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Random Thoughts: The Spread of Subprime


Credit issues have pervaded the market.

  • You can learn a lot just by watching! We spied Bear Stearns this morning (BSC) as a dry eye in the crimson sky and the stock has since tacked on seven percent.

  • I haven't heard a catalyst but I wouldn't be shocked if takeout chatter follows the stock higher. I was playing this pup from the short side but covered into yesterday's muck as a function of discipline. Better lucky than smart, eh?

  • There is an uber-important Minyan Mailbag nestled in my Freaky Friday Potpourri. It speaks to widespread perception of invisible bids in seemingly safe bond funds.

  • Are matzah balls fattening? Not like I care, I mean, I'm a guy. It's just that, er, I was curious.

  • How does a problem such as subprime spread to everything from student loans to corporate bonds, auto loans and credit cards? Simple, derivatives, in the context of an eye-popping credit expansion.

  • We've been talking about this for years--yes, years--and caught a fair amount of flack from certain circles. This is the thing, though, it's cumulative. The timing or catalyst (subprime) was unknowable but understanding the risk, as opposed to chasing reward, was lucid and intelligent. That remains the case regardless of however the next 5% shake out.

  • By the way, at dinner last night, I asked the savvy seer what his odds were, on a scale of 1-10, that we're entering a 1970's or 1930's type of environment. His response? "8 and 4, respectively."

  • The last time we got the Duran Duran vibe going, it stuck like white on rice. In that vein, I suppose we should Save A Prayer for the morning after Valentine's Day.

  • Pharma and consumer non-durables trade relatively dry, as you might expect in a slowing economy.

  • I failed to take my own advice about dipping my wick in a teenage Schering (SGP). The question I'm weighing now is whether I'm being penny wise and Plough foolish.

  • Pork bellies, which are used to make bacon. As you might find in a bacon, lettuce and tomato sandwich.

  • I've been pinging back and forth with Snoop Tony Dwyer, who pulled his horns January 7th. I told him that I'm in a "pure trading" mode, two-sided and opportunistic, with dry powder at the ready. That's my bailiwick, whatever that means.

  • Bigger picture, I'm firmly in the capital preservation, debt reduction and financial intelligence camp.

  • The ability to affect positive change is a powerful platform in a much-needed time.

  • Do you think the folks at FOX Business sing "M,m,m,my Shibani!"?

  • Readers of the Buzz know that I tried a snivlet of Apple (AAPL) calls this morning and was subsequently stopped out for a small loss. I share this because 1) there's no hiding in the 'Ville, 2) discipline must always trump conviction and 3) the only difference between a lesson and mistake is the ability to learn from it.

  • Is anyone else psyched that Lost is back?

  • Breadth doesn't support Snapper but remember, in a futures led market, internals will lag the broader tape (both ways).

  • Can you believe that Hoofy and Boo have filmed 70 episodes? If you wanna crack a smile during your day, hang with the critters and take a deep breath. A little levity goes a mighty long way.

  • Think positive Yo. It begins within.


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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