Random Thoughts: A Top-Down View of the World
By Todd Harrison Sep 13, 2012 10:00 am
Weighing QE3, warships, and Europe.
Will It Matter? Does It Now?
On one side, there's the bitter pill of debt destruction, asset class deflation, and a stronger dollar. On the other, there's more of the synthetic sweetener-the quantitative easing on other government stimulus-that got us into this mess in the first place. (See The Main Event: Inflation vs. Deflation.)
But it's not that clean-for every action, there is an equal and opposite reaction, and when actions are cumulative, the reactions are equally severe. We saw it in 2008, and take me at my word: If we don't shift our current course, we'll see it again. (See: The Anatomy of a Recession and A Five-Step Guide to Contagion.)
The issue now is how and when this dynamic manifests, and that, my friends, is a question that I'm not smart enough to answer. What I can say is the lurking danger may not be on our screens as much as behind the scenes.
The ramifications of policy gone awry are ever-present in the social sphere, and where you are in the "tricky trifecta"-societal acrimony, social unrest, and geopolitical conflict-is perhaps a function of what part of the world you're reading this in.
An Inside-Out Approach to the Market
The price action in global markets is in stark contrast to the devolving socionomic landscape. Credit trades well, stocks act fabu, and performance anxiety is running rampant. The buyers are higher-and the sellers lower-as we approach quarter and year end; in the FUBAR world of money management, it's OK to lose money if others lose more, but anathema to make money and underperform a benchmark.
I've traded two-sided this year with a rapid-fire staccato methodology. When I stuck to that approach, I benefited; when I veered from my discipline, I paid a hefty price. While I'm currently light and tight-I have a midday board meeting, today of all days-I wanna fade (sell) rallies for a trade and will look to buy some Facebook (FB) and not get shaken out of the position (this is an interesting article for those involved).
All the while, I'm doing my best to run a small business in a tough environment, balance the important stuff against the stressful stuff, and be part of the solution instead of part of the problem. I will say this: I speak with a LOT of folks from around the world, business leaders throughout the city and friends who are trying to make ends meet. It's not easy out there, and no, it's not you; the mantra, as we've been offered for some time, is to survive and thrive.
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No positions in stocks mentioned.
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