Editor's Note: Todd posts his vibes in real time each day on
Buzz & Banter
I was an aggressive trader,
who morphed into a trader that wrote
who turned into a writer that trades, who is now a writer sitting
on his hands with minimal short-term risk.
The stock market has become a mug's game; an arena where the rules
change mid-game in an attempt to protect an institution that long
ago lost its way. Those making cake in this historic move will be
quick to boo-hoo this perspective; where you stand is a function of
where you sit.
I was recently asked if I thought the market could rally to
(INDEXSP:.INX) 2000; I replied, "They can take this thing wherever
they want." My response was tongue-in-cheek, for at the end of the
day, I don't believe the Federal Reserve can control interest rates
indefinitely; and when it loses control, it will lose the
confidence of the investing public, as well as the faith of
sovereign holders of dollar-denominated debt.
These are not the sour grapes of adverse performance; while I
didn't trade up to my potential in 2013 -- which happens over the
course of a 23-year career -- the return is relative. I own hard
assets that appreciate with the rising tide of liquidity, and those
gains take some of the sting out of missing swatches of the
parabolic stock frolic. Or, at least that's what I tell myself in
lieu of sticking
corks on the forks.
What strikes me of late is how binary the market opinions have
become; there are bulls, bears, and very few voices in between. And
the vitriolic tenor in response to variant views on platforms like
) smacks of an underlying and pervasive frustration. It's not
enough to be right or wrong; many feel the need to attack those who
disagree with them, out loud and as a matter of public record.
I don't profess to know if this is "predictive" in any way; to be
it already lasted a lot longer than I thought it
. The pervasive tension,
all-time highs notwithstanding
, is perhaps a combination of performance anxiety juxtaposed with a
ready-made platform to air grievances in real time. Whatever it is,
it's a new frontier for the investing public; and as is often the
case during transitional times, it may prove wise to exhibit
patience as the perceived gold rush evolves.
The Here and Now
It's a holiday week as ranks thin and skeletal crews step up to the
plate. Having spent many years on buy- and sell-side trading desks,
I will share that said ranks have visions of grandeur that
will be their
Wally Pipp moment
. That may be true, but equally true is that the heretofore absent
Wally Pipps likely left explicit instructions
to blow their books up.
As such, the market (offered by sell-side desks to facilitate order
flow) will be less liquid than we're used to, which sets the stage
for an uptick in volatility (which is, by definition, the opposite
of liquidity). With most folks expecting a snoozer through
Thanksgiving -- the most likely outcome -- we should keep that
dynamic in mind.
Some top-line vibes in no particular order:
- As go the piggies, so goes the poke -- and the piggies (read:
financial stocks) have led the tape higher of late. Pulling back
the aperture, however, we see that banks are notably lagging the
broader market since the FOMC grand experiment began. I thought
that was interesting, and wanted to share, per the chart
- Big beta -- the
) of the world -- are soft out of the Turnaround Tuesday gate,
and they remain our best proxies for performance anxiety in this
- Tensions between Japan and China qualify as a "left field"
catalyst as everyone focuses on tapering, earnings multiples,
technical analysis, and performance anxiety into year-end. Of
course, any anxiety would likely manifest in Asian markets first
being the key word).
The Ruby Peck Foundation for Children's
will donate 100% of net proceeds through year-end to Typhoon
Haiyan disaster relief. We will also be offering
Money for Nothing: Inside the Federal Reserve
DVDs, with 20% benefiting said efforts, in short order. It's a
killer documentary, and not just because I have a bit of a part
- Tomorrow I'll be publishing my annual
column as we observe a moment of gratitude. If we've learned
anything in our 13 online years together, it's the difference
between loss and
. With Thanksgiving coming up, be good to others and better to
yourself. At the end of our journey, those are the memories that
- Good luck today.