"Street Critique"-Todd Harrison, Founder and CEO of Minyanville.com
Wednesday, May 13, 2009JEFF YASTINE: Tonight's "Street Critique" guest says investors need to have patience, discipline and some caution at this point in the markets. He's Todd Harrison, founder and CEO of Minyanville.com. Todd, welcome tonight to NIGHTLY BUSINESS REPORT.
TODD HARRISON, FOUNDER & CEO, MINYANVILLE.COM: It's good to be here.
YASTINE: You have been writing a lot about a presumed or possible "W" shape in the markets and that we're sitting on the widow's peak. What do you mean by that?
HARRISON: I think when we look back at 2009, it could well look like a "W." Coming into this year, we have this finance-based, derivative-laced economy and there was really a lot of pressure in the marketplace. We got to a point in the spring where it really felt like we were going to fall off the side of the cliff and it was really, there was a lot of towels being tossed in the market. We've now since, rallied. The market broke out through S&P 875. I think we need to see that technical affirmation to pull in some folks from the sidelines but I think we're going to traverse back down back into that "W" into the fall and potentially setting up for the second 20 percent rally of 2009 towards year end.
YASTINE: Todd, what about investors, everyday investors, the non- pros? What should they be doing in this kind of market environment if you're not somebody who trades?
HARRISON: I think there are three things. Really there is capital preservation. There is debt reduction and there is financial intelligence. I mean this is no longer a financial crisis or an economic crisis. This is really a social crisis and social mood and risk appetite shape financial markets and you know, I think that there is going to be tremendous opportunities as we get through this. I look at the great depression actually as a construct of optimism. There were some great companies that were formed through that period, but it's going to take some time. It took a long time to build. It's going to take some time to unwind. I think you need to be patient. You need to think your time horizon and your risk profile.
YASTINE: We see a lot of words and activity coming out of Washington. We will revive and save the banking system of the United States and therefore the markets. You're rather cautious about that attitude.
HARRISON: I think there is unintended consequences with what's going on and if you look back to the original bailout bill as we wrote on minyanville, the government attempted to buy the cancer and sell the car crash and to save the system really. So they've effectively done that but that comes at a cost and I think ultimately what you need to see for there to be a cure for this disease rather than masking the symptoms, the cure for this disease needs to be debt destruction. You need to let markets do what markets do if we're going to remain in a free-market capital construct, so I think that that's -- we're swimming backwards in that regard and I think that ultimately, we're going to have to edge back towards letting a meritocracy take hold in the marketplace.
YASTINE: In about 20 seconds, do you think that the worst is over, at least as how we measure it in the stock market?
HARRISON: I think it's going to -- that's a pretty loaded question. I think this is going to take some time. I think you have to watch the dollar. If the dollar starts to debase, I think equities -- that measuring stick could rally but again I'll say, there is going to be great opportunities down the road. Capital preservation and financial staying power cannot be reiterated enough. You've got to be in position to put capital to work when the time comes and it's going to take some time to get here.
YASTINE: All right. Patience is the word, Todd, thanks for joining us.
HARRISON: Thank you.
YASTINE: Our guest, Todd Harrison, CEO of minyanville.com.
