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Truth and Consequence


History will not reflect kindly on recent economic decisions.


"He who learns but does not think is lost. He who thinks but does not learn is in great danger."

A Chinese philosopher said that when it's obvious goals cannot be reached, don't adjust the goals-adjust the action steps. Global central banks have taken those lessons to heart.

The construct of capitalism has forever changed and investors are spinning from the insane volatility gripping financial markets. 20% moves in major market averages-session over session-are tough to stomach regardless of your directional bias.

One year ago, when the writing was on the wall as the Dow Jones Industrial Average probed all-time highs, pundits confidently proclaimed there was clear sailing ahead.

Last week, as perception caught up with the daunting reality of debt and derivatives that we've warned of for years, depression was debated across mainstream America.

You can't blame folks for being confused. We're past the point where bulls and bears profit or lose. We've entered a new world order, a scary stretch where politicians rewrite history on a daily basis in an attempt to escape the devil of deflation.

There are certain things we know for sure. Universal truths, if you will, that can provide clarity amid the confusion. We'll tackle five themes today with hopes that we'll shed some light as we together find our way.

The Measuring Shtick

Two trading dynamics considered gospel for many years have effectively been debunked. The first was that lower crude would serve as a positive equity catalyst and the second was that a higher dollar would bode well for stocks.

We live in a Wishbone World with dollar-denominated assets on one side and the greenback on the other. One of two things must occur: either the world reserve currency will debase, paving the way towards hyperinflation, or the dollar will strengthen as debt destruction continues it's natural course.

The government is attempting to buy the cancer and sell the car crash. The mere perception of "success"-a whiff, if you will-should be enough to shift psychology to the other side of the ride, damaging the dollar and propping stocks higher for a trade.

Fund of Funds

The hedge fund bubble popped this year and the carnage has been pervasive. On top of regulatory scrutiny and operational restrictions, the correlation of strategies has buried the best in breed well below their high water mark.

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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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