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Is This the Most Important Juncture in History?

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Investors cast their eyes towards Europe.

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I would like to start today's vibe by making a statement: I want to be bullish in here.

I will follow with an old school axiom: Hope is not a viable investment vehicle.

We've dutifully weighed both sides of the market ride, and a few weeks ago offered that The Critter Compass pointed to S&P 1250 (and we got quite close). Still, we'll chew through the dew one more time, for this is perhaps the single most important juncture of the year -- if not, and I'm not prone to hyperbole, history.

Yes, history.

The bulls will point to the strong corporate credit markets (which suggest higher equity prices despite trading off their best levels) and "The Misery Index," which has hit a 28-year high, as a contrary indicator. They'll use technical terms like "stochastics" and "put/call ratios" to support their thesis, and in a vacuum they're 100% right.

Outside the vacuum, here in the world with the rest of us, we're dancing on the head of a pin and few people seem to notice how precarious our position is. Way back when, during the panic of 2008, we spoke about the lesser of two evils, about how the government bought the cancer in an attempt to sell the car crash.

They were "successful," insofar that they jacked the stock market 100% and allowed corporate America to roll their debt and issue stock. What they also did, perhaps unintentionally, is transfer risk from the private sector to an already burgeoning public sector, and heighten tension in the geopolitical spectrum.

Again, and apologies if this is redundant, there are two paths:

  • Drugs that mask the symptoms (throwing trillions of dollars at the problem), which triggered a spate of unintended consequences (such as out-sized bank profits) and lead to a tricky trifecta of societal acrimony (Goldman Sachs (GS), BP (BP)), social unrest (Greece, Egypt, Libya, Yemen, Syria, Tunisia, Spain), and geopolitical conflicts (yet to be determined).

  • Medicine that cures the disease (debt destruction and/or reorganization), which will be a bitter pill to swallow (there are no easy answers) but once we traverse through that process, it'll pave the way to a legitimate outside-in globalization (the US won't lead, but will participate). This, in my view, is where the market was heading before the synthetic stimuli, and it's where the market will ultimately go whether we like it or not (the question, of course, is "from where?").

I will say it again: I want to be bullish. As a small business owner, an American, and most importantly, as a father, I want to prosper and leave a better world for future generations. The problem is, once you start down the path we're on -- once you begin to dig that hole -- there are only two option: reverse course or dig harder and deeper. We've done the latter, and folks around the world have started to wake-up to reality.

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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 todd@minyanville.com.

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.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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