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Minyan Mailbag: Bearishness and Seeing Both Sides of the Trade


We try to provide many lenses with which to view the dew for, if there are enough lenses in place, the spectrum of interpretation becomes clearer to see.


I'm a new Minyan and it's great to be reading you again. I remember reading your commentary years ago at RealMoney and found it quite useful. While your insights are much appreciated, I figured I'd offer a couple quick comments. In the interest of full disclosure, I run small and mid-cap growth portfolios.

Response: Thank you kindly sir, we're glad to have you in the 'Ville. I trust you'll find that it's unlike any other community you've experienced.

I am struck by the almost universal bearishness of your site. Maybe it's my timing as I just signed up a few weeks ago?

Response: I've always maintained that ursine inclinations weren't a necessary precursor for professorship. Instead, we require that professors are honest, forthright and, most importantly themselves. And we believe that we can get our message across sans acrimony. That's becoming rarefied air in this space.

The 'Ville has been a tad furry this summer but that's not necessarily a bad thing (I'll tell you in 5%). Still, in the context of providing "both sides to every trade," I'll offer that the party line on Wall Street and most mainstream media is often skewed to the best-case scenario. The former makes money selling advice and the latter has a vested interest in the advertising spend and sponsorship dollars (both of which do better when the screens are green).

Either way, our mission and mantra isn't to tell folks what to do, it's to provide them with the information they need to make better and more informed decisions. We are sometimes skeptical but far from universally bearish. In fact and for instance, we were bullish on energy and metals for a mighty long time (I continue to believe they have secular and relative winds at their back).

Keep in mind that many times, the content in MV is "early" and then appears in the mainstream press after the price action has justified it (we like to say that we provide the financial news you need to know before you know you need it). Whether or not you "need" it remains to be seen but it's always nice to be armed with insight before a trade is made.

The bearishness is almost condescending from some contributors like "you are an idiot if you don't think we are going into a bear market."

Response: Really? I always welcomed constructive criticism (that's how we improve) but this is the first time I've heard this. In fact, we've taken great care in packaging messy messages in a way that gets our point across without being "those guys."

I'm certainly not smart enough to know where we go from here (we are trying to figure it out in real-time each and every day) but I will humbly remind you not to shoot the messenger. This is a tough tape and our core objective is to provide value.

There doesn't seem to be any nod toward people that are more long-term focused – that while maybe the trade is down, things could be a lot better a year from now.

Response: Fair enough but, as you're new to Minyanville, I would encourage you to spend some time chewing through the archives. Much of what we've discussed does, in fact, speak to the "big picture." We try to provide many lenses with which to view the dew for, if there are enough lenses in place, the spectrum of interpretation becomes clearer to see.

There doesn't seem to be any acknowledgment that things tend to work out in the long run.

Response: History dictates that, over time, equities provide the best returns. No argument there. But I would also offer that these are unique times with historical imbalances after years of reward chasing, debt dependent behavior.

In a normal world, we have business cycles that toggle between expansions and recessions. One could argue that, following the boom, fiscal and monetary stimuli were pumped into the system to artificially inflate asset classes at the expense of the dollar, which is off 34% since 2002.

I suppose the thought process was that we could buy time to allow for a legitimate economic expansion to take root. Our finance-based economy is now completely dependent on the elasticity of debt and the velocity of money, both of which are showing signs of strain.

Seeing both sides, the "new rules" at the Federal Reserve (accepting riskier collateral) could indeed push the comeuppance of risk further out on the curve (there's nothing more dangerous than a cornered animal) but regardless, we must always respect that risk.

The problem is, through conditioned behavior, nobody wants to talk about the structural issues when the markets are buoyant. The irony is that by the time the conversation becomes mainstream, the likely cause is lower prices.

We aim to change that.

You sure seem to be working hard for a guy who doesn't want to work too hard at this stuff.

Response: I hear that! Minyanville is a labor of love, however and we truly believe we're making a difference. Besides, what's our alternative-to bury our heads in the sand and hope that our financial fortunes fend for themselves?

That's not an option, in my book, and for as long as there are Minyans looking to better educate themselves (and, coming next month, their children), we'll be here to share the fare.

Thanks again,
Minyan Alex

No, Alex, thank you. Honest dialogue and open communication are what make for a fertile community.
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