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Cash Still King: Todd Harrison Isn't Buying the 'Buffett Bottom'

Posted Oct 02, 2008 01:30pm EDT by Aaron Task in Investing, Recession, Banking

Back in July, when he declared his long-term portfolio was 100% in cash backed by T-bills, a lot of people said Todd Harrison was crazy -- or clueless.

But Harrison, CEO of Minyanville.com, is looking pretty smart these days given the ongoing turmoil in the financial markets. Just because Warren Buffett is putting money to work doesn't mean the average investor should -- unless you can get the same favorable terms "the Oracle" has gotten from recent investments in GE and Goldman Sachs.

In addition, the dollar has been on the rise lately and hit a 13-month high vs. the euro Thursday after the European Central Bank hinted it's close to dropping its inflation-focus and cutting rates.

The dollar's strength today also suggests the bailout may not pass the House, says Harrison. While debatable, that view makes sense, considering the implications of the U.S. government maybe not spending $700 billion on a bailout plus another $1.5 billion in various unfunded tax breaks and pork projects.

Dollar strength fits into the deflationary cycle Harrison sees coming down the pike: "all roads lead to deflation," he says. Still, he's not ruling out the potential for the dollar to tumble, leading to a hyper-inflationary spiral, a scenario many fear will happen if U.S. deficit spending continues to expand.

The world is at a fork in the road and the market is struggling to figure out which route it's going to take, he says. In the meantime, Harrison is still 100% cash in his long-term portfolio, and keeping short-term trades at a minimum to boot.

164 Comments

jetfighter
jetfighter - Thursday October 02, 2008 02:08PM EDT

THEY WILL NOT GIVE THE TAX PAYERS THE MONEY TO STIMULATE THE ECONOMY, INSTEAD; TO STIMULATE THE ECONOMY THEY GIVE IT TO THE CROOKS, AND THE TAX PYERS HAS TO BORROW THETR OWN MONEY BACK FROM THE CROOKS, AND PAY IT BACK TO THE CROOKS WITH HIGH INTEREST RATE. WHOS GITTING ROBBED? GOD BLESS AMERICA

Mark
Mark - Thursday October 02, 2008 02:09PM EDT

Not a bad idea

Yahoo! Finance User
Yahoo! Finance User - Thursday October 02, 2008 02:11PM EDT

This dude is a trader and not a long term investor so should do relatively better in this downtrend. Suckers that think holding stocks because they're "cheap", because they're scared of missing a bottom, or just because the prevailing theory is always keep your money in the stock market because you can't time will get slaughtered. No worries though, me and my "Wall Street" buddies will take your money as the market continues to fall. Man, just love those buy and holders...lol

AndrewD
AndrewD - Thursday October 02, 2008 02:12PM EDT

Social engineering doesn't work in finance either!

Yahoo! Finance User
Yahoo! Finance User - Thursday October 02, 2008 02:19PM EDT

Todd Harrison just likes to advertise his "minyanville" cartoon network of catchy cliches and metaphors. I hate hearing him blab. Get someone else on Tech Ticker.

Yahoo! Finance User
Yahoo! Finance User - Thursday October 02, 2008 02:19PM EDT

Silver Surfer here.... Todd Harrison might be right and I am positioned as he is.... All cash but this is more important than money... This is about DEAD SOLDIERS who died for FREEDOM our FREEDOM of CHOICE... VOTE NO FOR THEM...DO you here them complaining about where they are going to work. We have no right to violate our Trust to them... Keep American strong ARMY STRONG...Chicken Little get out of the way and let THE STRONG LEAD VOTE NO TO THE BAIL OUT. BUSH is running around trying to get votes because he wants to prop up the price of oil. If this bail does not pass OIL is going down big time. KEEP THE VICTORY WE ALREADY HAVE WON!

dea91730
dea91730 - Thursday October 02, 2008 02:20PM EDT

Bailout will not do anything for our economy. We need to come up with plans to help the employment rate and explore alternative energy. The bailout only helps these big banks that already have a lot of money and are willingfuly choosing not to lend. Look at JPM and CITI, they have the money to buy out WAMU and Wachovia, but no money to lend?!! All they are going to do is take the people's money and still not lend. We need to address the real problem which creating jobs to revive the economy and people become able to make their payment. We are try to solve the problem by throwing money!!! We need to seek alternative energy because this is what hurt our economy the most. Wall street and oil companies having record profit and the people suffering. I don't remember them helping out when our unemployment is high. They are actually laying more people off. Why should we lend them our money and pay three times the interest on it? I am no genious but I can tell you that the bailout will be the biggest failure in history and will be bring the end of this great country.

dea91730
dea91730 - Thursday October 02, 2008 02:20PM EDT

Bailout will not do anything for our economy. We need to come up with plans to help the employment rate and explore alternative energy. The bailout only helps these big banks that already have a lot of money and are willingfuly choosing not to lend. Look at JPM and CITI, they have the money to buy out WAMU and Wachovia, but no money to lend?!! All they are going to do is take the people's money and still not lend. We need to address the real problem which creating jobs to revive the economy and people become able to make their payment. We are try to solve the problem by throwing money!!! We need to seek alternative energy because this is what hurt our economy the most. Wall street and oil companies having record profit and the people suffering. I don't remember them helping out when our unemployment is high. They are actually laying more people off. Why should we lend them our money and pay three times the interest on it? I am no genious but I can tell you that the bailout will be the biggest failure in history and will be bring the end of this great country.

Clayjar_azn
Clayjar_azn - Thursday October 02, 2008 02:20PM EDT

I wish I had been in cash since October 2007. But I wasn't and I am paying for it big time. 0 for 5 for my stock trades.

__A_YAHOO_USER__
__A_YAHOO_USER__ - Thursday October 02, 2008 02:21PM EDT

MR.BUFFET HOLDINGS CASH LIKE A KING BECAUSE HE HAS A TALENT,BRAIN A COMMON SENSE TO MANAGE IT WISELY THAN A MAN WHO IS AFTER THE PORK BARREL....THAT MAN IS EATING TOO MUCH BEACON FROM THE PURSE OF THE PEOPLE WHICH IS OUR TAX..........IS IT TRUE........

Yahoo! Finance User
Yahoo! Finance User - Thursday October 02, 2008 02:24PM EDT

Firing Squad or Hang mans noose. OH JOY!!!!

mel
mel - Thursday October 02, 2008 02:26PM EDT

Bernake testified in 2006 before congress that the housing bubble was a myth. He forsaw another decade of increases. The guys I go to deercamp with were talking then about it being ready to burst. " ?" " The blind men make the rules for the wise men and the fools" Bob Dylan

__A_YAHOO_USER__
__A_YAHOO_USER__ - Thursday October 02, 2008 02:29PM EDT

NO CASH FOR THE POOR AND MIDDLE CLASS PEOPLE THAT WHAT IS HAPPEING NOW......SUCKER.....CASH IS A KING FROM THEM FOR US CASH IS OUR DAILY BREAD.....

wayne
wayne - Thursday October 02, 2008 02:29PM EDT

I placed everything in cash on 6/30. I work in the finanical markets and saw this mess coming fruition, too. If the Bear Stearns story didn't resinate with you back in March then your own portfolios are probably down 40%. I'll be back playing on Nov. 5 (remember November) For now I'm enjoying lavish 3% returns and lovin' watching the roller coaster ride in the markets. Cheers to the Republican's who controlled house through 2006. They created this mess and allowed greed to prevail. Don't let McCain backers fool you when they say this mess is traced back to Clinton. Clearly the Republicans drove this Edsel right to the ground and got the best of ol Billy boy, like they got the best of you.

wayne
wayne - Thursday October 02, 2008 02:30PM EDT

I placed everything in cash on 6/30. I work in the finanical markets and saw this mess coming fruition, too. If the Bear Stearns story didn't resinate with you back in March then your own portfolios are probably down 40%. I'll be back playing on Nov. 5 (remember November) For now I'm enjoying lavish 3% returns and lovin' watching the roller coaster ride in the markets. Cheers to the Republican's who controlled house through 2006. They created this mess and allowed greed to prevail. Don't let McCain backers fool you when they say this mess is traced back to Clinton. Clearly the Republicans drove this Edsel right to the ground and got the best of ol Billy boy, like they got the best of you.

Yahoo! Finance User
Yahoo! Finance User - Thursday October 02, 2008 02:34PM EDT

Bush and his supporters are ripe for a gigantic disaster. Why must the people who acted in a responsible way, get stuck with the bill. I have never seen such igorance as the way this country has behaved these last eight years. Who authorized this foolishness? How much revelation of what was taking place does it take? If we are not careful we will be contending with Fascism. Don't think it can happen here? Better think again because we are well on the way!

valueman
valueman - Thursday October 02, 2008 02:40PM EDT

Look to stocks paying high yields. There are TONS to choose from. Stocks that don't pay dividends are for chumps. The pipelines are screaming buys right now. We need these businesses. They will survive.

Yahoo! Finance User
Yahoo! Finance User - Thursday October 02, 2008 02:40PM EDT

The legislation says that the Treasury Secretary can authorize the purchase of mortgage-related assets AND "any other" financial instrument "necessary to promote financial market stability." In effect, that means they can buy whatever they want, including things like auto loans. Andrew Moylan Government Affairs Manager National Taxpayers Union 703-683-5700 phone 703-683-5722 fax amoylan@ntu.org -----Original Message----- From: Jeff Dircksen [mailto:dircksen@ntu.org] Sent: Wednesday, October 01, 2008 1:51 PM To: Andrew Moylan; Pete Sepp Subject: Re: Re: Pat, Taxpayers Won Today -- Your Help Was Crucial -----Original Message----- I've been told that together with the mortgages the government will also bu= y Derivatives in the package. If this is true, then the bailout would be mu= ch worse that I originally thought. Can you tell me if Derivatives are part= of the buyout plan?

Yahoo! Finance User
Yahoo! Finance User - Thursday October 02, 2008 02:41PM EDT

The legislation says that the Treasury Secretary can authorize the purchase of mortgage-related assets AND "any other" financial instrument "necessary to promote financial market stability." In effect, that means they can buy whatever they want, including things like auto loans. Andrew Moylan Government Affairs Manager National Taxpayers Union 703-683-5700 phone 703-683-5722 fax amoylan@ntu.org -----Original Message----- From: Jeff Dircksen [mailto:dircksen@ntu.org] Sent: Wednesday, October 01, 2008 1:51 PM To: Andrew Moylan; Pete Sepp Subject: Re: Re: Pat, Taxpayers Won Today -- Your Help Was Crucial -----Original Message----- I've been told that together with the mortgages the government will also bu= y Derivatives in the package. If this is true, then the bailout would be mu= ch worse that I originally thought. Can you tell me if Derivatives are part= of the buyout plan?

KOOLBUCK
KOOLBUCK - Thursday October 02, 2008 02:44PM EDT

I'm concerning that the market may not be bottom yet. Maybe it has another 10% to go before putting money back into the market. Hopefully, it will bounce back in January. So cash is king for now. KOOLBUCK

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