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Random Thoughts: The Quiet Riot


The streets are filled with acrimony.


What actions speak louder than words? Societal acrimony.

I speak to alotta smart fund managers and market players. They're edgy, frustrated, angry, tense and snappy.

Why does that matter?

Social mood and risk appetites invariably shape tapes.

Adding to that dynamic, I've noticed a lot more homelessness.

On my seven block, three avenue walk home from work yesterday, I counted a dozen--12--beggars or cardboard box homes.

That's in midtown Manhattan , my friends--I can only imagine what it looks like is "less affluent" areas.

In 2006, I spoke of "something entirely more depressing than a recession" at MIM3 in Vail.

When I finished, there was considerable consternation as my words lingered and thoughts drifted throughout the audience. It's not a happy message-it's not something that one would wish for-but it is what it is and we'll do what we must.

There will be a recovery-it will be "outside-in" just like the prognosticators offered early last year. But just as the prophecy didn't prove true before the tech crash, globalization won't happen until after the debt crash.

How we get there--via credit cancer or car crash--remains to be seen.

My point is this--take a breath.

It's an angry world as societal acrimony percolates. We spoke about this as one of our ten central themes of 2008-stateside into the election and globally as the imbalances permeate-and it's coming to fruition.

Think before acting, breathe before snapping and appreciate what you have rather than lament about what you don't.

It will get tougher before we recover-that much is assured-and lucidity, patience and perspective are critical, not only for success but in some cases survival.

I write these words for myself as much as ye faithful for its easy to forget.

Appreciate your friends-cut 'em a break!-reach out to your family, give something back.

If you're not part of the solution, chances are you're part of the problem.

And this world, as we know, has plenty of problems already.

Random Thoughts

  • Our "best guess" before yesterday's opener was a press (lower), rally attempt, siftage of winners from sinners, higher close, muddle forward and then a harsh downdraft (in time) as the difference between drugs and medicine manifests and other financial institutions fail.

  • That still seems valid although nothing is linear-between the macro movements (dollars), forced fund flows, government mandates, debt issuance and geopolitical agendas, the forming storm is gaining steam.

  • Risk management over reward chasing remains an intelligent approach.

  • Bill Miller's Value Trust fund owned 79 million shares of Freddie (FRE), according to the latest reports. I don't point that out to rub salt in anyone's wounds (not our style), I'm offering it as proof positive that it's hard out there and nobody is smarter than the market.

  • Why were the master betas (Google (GOOG), Research in Motion (RIMM), Apple (AAPL)) down yesterday? Part multiple compression (deflation comes in many forms), part forced selling (as hedge funds raise money for redemptions), part credit crisis (as it cycles through tech on the consumer and enterprise side).

  • Wells Fargo's (WFC) market value just overtook Citigroup (C) as the third largest bank. Crazy.

  • How "sure" am I on my USO calls? Sure enough to to trade them from the long side into par (crude $100) for a bounce but disciplined enough to respect the reaction to news (crude vs. Hurricane risk, dollar vs. GSE bailout) while understanding that my broader, secular thesis is deflation (lower crude).

  • Minyan C-Poe is unleashing his film at the Boston Film Festival on Saturday. Area faithful are encouraged to attend!

  • Hit 'em hard, Minyans, and keep an eye open for President Tyler!

  • The doors to Festivus 2008 are officially open! Lock 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.


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