With New Decade Comes New Hope
Following the worst 10-year equity stretch in history, optimism abounds that the crisis has passed.
Upon reflection, the personal and professional milestones were astounding.
AOL (AOL) was purchased by Time Warner (TWX) in 2000, only to legally separate ten years later.
Mad Cow Disease panicked the population, as did Anthrax, SARS, and the Swine Flu.
Alan Greenspan concocted his toxic brew, only to be hailed as the greatest Federal Reserve Chairman in history
The attacks of 2001 forever shattered our innocence.
Reactive regulation busted the likes of Kenneth Lay, Bernie Ebbers and Dennis Kozlowski.
Five years later, the same fate befell Warren Specter, Stan O’Neal and Chuck Prince, all of whom sold massive amounts of stock when they were ousted and before prices fully collapsed.
We watched Goldman Sachs (GS) take over Washington, one by one until they ruled the roost; Hank Paulson sold upwards of $500 million in stock through a tax-free loophole.
We invaded Iraq after being told they possessed Weapons of Mass Destruction.
There was the blackout in the Northeast—still yet to be explained—Abu Ghraib Prison abuse, Hurricane Katrina, election disputes, the iPod, Anthrax fears, terror alerts, Patriot Acts, American Idol, “Mission Accomplished,” Martha Stewart, Madonna kissing Britney, Howard Dean going nuts, Janet Jackson’s nip slip, Facebook, YouTube, Twitter, ringtones, Tsunamis and steroids. The Sopranos faded to black, The Red Sox finally won the World Series and Britney, Lindsay and Paris captivated the mainstream mindset only to crash back to earth in real-time.
And then, of course, there was Wall Street. Following the worst 10-year equity stretch in history -- a period littered with bubbles and busts in technology, real estate, China, Crude Oil and debt (stay tuned for the “bust portion) -- optimism abounds that the crisis has passed. A 65% rally off the lows will do that; the question, of course, is how long this particular phase lasts?
I plan to shape my Ten Themes for 2010 this week and will delve deeper into what I foresee in the next twelve calendar months. After a strong showing in 2007 and 2008, last year’s vibes weren’t up to my self-imposed snuff. Many of them should prove early rather than wrong, but we call spades by their name in these parts and never hide beneath the rug.
Conventional wisdom dictates the market will lift to start 2010 given Santa breached our oft-mentioned trend channel into year-end. S&P 1120 remains the “over-under” in that regard, a dynamic clouded by the late day decline last week. Respect -- but never defer to -- the price action and remember technical analysis is but one of our four primary metrics.
As mainstream thinking goes, the government-induced sugar high will continue until such time the market is weaned off life-support. That race to embrace “free” market capitalism will face stiff headwinds this year given the chasm between the economy and the market, looming state insolvencies and the growing disconnect between perception and reality.
Alas, that reality check may not arrive for some time, as Mason Slaine presciently predicted in November. Still, we must see both sides, which includes the market being overbought and tactically vulnerable, with a pullback to S&P 950-1000 a viable scenario before (and if) a more meaningful upside leg emerges. The dollar, financial stocks (Goldman, Bank of America (BAC)) and market breadth remain intuitive near-term tells
The Coral Reef
Some quick ditties from my rarified time away, a journey to the Hawaiian Islands for Dad time in Maui and downtime in Kauai. As many old school Minyans have inquired, I’m happy to report my father is in a clean, grateful and reflective state of mind.
46 hours. That’s how long it took for my girlfriend and me to travel from JFK to the South Pacific due to the blizzard on December 20th. We were lucky to get there and made the most of our layover in Los Angeles. As we don’t “do” acrimony in the 'Ville, I’ll refrain on discussing Delta Airlines or how they treat their customers.
The trip itself was a slice of paradise; Mama’s Fish House in Maui remains my single favorite restaurant on earth and the Ko’a Kea Hotel in Kauai is a fresh find that has won my repeated business. It’s amazing to watch a sunrise from atop a cliff as whale’s breach in the distance, or swim with turtles as the sun sets to conclude the day.
There were, however, somber reality checks that reminded us of the fragility of life. As we walked on the beach, we watched a young man -- all of 20-years old -- pulled from the water and given CPR. A few minutes later, he was pronounced dead. On the other side of the island, at the same exact time, two brothers decided to snorkel; only one of them would return to shore.
I relearned a powerful lesson that day, one that relates to swimming in the ocean and trading financial markets. When caught in a riptide, don’t try to fight the current; it’s a recipe for disaster. Instead, swim parallel to the shore until you reach calmer waters that allow you to set a course safely.
For many, the last few years were a riptide -- first lower, into the depths of the abyss, and then higher, albeit equally as vicious. Financial Staying Power was a theme we introduced last January but it’s equally apt now.
If we practice the proper stroke, we might even enjoy the beauty that surrounds us.
I’m gonna hop on over to the Buzz & Banter and chew through the dew in real-time. If you missed our Dawn of the Decade video montage, I highly suggest you give it a gander as it offers ample food for thought.
May peace be with you.
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.
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