Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Being Wrong Vs. Being Early

By

The only difference between being wrong and early is whether you're there to collect on your bet, even if the bet is not making a bet.

PrintPRINT

Todd,

You've been cautious on the market since the summer. Yes, you could very well be right and early. However, when something you think would happen does not, it begs the question why? Is it because the parties holding the keys have a different motivation and agenda? Are they able and willing to continue or change course? What are other factors that have so far been ignored, which could have contributed to a different conclusion? We, as reactors, have our own decisions to make.

That is where I am at this point-trying to make a decision based on confusing information. What I think should have happened has not. Should I wait for the situation to become clearer? Or should I be "early" and take the action, and accept possibility of risk and being "wrong?"

It is a philosophical question as well as a practical one. You are very much aware of the cost of being "early" or "wrong". That is why I am interested in your opinion.

Minyan A


MA,

Very well said; the context of time is correct, as is the multi-linear equation of the markets, human emotion and intellectual agility. We used to say the destination we arrive at pales in comparison to the path that we take to get there. For me, I attempt to execute against that dynamic with my trading portfolio.

In my long-term bucket -- which has been in cash since well before the crisis began when equity markets were 30+% higher -- I'm comfortable with that posture as it's a longer-term nest egg I cannot afford to lose. The only difference between being wrong and early is whether you're there to collect on your bet, even if the bet is not making a bet.

Opportunity cost is the other side of discipline; that doesn't sugarcoat the 'miss,' but if I've learned anything over the course of my career, it's that opportunity cost is a lot easier to make up for than losses.

There is a scenario where the big picture concerns don't manifest for a few years. That's what corporate credit markets are telling us but I believe the crisis has evolved into the socioeconomic spectrum. I wince at the notion of being branded a dire wolf-take me at my word, I've bet big on the upside over the course of my career. Some of the smartest people I know are raging bulls and that fact isn't lost on me. The unknown variable is amorphous, dependent on social mood, risk appetites and struggling sovereign nations around the world.

Through the lens of the context of time, to bring this full circle, there are scenarios in the probability spectrum where investors migrate further out on the risk curve and asset classes move higher. See all sides, as we like to say, and I continue to watch the dollar (if that catches a sustained bid, I belief all bets are off) and S&P 1120ish as a technical context with which to define risk.

Not sure if this makes sense but I most certainly hope it helps.

Have an awesome holiday stretch.

Todd

R.P.

Position in S&P

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.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE