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Tom Armistead
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I am a retired accountant, having spent the early years of my career in the insurance industry and the later part in the field of accounting. My insurance experience has given me the willingness to accept investment risk if I feel the return justifies it; also, an interest in applying risk... More
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  • Hitting The Eephus Pitch 3 comments
    May 18, 2012 8:24 AM | about stocks: SPY

    As a Red Sox fan, I learned about the "eephus blooper" when Bill "Space Man" Lee used it. The eephus pitch is a long, high, excruciatingly slow junk ball that is particularly effective against power hitters.

    There are a number of amusing anecdotes involving the pitch, including the 1946 All Star game when Rip Sewell, who perfected it, embarrassed Ted Williams, who asked for another chance. Sewell obliged, and Williams stepped forward into the ball (leaving the batter's box) and hit it out of the park. The umpire missed the call, although Williams later confessed to being out of the box.

    Here's a link to a good article on the topic.

    Investment Implications

    Some, most notably Nouriel Roubini, see the turmoil in Europe, and the resulting decline in the US markets, as a slow motion train wreck. I see an eephus pitch.

    This could be a long slow process, waiting for the ball to come down over the plate. Some hitters swing multiple times, and miss. Some swing so hard they fall to the ground, while missing the ball. Logically, it shouldn't be much harder than hitting a slow pitch softball.

    The ball is drifting slowly toward the plate...

    Disclosure: I am long SPY.

    Themes: Strategy and Tactics Stocks: SPY
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    Ha! I remember watching a half hour show about the eephus pitch about 30 years ago. It was chock full of black and white "highlights" of batters either missing so bad it was embarrassing or hitting the ball with bad mechanics that caused it to take weird flight.

    I've been thinking about things in a similar way but Somebody in or connected to Europe has to take a big fall first. When the market knows who the victim is then recovery (in the markets) will kick in.
    18 May 2012, 11:25 PM Reply Like
  •  
    XTigerX,

    Back in Jan 2010 McKinsey issued a report on Debt and Deleveraging, a look at global sectors that might need to deleverage. Spain stood at the top of the list, with households, corporate (CRE and non CRE) and the Financial Sector all in the spotlight.

    Italy took down Corzine/MFG, then it seemed to go on the back burner. Maybe after the situation in Spain takes someone down we will have clarity and smoother sailing, since they were the most in need of deleveraging at the outset of the financial crisis.
    19 May 2012, 07:34 AM Reply Like
  •  
    Excellent analogy, Tony. There are some things the world can do without and some things we have to have--regardless of economic conditions. That's where I think the sweet spot will be. Relax, be patient and get rewarded.Just don't leave the batter's box.
    19 May 2012, 06:10 PM Reply Like
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