friends shouldering death, divorce, disease and business struggles, 2009 has been paved with challenges that require persistent fortitude and steadfast perseverance.
I'm not complaining, which is sorta my point in sharing this. While the stress is ever-present, the ability to get up each morning and fight the good fight beats the pants off the alternative. Not a day passes when I don't count my blessings; to do what you love with people you respect while serving the greater good has always been my definition of professional nirvana.
With that said, I speak to a lot of people-and know many within the financial complex-and take me at my word when I tell you white flags are flying. The old guard-an establishment I grew up with and in some cases, looked up to-is being deconstructed as free-market capitalism attempts to find newfound footing following its near-death experience.
Some folks have made a decision of choice that economic incentive no longer exists while others I know are exiting the business as a function of need. Through it all, a common thread exists that binds them and by extension us. It's something we've written about for years and spoken about extensively during our many community gatherings.
The leaders that emerge on the other side of this crisis will not be the same as those that entered it.
While this process will change shape and take many forms, it will be measured in years, not months; it will be an era rather than an event, and it will involve virtually every industry.
There's no reason to be frightened-in fact, with the proper perspective and proactive preparedness, we'll together arrive at a fertile ground where opportunities abound. The playing field will be entirely less crowded, but financial staying power will enable those in the game to pave a path to prosperity where future franchises and fortunes await.
My grandfather taught me to never run scared. I will ask the same of ye faithful as we focus on the purpose of the journey that is the journey itself.
So It's Said and So You Know
I was giving a lecture at Syracuse University last Friday when the news hit that Galleon Group founder Raj Rajaratnam and five other people were arrested and charged with insider trading. As Minyans know, I worked at Galleon for a few years before resigning in 1999 to run the trading operation at Cramer, Berkowitz.
I received a few emails Friday night from folks who mistakenly thought I was sourced in a story discussing the incident. After a little digging, I discovered the following passage posted on an Internet platform:
"Buried in a footnote on page 11 in the FBI charge it says Raj interacted with CW since the mid-90's in connection with the CW's prior employment. Raj's former employer was none other than Needham & Company. Todd Harrison of Miniville reminds us that Raj and Gary worked together at Needham, a top boutique firm that invested in tech companies. Keep in mind Rosenbach's name is on some of the alleged insider traders like PeopleSupport Inc."
Aside from the obvious spelling error, this reads as if I was contacted for and participated in the story. To be clear, I was not and did not. That (out of context) reference was pulled from (and linked to) a chapter of Memoirs of a Minyan that was published on July 8th, 2009.
Despite repeated calls from The Wall Street Journal, The New York Times, New York Post and other publications, I have not discussed this situation on the record, off the record or otherwise. I worked at Galleon over ten years ago and the professional path I've chosen will serve my name and word in good stead.
While I Have You…
You may have noticed that the breadth of Minyanville content has expanded. We set forth on a mission years ago to effect positive change through financial understanding from the ABC's to the 401(K)'s. We've largely achieved that but make no mistake; we've only just begun.
As part of our ongoing evolution, our editorial management team ushers content to the proper rung on our vertical learning ladder. As part of that charge, they've been more prescriptive in what is suited for our syndicated News & Views and what is better kept for our real-time Buzz & Banter.
I will continue to write about pertinent issues in column format while day-to-day market musings and actionable ideas will be found mostly on the Buzz. This is not a dramatic shift or seeds of an up-sell-I've seen firsthand what that can do to an online community. It's simply forthright communication, as you've come to expect from a media concern predicated on truth and trust.
Gimme My Greenback!
With the dollar index (DXY) back at levels last seen in August of 2008, I wanted to quickly highlight a chart of the greenback vs. the S&P from October 2007 to present.
As you can see, lethargy in the dollar coincided with slippage in stocks for three months as the S&P lost 20% before our much discussed "asset class deflation vs. dollar devaluation" dynamic kicked in. This is a prime example of why we often say both sides of that equation can trade lower but they won't, in my humble opinion, together rally.
What's the main difference between now and then? The credit markets, as they've been buffer than Mario Lopez (according to the picture on Editor Matt Theal's desk). That's the fly in Boo's try; that the government-sponsored euphoria already passed the baton to corporate America (before sticking it once again in the palms of the consumer). As Pepe Depew so eloquently wrote, while that promises to be a huge problem, it may not "matter" for years.
Be that as it may and through the lens of one step at a time, I've been trading around a short bias with positive gamma in the N's and S's (as discussed late Monday and continued on today's Buzz). I'm operating smaller-which is prudent when you've had a chilly feel-with one eye on S&P 1120, the other watching the news flow and the Third Eye Blind.
You know how this works, right? We toss out a word and I'll say the first thing that comes to mind. Yes, it's a little weird but hello, do you know me yet?
Goldman Sachs (GS): Did the insider sales window open yet?
Trip to Baltimore: Pushed to next weekend so I can take the kids trick-or- treating (which fits nicely with the Ratdog show on Friday, a charity event Saturday and the Raiders-Jets game in the big city on Sunday).
Dollar: At what point does the lower dollar become a cause for equity pause given everyone is conditioned to buy stocks on a sloppy greenback?
Dollar: (sorry, I'm A.D.D.): Too many bears or do currencies, like stocks, crash from oversold readings?
Simple Smiles: How could I possibly miss the Grateful Dead exhibit at the NY Historical Society last night? I couldn't, and I was rewarded with some vibe time with Bobby, which was nice.
BirthWallet?: Did anyone else catch the fact that CC Sabathia is a die-hard silver and black fanatic? He's also a cancer (check), lived in Cali (check), favorites include Goodfellas and Entourage (double check) and he danced in a ballet (no shot; did you really think I could do that?)
Insider trading probe: It could be entirely more far-reaching than most people expect. Remember at the end of last year, we opined that in the eyes of the government and the public-not my view- hedge funds were an acceptable casualty of war. I think that process has begun and it should be interesting to see how it plays out through two lenses: structural (the unwinding of risk) and psychological sentiment (faith in the credibility of the system).
Social Mood? A populous revolution is emerging, and yes, I'm always early.
Society? A sum of the parts. Anecdotal inputs I'm getting are seemingly down-ticking, not up-ticking*.
Why the "*"? The "have's" on Wall Street banks will make big bank this year, which fits with the social mood bullet a few lines higher.
Sugar tax? Why not, if taxes are going to rise-and they certainly will-why not start with sin taxes and sugar taxes? Wouldn't that indirectly lower healthcare costs?
Kevin Wassong: Save Ruby, the best man I ever met.
Jeff Saut: One of the few weekly Minyanville missives I never miss.
Moments of gratitude? Profound. You have no idea what I'm talking about, I'm sure. But don't worry... you will someday.
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