Remember me
“We used to play for silver, now we play for life; Ones for sport and one’s for blood at the point of a knife.”-- Grateful DeadWe live in interesting times. Over the last two years, a financial virus spawned, infecting the economic and social spheres as a matter of course. This isn’t just about money anymore; our civil liberties, the foundation of free market enterprise, and the quality of life for future generations are dynamically shifting as we traverse our current course.I once offered that Shock & Awe was a tipping point through a historical lens. As Baghdad blew-up on CNN, I somberly sensed America would never be the same. That’s not a political statement -- we don’t know what would have been if we didn’t invade -- it’s simply an observation. World empathy turned to global condemnation, almost overnight.If we’ve learned anything through these years, it’s that unintended consequences tend to come full circle. Whether it’s the moral hazard of bailing out some banks, the gargantuan profits of a chosen few -- Goldman Sachs (GS), JP Morgan (JPM), Bank America (BAC), Morgan Stanley (MS), Wells Fargo (WFC) -- the caveats of percolating protectionism or the growing chasm of societal discord, times they are a-changin’ and it’s freaking people out.As The War on Capitalism intensifies, I expect financial fatigue to evolve in kind. We’ve already seen the burnout manifest in trading volume -- 70% of the flow are the robots -- and we’ve witnessed it in financial media, with reported viewership of some of CNBC’s marquee shows down as much as 25% year-over-year.Sun-tzu once said, “If your enemy is superior, evade him. If angry, irritate him. If equally matched, fight, and if not, split and reevaluate.” As we navigate unchartered waters and sail through The Eye of the Financial Storm, an increasing number of people are weighing their options -- and some of the smarter folks I know are “going dark.”What does that mean? They’re selling businesses, unwinding trading operations, or otherwise insulating themselves from the capital markets. The underlying reasoning is straight out of an Ayn Rand novel: “I can’t compete and when I do, the rules of engagement change in the middle of the game. I’ll let the powers that be vanquish themselves and return in three to five years to sift through the remains.”The first time I heard this, I took notice. The second time, it piqued my interest. Now, with four of five savvy seers pulling the plug, I felt compelled to communicate my observations and intuition with the Minyanville community. I’m often early and sometimes wrong but I’ll put this out there; while few are talking about this, it’s on many people’s mind.I’ll also share that the most lucid thought I’ve had since offering in 2003 that we should "sell tech and financials, buy energy and metals, and open a taco stand in Costa Rica" is to get the heck out of NYC. While I’m not the panicky type -- heck, some would say I thrive under pressure -- I would be remiss if I didn’t offer the respect of that honesty.As it stands, I'm not in a position to do that -- this is where we are and this is what we do -- but my personal choice doesn’t change the overarching social shift. I speak to a ton of people in an array of industries throughout the world and the "business is great" feedback is a rarity.More often and with increased frequency, the sentiment skews the other direction, as do anecdotal data points such as thin crowds at concerts and capacity at high-end restaurants and sporting events. There are, of course, exceptions -- $10 million plus homes in Manhattan are well bid, due in large part to Wall Street bonuses -- but that's an outlier in the broader array of the societal fray.Yesterday on our real-time Buzz & Banter (free trial), we shared the following feedback from one of ye faithful. And I quote:
Toddo -- I saw the exchange with Minyan Jeff. A little more anecdotal evidence for our discussion. I owned a corporation (manufacturing/chemical) that employed 12 people. We sold the corporation in October, 2009. We sold it for three reasons: expectations of higher future tax rates (income and cap gains), lack of clarity in regulations, and the perceived coming wave of governmental policies. Looking at that last sentence reminds me of why we decided to take our cards off the table after a successful run; the words EXPECTATION, CLARITY, and PERCEIVED.All of these lead to one thing -- uncertainty. It was hard enough to make a dime with the relative stability of the previous period. Change the operating environment and in my mind, you change the probability of success. Smart people (absolutely being presumptuous there!!!) don’t wager in that environment!
Now, I’m not suggesting we cower in a corner, buy guns and butter, and get all Mel Gibson on each other. I’ve written that if we’re not part of the solution, we’re part of the problem and that remains true, now more than ever. As we grasp at The Last Gasp Bubble and attempt to operate in the best interests of ourselves and those whom we love, I simply wanted to share that some of the smarter folks in the know have chosen to extricate themselves from an increasingly tenuous struggle. I suppose, in a way, they’re lucky to have that option.I don’t know if this distancing qualifies as apathy but it most certainly warrants some thought provocation as we collectively find our way. I remain of the view that preparedness and perseverance are precursors to profound possibilities; we simply have to go through it to get through it.May peace be with you.R.P.
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.
Copyright 2010 Minyanville Media, Inc. All Rights Reserved.
Most Read
Emailed
Latest
Read Full Article »