Without the futures ramping, don't things seem so expensive? Those consumer nondurables -- uh-oh, they have dollar pressure. The stimulus package of China? Is that why we bought Fluor (NYSE: FLR) (Cramer's Take)? Where are the orders? All those oil stocks looked so inexpensive with oil at $66 going to $70. But we just paid $2.25 at the pump with no line and the futures are at $60. Citigroup (NYSE: C) (Cramer's Take) hit a 52-week low despite talking about an acquisition, and Bank of America (NYSE: BAC) (Cramer's Take) is a smidge above the 52-week low. What happens if it takes it out? What happens if Google (NASDAQ: GOOG) (Cramer's Take) takes out $300? Where is the Nasdaq bid, for heaven's sake? Where did all of those morning buyers go who kept coming back right until the end?
And that's the problem, isn't it? The collective cheapness of equities vs. the overvaluation of stocks. We simply don't get an opportunity to do anything but lose less than the other guy, and we are supposed to like it because stocks only get this inexpensive once or twice in a lifetime.
"Time to buy?", a great piece by John Authers in yesterday's Financial Times, is emblematic of what I am talking about. He's got the story: Bears and value guys are warming up to the market.
At the same time, what would get these guys to like the market? To actually like it? If it never got to the levels they like it to go to. That's the answer. Everything else is just early.
Which leaves ourselves open for the endless declines in too-cheap-to-ignore Goldman Sachs (NYSE: GS) (Cramer's Take), "which must have huge problems even though we like it long term," or to Citigroup, which has to be as cheap at $11 as it was in 1990 (except it went to $5 then when it was really cheap), or GE (NYSE: GE) (Cramer's Take), which was cheap ... oops -- negative piece in The Wall Street Journal about what else, its finance division, which has made it cheap for 30 points and is a monster, obviously, because it borrows short and lends long, which should be good except there is a belief it can only borrow from the federal government.
So the animal spirits are tamped until the futures buyers come in and then the ETF double and triple buyers -- the absurd, never-should-have-been-approved ETFs that allow you to get double and triple returns by the day on the market -- work their magic and move the market up in order to comply with their charters, which require them to move it up with futures buying ... until they have to move it double and triple down with futures selling to meet their bear charters. You can't make that up.
Oh, and let's not forget that when it's down, that's a tremendous opportunity to buy the market for the hobbled hedge funds that have cash ... except, of course, that the cash is meant for redemptions.
Under this scenario it is impossible not to be bullish, right? Especially because you must lose money to be successful.
I remember when I was at my hedge fund and someone would mention that you have to lose money to be successful, and I would put out that the reason I compounded at 24% after all fees, the thing that doesn't make me a joker no matter how hard rival news organizations and pot-shotters try, is that I never lost big money to make money.
Which is exactly what the bulls do every day ... or at least the first part.
Jim Cramer is co-founder and chairman 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 GE and Goldman Sachs.
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Reader Comments (Page 1 of 1)
11-11-2008 @ 10:24AM
beachpaul said...
It's digital, dude. Get in, get out, to the sound of a click. All your advice, all your market history, all that you learned in life and school, is from an analog age that no longer exists. There are no time lapses in digital land. Anyone who played by the old rule, buy and hold, has been hammered. Anyone who bought a house as an investment has been clobbered. Anyone who got mutually funded into a 401K has been raped. Everyone who went greedy has been burned. Greed is not good. It is one of seven deadly sins. Maybe if you MBA's took some Liberal Arts classes, read Dante or Milton, you might have recognized that difference when you were peering at your portfolio. You might have known you were staring at a snake pit, and wouldn't be whining about getting bit. Click, Click, Click...
11-11-2008 @ 1:01PM
BHarrison said...
The TRUTH has finally been revealed to the American people in that the stock markets are really nothing more than sophisticaated "Las Vegas big stakes gambling". The "House" gets a cut of every transaction, and they win 90% of the time. The blatant corruption and manipulations of it all have finally been unequivocally revealed . . . there can be no "faith and confidence in the market until FULL DISCLOSURE is provided of the financial status of ALL of the corporations . . . the integrity of financial accounting and auditing must be restored; minimal reasonable "over sight and regulation" MUST be provided to ensure integrity in the markets; indictments and prosecutions of the CORRUPT CEOs and corporate managment must be carried out. Otherwise, there WILL BE NO "FAITH AND CONFIDENCE" IN THE MARKETS OR THE FIs.
"beachpal" above just represents the new style of "gambler". There is always "another sucker who comes along . . ." They'll find a way to "skin him" too.
11-11-2008 @ 1:00PM
BHarrison said...
RE: Beachpaul's comment: It sounds like he would be considered a "day trader"? And from what I have heard in the past, 90% of the day traders lose their "seed" capital within six months of their entry into the market . . . otherwise, how is beachpaul different from the day traders??? The days of stability and profitability of long time investments in the market are over . . . at least until integrity is restored to the market.
11-11-2008 @ 8:48PM
dad said...
S-x, Lies and Videotapes, greedy, corrupt, inbreeding morons. You guys screwed the worlds financial system and have the gall to ask, nay tell us, the ordinary citizens that we have to bail you out? Bollocks!
11-12-2008 @ 9:08AM
BOB said...
How can companies like AGU, POT, and MOS keep going down when they all just set record profits and their POTACH has just gone up in price by 1/3?
AGU is under 4x EPS THeir industry includes MON which is selling at 19x EPS. companies that lose money have not lost aas big a % as these 3 have