Revisiting the War on Capitalism
The long hard road to a better tomorrow.
Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.
These aren't easy days for financial professionals; The War on Capitalism, once an aphorism, has morphed into a full-fledged attack.
It was more than two years ago when German Chancellor Angela Merkel first lashed out, saying "speculators are our adversaries" and she's "resolved to win the battle against markets." Stateside politicians were quick to chime in; Wall Street, once the engine of our finance-based global economy, became an acceptable casualty of war.
In early 2000, I wrote a column called, "The Long Hard Road" which offered that the entire financial dynamic -- not just trading, but the business itself -- was on the verge of a seismic shift. It would take three times as much work to make half as much money, I shared at the time, and public perception would sour to a level reminiscent of the early 1970s.
Most people thought I fell out of my tree, a perception that would be repeated many times in the decade to follow.
Yet here we are, caught between a rock and a hard place, with the credit crunch on one side and motivated agendas from global central banks on the other. This, too, is reminiscent of a dynamic we discussed in 2007 when Axel Weber, then president of the Bundesbank, said, "The current turmoil in the financial markets has all the characteristics of a classic banking crisis, but one that is taking place outside of the traditional banking sector."
The sovereign sequel to the first phase of the financial crisis, indeed -- or, as Professor Peter Atwater more succinctly surmised, we've arrived at the time when the sovereign lifeguards who saved corporate America now need to be rescued.
Who's gonna do it, you, Lt. Weingard?
China, as we posited on Monday (and the mainstream press ran with today)?
Will the ECB enter the Twilight Zone and move rates into negative territory?
Could there be more stimulus, on top of the $13 trillion-ish dollars thrown at the economy by the US government (to arrive at 1.9% GDP)?
To say that the financial dynamic “would seismically shift” may have been the understatement of my career; it's downright surreal -- and we're still in the middle of the vortex.
I used to swing a big risk bat; in fact, I wore that fact like a badge of honor. "I've had $30 million swings in a single session," I boasted in my book, as if it were some sort of achievement. Maybe it was at the time -- I made a ton of money for my investors and got paid in return -- but times, and public perception of wealth, have changed.
We've entered The Age of Austerity, an era of American consciousness where many people actually want to see those on the societal pedestal publicly perish.
What to do? Ride it out; "survive and thrive," so to speak. As a trader, that requires that I manage risk rather than chase reward, make trades to take trades, and choke up on my risk bat in an attempt to hit singles and doubles. That's been my stylistic approach this year and it's one I plan to continue as it pertains to my trading capital.
As a small business owner, it means that I adapt but not conform, identify trends and attempt to stay ahead of the curve while surrounding myself with people who are good at what they do and better at who they are. There will be generational winners on the other side of this socioeconomic malaise; we have to believe in something -- at a point, we must put a stake in the ground and lay claim to our future.
There will be easier trades and better days; the goal is to get there together and -- as hard as it may be at times -- remember that the purpose of the journey is the journey itself.
Good luck out there, and remember: Profitability begins within.
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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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