Fall back. Fall back to basic principles. What do people have to do whether they want to do it or not? What do governments have to pay for whether they want something or not? What must be used whether you like it or not?
That's where we are right now in the helter-skelter pell-mell race to take all stocks to single digits as the notion of a worldwide global depression sinks in.
So many of you -- some incessantly, for heaven's sakes already -- have asked me, "Why bother?" or "Why not sell everything?" or "What's the point?" To which I say, patiently, and endlessly, and I'm on record on this, that if you need money for anything important, take it the heck out of the stock market.
As far as I can tell, I am the only one who has said, "Get it out of the stock market," and judging by the firestorm with which it was received -- including a national ad campaign against me -- I can see why people don't do it.
I am reiterating again that it is right. You need that money in the next four-and-a-half years? Go. Sell some. Maybe we get a lift, sell more. We don't get a lift, sell anyway. The market's horrible.
But there is such a thing as asset allocation. You can have 100% of your money in cash, and that's been terrific. For now. You can have lots of shorts on, that's terrific too. For now. You can own some stock and have lots of other assets, like gold and Treasuries and municipals, and that's also fabulous. For now.
The main thing for the stock portion of your portfolio, if there is one, is to think and remember what people have to do to exist. Think also what governments have to do to exist and, if you have to own stocks -- and maybe you don't (so stop reading here) -- you have a better chance of buying a survivor than not.
Mind you, that doesn't mean, "OK, go buy Procter (NYSE: PG) (Cramer's Take)." It doesn't mean that because the "what must" people buy doesn't mean the stocks making the stuff are cheap. The competition is fiercer than ever. The retailer and the consumer are squeezed and squeezing the suppliers. Think Wal-Mart (NYSE: WMT) (Cramer's Take). Think private label, like TreeHouse Foods (NYSE: THS) (Cramer's Take) and Ralcorp (NYSE: RAH) (Cramer's Take) before you think Procter & Gamble.
Whatever the government can buy less of or pay less for it will -- the latter is a new thing when it comes to President Obama. That's why UnitedHealth (NYSE: UNH) (Cramer's Take) and Aetna (NYSE: AET) (Cramer's Take) have been decimated and are going to get decimated again. That's why Genzyme (NASDAQ: GENZ) (Cramer's Take) could be in for trouble along with Amgen (NASDAQ: AMGN) (Cramer's Take) and the others that have high-priced drugs that need taxpayer support. It's why I don't trust General Dynamics (NYSE: GD) (Cramer's Take) or Northrop Grumman (NYSE: NOC) (Cramer's Take).
Many companies make useful products, but they will not survive in their current form. Too much debt. Too little cash. We will need what Terex (NYSE: TEX) (Cramer's Take) or Manitowic (NYSE: MTW) (Cramer's Take) makes for sure. But the way the companies are structured, you won't benefit.
We need cars, but we just don't need General Motors (NYSE: GM) (Cramer's Take), Ford (NYSE: F) (Cramer's Take), Chrysler or Honda (NYSE: HMC) (Cramer's Take) or Toyota (NYSE: TM) (Cramer's Take). Or at least all of them, perhaps just maybe two or three of them.
We will shop, but why must we shop at Macy's (NYSE: M) (Cramer's Take) or Limited (NYSE: LTD) (Cramer's Take) or Nieman Marcus or Target (NYSE: TGT) (Cramer's Take) for that matter? We have Wal-Mart.
And, as always, think both ways. When I say I don't like a stock, you don't have to have me drill it into your head to short it. The opportunities here on the short side are much better than on the long side. Still. I don't think that will change until we repeal all of the gains since the mid-1990s.
Only then will we get to prices where selling may simply not make sense. Right now, shorting makes all too much sense, so selling will certainly make sense.
So, if you don't need stocks now, don't own them. If you can short them, short them. If you have them as part of an allocation, be defensive and diversified. But don't get your hopes up. On Thursday, with this budget, we saw the true colors of this administration.
It wants lower stock prices and less money for the wealthy.
That's never a prescription for a bull market.
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 Wal-Mart.











Reader Comments (Page 1 of 2)
2-27-2009 @ 11:15AM
Mia said...
Do not buy Kohls stock. Poor customer service persists from Mr. Mansell, the ceo's office down through store management. Customer's complaints go unaddressed, many customers complain about the three-tier sales promotions (10, 20 or 30% off) as unfair and discriminatory. Store is overcrowded and hard to navigate for disabled using wheelchairs. Clearance racks are filled with junk, looks like stuff goodwill wouldn't even accept.
2-27-2009 @ 12:03PM
k-dog said...
Thanks for the insight Jim....... your entire opinion loses all credibility when you state "whatever the government can buy less of or pay less for it will". Are you joking? Other than the military, what does the government do more efficiently than the private sector? If you wanted a DVD, would you fare better at Blockbuster or "The Federal Bureau of Videos"? That is where health care, banking, and the auto business is headed. Everything is more expensive if handled by big brother.
2-27-2009 @ 12:06PM
Frankie D. said...
Cramer, In a previous article you said it was great to have a president who understood the economy, or words to that effect. Please explain. Obama is acting according to plan. What has changed? (And PLEASE don't say your medication.)
2-27-2009 @ 12:43PM
paul s said...
The days of "nobody in their right mind" buying stocks are OVER. Thirty times earnings? Get OFF the PAINKILLERS. It was all bull s#&t, Cramer. Fifteen times earnings, yeah, if the company is doing really well. Eight, nine times earnings, if the company is not doing well and could be doing better with new management. The only original idea bankers have had in the last thirty years that did most of us any good was the ATM machine. All that wealth you talk about, if you didn't convert it to capital gains, was an illusion. Borrowing against the imaginary gain, without realizing it and paying the tax, was foolish and greedy. Greed is a deadly sin, Cramer. It can lead to stock poisoning.
2-27-2009 @ 12:54PM
dinohealth said...
Great story, great advice, Jim. Tell it like it is. I did not get out though. I have no short need cash requirements. I went for companies like LUBYS. Little debt, under-valued, and product-expert management, dug in for the long run!
2-27-2009 @ 12:59PM
bdaly1979 said...
He is right, get out of the stock market. The hottest investments these days are Private Equities, especially the film industry. The film industry is up 30% from last year! What other industry compares to that?
2-27-2009 @ 1:11PM
Jim J said...
Sell low . . . buy high!
2-27-2009 @ 1:48PM
NATMAN said...
WHO IS JIM CRAMER?? IF HE IS SO SMART WHY IS HE ON AOL??
2-27-2009 @ 1:51PM
toogeorge said...
Just checking to see if I can get posted on this site!
2-27-2009 @ 1:53PM
Jim said...
I like Cramer's show, in that it gives you good tips on how to invest. However, anytime I've actually followed his advice on timing on purchase or sale of stocks, I've lost money. His tips, such as buying in increments as a stock is going down, and selling in increments as it rises, is great. BUT, his advice on markets is actually mostly wrong. Case in point, he said dump Google last year the day before it rose a phenominal $100 per share!!!!!! Good adive, Jim
2-27-2009 @ 1:56PM
Bobby P said...
Cramer's not a realist, he is a coward leaving a sinking ship that he help torpedo. It's time for victory gardens and war bonds.
2-27-2009 @ 2:04PM
toogeorge said...
History was predicting this crash....How so?......TAKE A LOOK AT A DOW CHART, INFLATION ADJUSTED(=constant value dollars), SINCE ITS INCEPTION IN 1896....YOU WILL SEE A 35 YEAR CYCLE(except for 1929-32 when it fell 90% in three years).....I think we are about 9 years into that 35 year cycle, which leaves us about 8 years to the bottom...
You can find these inflation adjusted charts by entering "Dow inflation adjusted" on Google, or other search engines....Also note that the y-axis is usually logarithmic, and if they display with too many cycles you tend to lose the cyclic nature if the Dow(The Wikipedia chart has this defect).
An even more dramatic display of the cyclic nature of the Dow is to convert its value to GOLD, then chart it......The thing to note then is that the recovery from the bottom is very slow...See what you think.
2-27-2009 @ 2:07PM
toogeorge said...
That worked smoothly enough, what's up with the Daily Finance site?
2-27-2009 @ 2:25PM
Frank ODonnell said...
Kohls is OK, shoes are pricey, jewelry is
SOS, but rest of store is acceptable, I shop
for pants, shirts, casual wear, good Sales if
you have a card and senior days. Compared
to Malls or specialty stores they are very good.
Mall stores and specialty strips are very pricey and more and sell the same stuff under specialty labels
and brands. I think that personal service is great
but most of the Mall stores have no people to
help you.
sos
2-27-2009 @ 2:34PM
hl said...
Whatever Cramer says, do the opposite!
2-27-2009 @ 2:38PM
David said...
Cramer giving advice on the STOCK MARKET!??!?! REALLLLLY!?? You mean like when he recommended, "HIS TOP 5 BANKS TO COME OUT OF TARP AHEAD" ON NOV. 10, BAC, WFC, JPM, USB and..... WACHOVIA WB, why don't you all take a look at what has happened to those stocks. Or maybe you want his energy plays how about recommending Nuecor at 75!? or maybe.... Kaydon at 60!!!? or maybe his best play ever Rexx Energy at 17!!! 4 months ago which is now 1.50..... hmmm cramer you swing with the market you bash one day pump the next, your words USE to mean something to me then you lost me oh let's see 15,000 dollars in 3 months HAHAHAHA, your advice is worthless as is the company CNBC you work for, half the fear in this market is spread by them.
2-27-2009 @ 2:40PM
jonathanmcrowder said...
Wow. Cramer holds himself out to be an expert on the market, stock picking, and timing. After the market has already fallen nearly 50% from its highs, doesn't his call to get out of the market seem just a little bit late?
I actually think he's right and that there's more downside to come (Dow 5500-6000?), but I'm also watching for widespread pessimism that will indicate a bottom. We're not there yet. As John Bogle (Vanguard founder) said recently, markets tend to overshoot in both directions. When Cramer makes this kind of a call, it's a signal that we're getting closer to the bottom and widespread/maximum pessimism. John Templeton (Templeton Funds) is famous for investing at the height of what he called "maximum pessimism." I don't have a crystal ball. But, Cramer's call tells me alot.
2-27-2009 @ 2:40PM
Kate said...
The stock market is a bad place to invest at the moment. With the trillions of dollars Obama is pouring into the economy, there is no guarantee it will work. What is guaranteed is a couple decades of debt to pay off. We're borrowing money from other countries to make loans to Citibank and B of A. What the US government is doing is exactly what toppled the financial sector. Our government is ignoring the ground rules for running a financially stable business. I guess that's why investing more money in Citibank sounds good to Obama. Just borrow more money from China if we need it... These are scary times.
2-27-2009 @ 4:01PM
dave said...
If Cramer says dump your stocks this is definitely the time to buy as he has been consistently wrong for the past 18 mos. I just invested again in the market.
2-27-2009 @ 3:02PM
GEORGE MOYER said...
THANKS FOR THE ADVICE JIM. AFTER TELLING PEOPLE TO BUY STOCK FOR YEARS NOW THAT WE BOUGHT AND ARE ALMOST BROKE WHO NEEDS YOUR ADVICE.