Monday, June 21, 2010

Eye of The Financial Storm

Todd Harrison of, as one of the few who predicted the market crash of late 2008, is a voice to heed.  On last week: "We've been pushing risk further out on the time continuum for such a long time that it's become an accepted - dare I say normalized - pattern that interconnects the world through a tangled web of derivatives.  While the recent price action has been docile, I believe we're in the eye of the storm, a relative calm between the first phase of the financial crisis and the cumulative comeuppance that'll flush - and perhaps reset - the system.  You know it won't come easy; this decade will require steadfast stamina and proactive patience.  While the first half will be focused on preservation and perseverance, the back nine will be ripe with rewards. ... I shared the following thoughts in September 2008 and they're equally apt today as the second side of this storm builds on the horizon: 'Surround yourself with people you trust.  Practice risk management over reward chasing.  Preserve capital, reduce debt and become financially aware of your surroundings.  It won't be an easy road but it won't be impossible either.' ... I don't profess to know how long the calm lasts ... future gusts may come from any given direction. ...we must allow for a scenario where a reflex rally...masks the hazardous horizon..."