TheStreet.com's Jim Cramer says we were due for a pullback, and he'll be buying it.
Don't freak out when you get what you wish for. That's what people are doing. They are selling the market after the Fed has done exactly the right thing and they are selling it because of the reasons it is cutting: subprime, MBIA (NYSE: MBI) (Cramer's Take), Radian (NYSE: RDN) (Cramer's Take), Ambac (NYSE: ABK) (Cramer's Take), etc, and Wilbur Ross ain't gonna save us.
It's always been the Gang of Four, always, plus Radian, that defines the issue. They are the ones that can't let us get closure because they are the ones on the other side of so many positions that are still marked too high. You saw when you went over Merrill Lynch (NYSE: MER)'s (Cramer's Take) quarter that when insurance goes bad -- as it did for an insurer Merrill used -- you need to take a 100% writedown. Bank of America (NYSE: BAC) (Cramer's Take) and Wachovia (NYSE: WB) (Cramer's Take) address this possibility in their calls, so if you match what they say with what John Thain said, you can sense the big exposure here. It is one of the reasons why I don't understand the insider buying at E*Trade (NASDAQ: ETFC) (Cramer's Take), as they have a ton of this exposure.
Still, stepping back, the selloff comes after a remarkable run, and we are due for a pullback, which has to be bought. The only suspect area isn't finance -- everyone knows about the collapse of the monolines -- but in tech, where even the good ones go down.
I am a buyer, not a seller, because the selling is from exactly where I expected: ABK, MBI and the like -- the same clowns who keep claiming all is well and who should have had the stuffing kicked out of them long ago.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.
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Reader Comments (Page 1 of 1)
2-02-2008 @ 2:00PM
fingerfanger said...
Amen to Richard. If individuals and the government
don't stop spending beyond their means, then this country is doomed to failure. I am still waiting for any politician at any level to display this common sense.
2-04-2008 @ 10:40AM
Richard said...
I'm not sure if Mr. Cramer and other economic "experts" understand the seriousness of how deep the debt crisis has reached. If you factor in median family income (calculated in 2005 dollars), $31,275 which includes all races, there is no way on God's green earth that consumers can continue to borrow and spend without suffering devastating consequences. Those consequences are being felt all over America.
No question, the super rich have made out like bandits with the Bush house of cards economy. The plaint that the right wingers keep hammering on claim that the wealthiest population pays the most in income taxes. But that statistic is only on paper and based on the assumption that the super wealthy actually pay those taxes.
Trillions of dollars are stashed in ghost companies offshore in places like the Cayman Islands where accounts are not audited or under the jurisdiction of the IRS. They pay no taxes whatsoever.
The borrow and spend days have come to a screeching halt for ordinary American consumers who can no longer sustain a middle class lifestyle living off of their credit cards and money from cash-out refinancing which allowed an orgy of spending unseen in the past.
The only people getting the "free" money today are the fat cats on Wall Street who borrow at obscenely low interest rates which the Feeding Chairman, Ben Bernanke, recently lowered to 3%. These Ponzi Scheme vultures are clamoring for more -- and they'll probably get it.
In the meantime, ordinary American workers are tapped out and jobbed-out as the corporate swindlers continue to send jobs overseas where cheap labor costs guarantee growing foreign economies while jobs and income will continue to shrink for workers in our own country.