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TheStreet.com's Jim Cramer says false correlations can lead you to despair -- you need to see through them. At moments like this, you have to figure out what will be affected and what won't be, and you need to recognize that the interrelation of all stocks to these events is a false one.
There is no doubt that anything mortgage is troubled. So even though I like Wells Fargo (NYSE: WFC) (Cramer's Take) a great deal, it is unlikely that WFC can stay anywhere near up here now that Lehman (NYSE: LEH) (Cramer's Take) collapsed. I don't want to hazard a guess, because it would be a guess, about where that stock can trade. Obviously it is a buy at some price, but that's a difficult issue.
Stocks like Schwab (NASDAQ: SCHW) (Cramer's Take) and Capital One (NYSE: COF) (Cramer's Take) are difficult to figure out, too. Schwab has nothing to do with this mess, but maybe trading will slow. People might look at the numbers Capital One put out about defaults, and while they seem pretty darned good, does anyone care? That stock had been on a rampage; probably stops today.
But how about the stocks on the Nasdaq? The Nazz futures are indicating down huge. Does that make sense? Just because it is happening, does that make sense? Symantec (NASDAQ: SYMC) (Cramer's Take), positive article this weekend -- a buy? If the futures take it down, yes. Amgen (NASDAQ: AMGN) (Cramer's Take) with new data coming up? Yes. Celgene (NASDAQ: CELG) (Cramer's Take), which wouldn't come down last week? Yes.
For the same reason we have to worry about Lehman ripples, we have to worry about lots of stocks of companies caught up in the wake of derivatives. The derivatives are more powerful than the stocks they encompass -- Nasdaq or S&P futures -- but they are not more powerful than the companies themselves. Genzyme (NASDAQ: GENZ) (Cramer's Take), Gilead (NASDAQ: GILD) (Cramer's Take), Hologic (NASDAQ: HOLX) (Cramer's Take), Starbucks (NASDAQ: SBUX) (Cramer's Take), they will all get killed. Is that right? I don't think so.
Meanwhile, oil is still not stopping despite the weakness in the dollar (always an overrated correlative to oil) and China cutting rates. Here's a market that is so sick that you have to go back to the consumers of oil again today to find ways to make money. Look for the S&P 500 futures to take down Procter (NYSE: PG) (Cramer's Take) and Colgate (NYSE: CL) (Cramer's Take) and General Mills (NYSE: GIS) (Cramer's Take), and don't think, "Oh my, are they expensive." Think, "Hmmm, that could be opportunity." Or how about the retailers that will benefit from the big storm damage, Wal-Mart (NYSE: WMT) (Cramer's Take) or Lowe's (NYSE: LOW) (Cramer's Take)? I know I'm working on that now for Action Alerts PLUS. Opportunity in chaos.
You have to think like this. Otherwise you have to say, "OK, it's all over and I am done." Because moments like this are where fortunes are made and lost and if there is one to be made, you want it.
Random musings: Amazing call by Doug to buy Merrill (NYSE: MER) (Cramer's Take) on Friday. ... AIG (NYSE: AIG) (Cramer's Take) is following Lehman on the hubris train, as there was plenty there but they were frozen.
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RELATED LINKS:
Lehman to File for Chapter 11 Bankruptcy
Bank of America Agrees to Buy Merrill
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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 was long Wal-Mart, General Mills, Procter & Gamble, Gilead and Celgene.
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Reader Comments (Page 1 of 1)
9-15-2008 @ 11:40AM
Sheldon L said...
Some good ideas Jim. When the bad pull the good down it does not mean they will stay down. They just need to shake free of the overall market grasping at their ankles.
The opportunity to get stocks like PG, or GILD on sale make them very much worth watching in times likes these.
9-15-2008 @ 1:30PM
charles nickerson said...
Sure hope you had alot of money in these failed companys. But we know what you will come out and say, I got rid of those stocks when they were high, you must have not heeded my advice.
9-16-2008 @ 2:17AM
BELLCORD said...
I'M PROBABLY NOT THE FIRST TO MENTION THIS BUT JIM CRAMER SEEMS TO BE A SHIT-EATING MORON....
9-16-2008 @ 8:05AM
bmaddigan3 said...
WOE to them...
The sins (PRIDE & GREED)
of the fathers,
Visited Upon the children (Us)
Coupled with a Lot of 'Self' Exalting
& Deceptive practices
= our Present financial, BLACK Hole...
9-16-2008 @ 8:10AM
bmaddigan3 said...
WOE to them...
The sins (PRIDE & GREED)
of the fathers,
Visited Upon the children (Us)
Coupled with a Lot of 'Self' Exalting
& Deceptive practices
= our Present financial, BLACK Hole...
9-19-2008 @ 11:04PM
gerrycull said...
Jimmbo: In CA R.E.
stocks are about to take off. Banks will have $$.They own 45% of houses & 60% of repossessed
developable land. RE
laws are flimsy.It's a go!