Where The Market Will Go
The answer is a matter of time.
As I snuck a peek at that psychological continuum, I wondered where we are on the curve. The answer, I suppose, is a function of time; as with most things, there are short-, medium- and longer-term horizons. The trick to the trade-this, or any-is making sure your risk profile and time horizons are in sync.
Short-term, after covering my recent spate of downside bets, I took a very defined upside stab Wednesday afternoon as we sat across multiple technical support zones. Those are pure trades in my eyes, and an attempt to squirrel some acorns through a defined risk lens.
Medium-term, over the next several months, I'm concerned for the "asset class" side of our equation should the dollar act well, as I believe it will. I'm holding some UUP exposure as a variant view of the widespread pooh (97% bears), as well as for the "best house in a bad neighborhood" trade (the recent Buzz by Professor Bloudek is required reading for all Minyans).
Longer-term, as discussed through the years, my fear is that a cumulative comeuppance will come to bear. We, the people, bought the cancer when we sold the car crash and we're living, quite literally, on borrowed time. This is not a healthy market; if it were, there would be no need for the government IV drip.
That's a different conversation than "Can we rally?" Of course we can; the question is, at what cost and to whom?
Pepe Depew recently wrote "debt deflation is a game of survival more than an investment opportunity, but even on the spectrum of survival there are shapes of acceptable risks."
I think that's spot on; at the end of the day, trading, life, love-you name it-is about measuring potential reward versus incremental risk. I'll borrow a page from December 2006 when I was asked what concerned me most. My response was that "The Dow is trading at all-time highs yet nobody feels like we're at all-time highs."
Fast-forward to a conversation I had with Pep yesterday, when I said, "You hit the nail on the head with regard to survival. I'm hearing horror stories daily; businesses closing, relationships ending, folks not able to make ends meet. If it's this bad now, after a 60% rally, can you imagine what it will feel like when the next wave of the crisis hits?"
I'm a humble man; I don't claim to know when, why or how things happen, but experience is a powerful weapon of preparedness. The financial crisis hasn't disappeared, it's simply changed shape and that will manifest in unforeseen ways.
Our mandate in Minyanville is "truth and trust;" that doesn't make the above scenarios "right," it simply means they come from an honest place. I remain of the view that Financial Staying Power is the first and foremost goal of any investor and those who find their way the other side of this prolonged process of price discovery will have generational opportunities.
Fare ye well, Minyans, and be thankful for every day. It should never take something bad to make us realize that we've got it good
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 firstname.lastname@example.org.
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.
Daily Recap Newsletter