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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.
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Reader Comments (Page 2 of 2)
2-27-2009 @ 3:04PM
Dereck Dodson said...
Once the World Fortune achieves "Clear Channels", having gotten rid of the dirty: Politicians, commercial property mangers, and ceo's trying to steal your money, I believe that saving all that "B.S." Stock Records Fees for the Government and Corporate Industries, a "Credit System" towards Retirement Expenses will probably be implemented. that will isolate any problematic areas, which seem to be the afor mentioned.
2-27-2009 @ 4:17PM
Charlott said...
I ditched last year. Listened to that voice in my head instead of a talking-head. I miss making money though. My paycheck this week was $42.00. I made more than that in 8th grade babysitting. Currently I am googling "how to grow your own vegetable garden". Tally-ho!
2-27-2009 @ 3:39PM
fontaine1805 said...
Come on "Crammer" lay off Obama and the administation for your own"expedience" sake...You are just a "closet Consrv Republican" who DON'T have a clue what to do to bring this economy/Stock mrkt back from the GRAVE that we were bury in by the G.W. Bush and Cheney administration ( ARAQ really made American's more properous--RIGHT!! Speaking of "showing True" colors (mentioned in your column) you have a great way of doing so--specifically since Obama has only been in the white house 45 days and has begun to give this country HOPE & DIRECTIONS, something that "open" minded people have wished for eight (8) years to happen..Question?/ Why haven't you been asked to be an "economic" ADVISOR to the admin!!!!!!????
2-27-2009 @ 3:49PM
big al said...
crammer is a dum-ass you never sell stocks when there low you BUY-BUY-BUY!!!
2-27-2009 @ 4:28PM
jackisbackprt4 said...
Cramer seems like some kind of a nut, jumping and rattling around like an ape in a cage, totally hysterical and assinine. I would hardly take the advice of someone like him. I am sure there are other more rational sources of advice out there.
2-27-2009 @ 6:50PM
Robert said...
The only good stock to buy is IBM. Put the rest of your money in CD's. Be afraid of this market ... be VERY AFRAID.
2-27-2009 @ 11:47PM
hank said...
You think this guy knows anything? He knows nothing,but makes his living and gets his rocks off,over "GIVING THE IMPRESSION" he is the all knowing,all seeing, " Karnak the Magnificent" !
2-28-2009 @ 2:26PM
sgentilejr said...
Too bad Jim Cramer is 12 months late on saying stay away from stocks. Just a few months ago he was hyping one stock after another. Such as CHK when it was $70 and it is now $15. People like Cramer are always far more wrong than they are ever correct. That is why they work for a living instead of being retired early and sitting on a beach in the sun.
3-01-2009 @ 3:42PM
Master Ian said...
Some of you people are reading and filling in presumptions in your head. This article clearly states "if you need the money for anything". Ie living costs, paying your mortgage etc it should not be in the market. Thats good advice no matter the market conditions. This is not a quick recovery like the last few crashes this could go on for years until a effective action is found. The governments have implemented action after action each bigger then the last and yet things are still dire. Bank loan books are being destroyed by huge numbers of businesses around the world going to the wall as yet there is no sign of this rectifying its still a bottomless pit.
Ive lost your equivilent of $30,000 dollars on the stockmarket over the last 2-3 years. But it doesn't matter its only money! All gamblers should know what they can afford to lose.
3-08-2009 @ 11:17AM
alanearth said...
The market is Cramer's ponzi scheme, at least he is consistant, he is wrong about everything. I hope all of you who bought bear stearns 6 days before it imploded, on cramers advice are doing well. Anything he recommends short it that's what he is doing. Rick sant. and the cnbc luminarys will be living in a homeless shelter in greenwich soon.
3-23-2009 @ 8:33PM
dinohealth said...
Gee, Lubys was up 13% today... up over 30% since I first said in this blog that I was staying in, and looking for bargains that are solid, undervalued, with product-expert management that is dug in for the long haul...hmmm...