From: John Mauldin 3jmauldin@gmail.

com
Subject:
Date: September 12, 2017 at 3:45 PM
To:

Time to Shorten Time Frames

Sep 7, 2017 | 9:25 AM EDT

In keeping with the trading -- and not a buy-and-hold -- strategy as contained in my opening missive below,
about six weeks ago I published this column, "It's a Trading Sardine Market, Not an Eating One," which
"bears" repeating:

"Into the eternal darkness, into fire and into ice."

---Dante Alighieri, "The Divine Comedy"

In his seminal book "Margin of Safety," hedge fund manager Seth Klarman tells an old story about the
market craze in sardine trading. One day, the sardines disappear from their traditional habitat off the
Monterey, California, shores, the commodity traders bid the price of sardines up, and prices soar. Then,
along comes a buyer who decides that he wants to treat himself to an expensive meal and actually opens
up a can of sardines and starts eating. He immediately gets ill and tells the seller that the sardines were no
good. The seller quickly responds, "You don't understand. These are not eating sardines; they are trading
sardines!"

Similar to Klarman's tale, today's market is a trading-sardine market, not an eating-sardine market.

The bull market is mature, as is the domestic economic cycle.

In the months ahead, much like Dante's "Divine Comedy," market participants are likely to be traveling
alternatively through hell, purgatory and the paradise of heaven in the market without memory from day to
day.
With quant-driven strategies' domination in a vacuum of disinterest on the part of the retail investor and a
quiet fraternity of institutional investors (mutual and hedge funds), the market is growing increasingly
illiquid and its foundation is weakening as fewer issues participate in the upturn

To paraphrase Dante Alighieri, the market may not have died but it might be losing its brea(d)th.

And with so many possible economic, political and market outcomes -- many of them potentially adverse --
the trading-sardine market is likely going to be with us for many months.

Bottom Line

Trade the sardines: Don't eat them!

Shorten time frames as it's time to hit for averages and not for power.

In terms of trading, more than ever, it's important to remember that there are two kinds of traders:

* Those who are humble.

* Those who are going to be humbled.

Remember those words because, despite the appearance of the many talking heads in the business
media who regal in their consecutive winning trades (streaks) that would make Joe DiMaggio jealous, the
stock market business (investing and trading) is likely to grow even more difficult and more narrow in the
months ahead.

Divina Comedia!

Douglas A. Kass
Seabreeze Partners Management Inc.
411 Seabreeze Avenue
Palm Beach, Florida 33480

Telephone: (561) 714-7484

Web Site: http://www.seabreezepartners.net
Email: ekass73388@aol.com
Twitter: @DougKass