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One Step Closer to the Future


President-Elect Barack Obama will inherit a full plate of persistent pressures.


"All progress is precarious, and the solution of one problem brings us face to face with another problem."
Martin Luther King, Jr.

New York City was extremely energized last night as the shifting social mood that began on Halloween and ran through the Marathon reached a palpable, impassioned pitch.

It's been an anxious and frustrating stretch for our nation and we, the people, demanded a change. The face of that change is Barack Hussein Obama and our President-elect will inherit a full plate of percolating and persistent pressures.

As a card-carrying, socially liberal, fiscally conservative free-market supportive citizen, I'm paying close attention to the societal shifts currently in play. I consider the economy a "punt" over the next four years-time and price are the only arbiters of our financial fate-but, as social mood and risk appetite shape financial markets, psychology on the Street is of paramount importance.

I wrote last week that if the U.S.A. is to regain respect on a global stage, there are intuitive steps that can be taken. Inherent in the establishment of a fresh international foothold is our collective ability to admit the error of our ways as we begin the arduous process of rebuilding trust.

The structural foundation of global financial markets remain under siege and it's our sincere hope that the specter of diplomacy will buy some time as we sort through the incredible mess that's cumulatively built over the last eight years. No one man can wave a magic wand and suddenly make everything better, we know, but every journey begins with a single step.

Minyanville takes great strides to remain apolitical and speak to the government only when it pertains to capital markets. Those lines were forever blurred a few months ago when we awoke one morning Back in the U.S.S.A. That dynamic will remain in play for the foreseeable future until the excess unwinds and debt is destroyed.

The Purpose of the Journey is the Journey Itself

As we turn this historical corner, we find ourselves less than two months away from 2009. The obvious question on everybody's mind is what this political and societal shift will mean for the markets as we finish up this freaky year.

I was asked if yesterday's rally was a function of electoral clarity and my response was that the entire lift the last six sessions-almost 20% in the S&P-was the same trade. What remains to be seen if "buy the rumor, sell the news" once again proves true.

As discussed on October 15th, the ability of the bulls to put some distance between themselves and S&P 840 could spark performance anxiety in the mutual fund arena. The only thing worse than losing your money, in their minds, is under-performing their peers. That remains on our radar as we edge ahead and I'll remind ye faithful "don't hate the playa, hate the game."

On the other side of the ride,
the disconnect between credit and equity remains problematic. Popular perception is that credit has thawed and while many symptoms have, the underlying disease continues to lurk. The smarter folks in the space remain wary and worried that further selling and redemptions are inevitable.

So, what's a Minyan to do? What we always do. Operate through the lens of risk management over reward chasing with an eye on capital preservation, debt reduction and financial intelligence. All the while, remain conscious of the other side of Our Wishbone World where capital conversion may be a necessary step to protect our hard earned coin.

Random Thoughts

  • As discussed yesterday in real-time, I punted my crude and gold plays into yesterday's hot popper commodity rip. Just trading through the lens of "hit it to quit it" while keeping my risk leash tight.

  • I also nibbled on a snivlet of Wal-Mart (WMT) puts. The stock is up almost 20% from its recent low and resistance looms at $58ish. This was one of those retail therapy candidates we spoke of in August-the vibe that retailers would need therapy into the holidays-and I took down a starter position in January puts, leaving room to add higher (with a stop on the other side of $58).

  • Let's see, Hoofy and Boo will find out if they won their Emmy Awards on December 2nd and our annual Holiday Festivus to benefit the Ruby Peck Foundation is two nights later. Hey grandpa, how bout a kiss from above on this one?

  • "What goes around, comes around." In trading and in life, doing the right thing typically pays dividends. It might take some time but time, as we like to say, is the arbiter of all fate.

  • Be careful with the traditional "election plays." Much like expirations, they're often too crowded to effective game.

  • The single most important tell for global financial asset classes remains the US Dollar (DXY). Asset class deflation or dollar devaluation, Yo, pick your poison.

  • If you close your eyes and listen to this song, how many artists can you name?

  • What do you mean you're too busy?

  • Alright-time to let this puppy rip. Fare ye well as we hike over the Hump, Minyans, and think positive. Profitability begins within.


Did you know the doors to Festivus 2008 are officially open? Have you yet locked your spot for the critter trot as last year's soiree sold out? (This is our annual event to commingle our professors, partners and Minyans while chowing down and listening to live music. The very best part? It's for the kids in the good name of my grandfather.)

No positions in stocks mentioned.
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