Randoms: Mergers, Hedge Fund Structures & Trading Set-Up
The only thing to fear is fear itself.
- Why are Pebble Beach and Rockefeller Center suddenly popping into my crowded keppe?
- Bharti Airtel Ltd., India's biggest mobile-phone company, and South Africa's MTN Group Ltd. have announced a $24 billion marriage, according to Bloomberg. Can you imagine how big the ice sculptures must be?
- On the heels of the Disney (DIS)-Marvel (MVL) union and the semi-sweet Cadbury PLC (CBY)-Kraft (KFT)-Hershey (HSY) Ménage à trois, the bulls can throw another anecdotal log on the optimistic M&A fire.
- I'm a 4 bid for size on Raider wins this year if anyone is feeling frisky.
- As discussed in Tuesday's opener-and followed up in yesterday's Randoms-I've been operating from the short side into the upside down devil (09/09/09) with an all-caps "DISCIPLINE OVER CONVICTION" taped to my turret.
- That means tight stops, which will trail given the opportunity. With regard to my tech bets-which is the meat of my downside heat-I've shifted my lens from the NASDAQ COMP (see the 5-year set-up here) to the NDX, which is sitting at the intersecting trend-lines and a push through NDX 1675 would invalidate that critical crossroads).
- Reactive rationalization or astute audible? I'll tell you in 5% although, given my entry levels (following last Tuesday's full cover), the risk-reward fits my stylistic approach, risk appetite and time horizon. Setting stops removes emotions and will limit face plant falls to embarrassing stumbles.
- The risk to that bisque? The dollar, which is on a collision course with a Monopoly peg (keep in mind this is a necessary precondition--but not guarantor--of higher asset classes), performance anxiety, which will increase .0089% every 24 hours over the next 113 days, and the action in the credit markets (which, if it continues, will lead to more M&A and other shareholder enhancing efforts).
- On the S&P side of the equation, a push through S&P 1040, with moxie, will quell Boo's bandito persona. The udder way, S&P 980 is the first level of discernible support.
- With Honest Abe sitting on my shoulder, I'll offer that hands over eyes, the market acts awesome and I learned a long time ago to respect--but never defer to--the price action.
- My current posturing-which feels like a salmon swimming up a waterfall-is a attempting to capture the disconnect between perception and reality.
- Unemployment, social mood, geopolitical tension, unsustainable debt, the DC I.V drip, commercial real estate, swine flu, municipal time bombs...they won't matter until they do-and they might not matter till 2010-but I see them clear as day.
- The risk--which seems to be my perpetual risk--is that I'm always early, a blessing and a curse if there ever was one.
- If I'm wrong, I'll suck down a slab of humble pie (again) and remind myself that good traders know how to make money but great traders know how to take a loss. I know all too well that if you don't stay humble in this business, the market will do it for you.
- In my Ten Themes for 2009, I offered that we would likely see a substantial shift in the hedge fund compensatory structure. I believe that process is well under way and I share the option offered in January as a potential possibility.
Typical hedge fund terms are "one and twenty," or 1% management fee and 20% performance fee. Expect industry standards to shift to a three-year aggregate performance structure that eliminates the annual payout and weeds out the excess capacity in this space.
- My single biggest pairs trade? Long humility, short hubris.
- As my peeps keep telling me to push my tweets, I'll do so again sans any semblance of shameless self promotion.
- Citi (C), Bank of America (BAC), JPMorgan (JPM), Amazon (AMZN), Research in Motion (RIMM) and Apple (AAPL) are channeling Andie Walsh. Maybe something, maybe nothing-maybe a pterodactyl-but see it please.
- Wouldn't the world be a better place if everyone did what they say and say what they did?
- Hey, if society is a sum of the parts, why not join the Minyanville Underground Railroad and do your part? If not us, who? If not now, when?
- Have you seen Hoofy & Boo's latest take on multitasking?
- Whose with me?!??
- Good luck, Minyans---and let's be careful out there!
Answers I Really Wanna Know…
- In holiday shortened weeks, does Turnaround Tuesday morph into Turnaround Wednesday?
- Can Minyans possibly be surprised that China is alarmed by the US printing press?
- Trade options? Have you taken your free trial to our OptionSmith by Steve Smith subscription product?
- Will Richard Seymour (please) report to the Oakland Raiders?
- Do you have Friday, December 4th circled for our annual Festivus to benefit the leaders, healers and dreamers of tomorrow?
- Why can't I shake the sense that something seismic is looming?
- Isn't the ability not to trade as important as trading ability?
- Does anyone recognize the overweight scruffy guy who continually channels Bud Fox in Oliver Stone's 20th Anniversary Wall Street documentary (the only person who appears without a credit)?
- Isn't end demand a necessary precursor to hyper-inflation?
- Is a lower dollar and lower stocks the path of maximum frustration?
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 email@example.com.
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