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The Greenspan Put Gives Way to the Bernanke Call

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A message board rant speaks to the moral hazard mindset that's sweeping the Street.

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Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

Yesterday, we highlighted the following observation:

"The stock market is the world's largest thermometer; perhaps that's why international investors are the most bullish they've been in 3.5 years, with close to two-thirds planning to raise their equity holdings during the next six months, according to Bloomberg."

Last night, reader Minyan Mark forwarded the following passage that he saw on a message board; it was in response to someone who was getting short the market:

"Hope you didn't put much money on that bet, Dawg. These ****** are going to print hard enough to wake the dead. They'll print like ****'s, print like mad men, print like fly pimps. Print until their eyes bleed. They will print via the swaps, via bank bailouts and mergers, via fixed Treasury yields, via real honest-to-God negative interest rates, via loans to banks on no collateral, via payroll tax reductions, and in the end via actual fiat paper instruments which they might very well drop in bails from actual ************ helicopters. They will not give two figs what anyone thinks. Here is why: Because this is the ********* end of it my friend. There is no accounting beyond this point. There will be no history of it. No one to take notes of rates of exchange, or of the graft and violence, nobody to worry about the deficit or the GDP or the national debt of any nation large or small under the blazing ********* sun. End. Of. It. Does anyone ***** about how Rome totally debased their coinage at the end? Heck no. But whoever did it had enough to hand and grabbed some land with a nice vineyard and sat back and waited for the Middle Ages to start 700 years further on. And that's what a singularity is about. Anything that passes through is stripped of all meaning. Nothing we think is important now will remain so beyond the event horizon. Nobody will remember, nobody will write about it, nobody will be held to any standard. Ever for evar. So yeah, they'll print like the mad crazed ******** they are. Because they have nothing to lose, and maybe something to gain. Maybe a dollar. Maybe a day. Maybe a slim chance to escape with some of the loot. Whatever the **** advantage they see in it, for themselves and their elite **** ******* buddies, they will full-on-full-time-******* do it to advantage. Watch for it, Dawg. It's totally on this time, on like Donkey Kong. And when the dust is settled in a generation hence it's going to have become another unbelievable episode among the ages of men."

I don't read message boards and would never have seen this if not for the watchful eyes from within our community. It stuck a chord, however, in the tenor of its certainty; this rant, if nothing else, speaks to the mindset of moral hazard and the "if you can't beat 'em, get yours before the punch bowl is removed" paradigm sweeping Wall Street-and eyeing Main Street.

Yes, underperformance is a four-letter word on in financial circles; the only thing worse than losing money, in the fakakta fund world, is not making as much as your benchmark or peers.

Sure, credit trades great on the corporate level, and dare I say, in the sovereign sphere as well.

And earnings, while still in motion, have been digested if not embraced. IBM (NYSE:IBM) and Google (NASDAQ:GOOG) are indicated higher, CSX (NYSE:CSX) and Norfolk Southern (NYSE:NSC) are in-line, and even McDonald's (NYSE:MCD) is looking McBetter.

So why share the rant? In a word: perspective.

We have witnessed conventional wisdom peak right before the asset class it surrounded. Remember The Gold Scold when the yellow metal was trading at $1900? Brutal.

Oil of Oy Vey, when crude was at $140 following the parabolic frolic of 2008? Scary.

How about the optimism shared in The Darkness Before the Dawn on March 6, 2009? That push-back was so palpable that I included a sampling of the venom within the article.

I'm not saying THIS is the top, right here and right now. I'm not that smart, nor is it a high-probability bet. When trading, it's much easier to make money between the twenties and leave the red zone (before and after each directional cusp) to others. With the projected count (highlighted last year) "working" to S&P (INDEXSP:.INX) 1520, I respect, but will never defer to, the price action, which has been all sorts of snazzy this calendar year.

What's my point? Glad you asked. There are GREAT opportunities to trade this tape-and yes, there is a risk of over-trading a solid call, as evidenced by our bullish vibes on Research in Motion (NASDAQ:RIMM), which is nearly 200% higher than it was in September, or our constructive stance when Facebook (NASDAQ:FB) traded down to $19 (the 50% Fibonacci retracement) in November, and has since tacked on 77%-but risk definition and discipline must remain steadfast elements of any approach (particularly with the VIX (^VIX) at 15-year lows).

NDX 2700-2750 is the near-term toggle for tech, while S&P 1435/1460-1500/1520 is the zone to monitor on the big board. As always, the banks, market breadth, the reaction to earnings and the price action in commodities will lend a hand as we navigate our way, one step at a time.

Random Thoughts:
  • Mother Morgan (NYSE:MS) and Grandma Goldman (NYSE:GS) stood out on the upside on Friday but we should keep an eye peeled for an insider sales window in Goldman, which should open this week.
  • In early December, I penned an article about My Single Best Investment Idea for the Next Decade. While I couldn't (and still won't) discuss individual securities (they're too thin), one of those lottery tickets doubled since I took a position, and yesterday, I sold half of that stock as a function of discipline while whispering, "Let your first sale be your worst sale."
  • The odd-lot S&P out-of-the-money February puts I had/have on against that long exposure? They're all but gone, but long from forgotten. As a rule of thumb, I generally don't like to sell anything for less than $0.50, and because they were sized right, I didn't feel pressure to do so.
  • Gun to head, Apple (NASDAQ:AAPL) springs higher after earnings, but I'm not making a sizable bets despite the $500 level offering two-sided risk definition. It's crowded and I try to avoid crowds these days, particularly given technical analysis will soon take a back seat to fundamentals.
  • Deutsche Bank (NYSE:DB) stands out as a red bean in an otherwise green sea of financials today. $47ish is where the stock broke out, and by extension, it's where initial support should reside.
R.P.

Twitter: @todd_harrison

Disclosure: Minyanville has a commercial relationship with RIMM.

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Position in SPX, commercial relationship with RIMM.

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 todd@minyanville.com.

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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