TheStreet.com's Jim Cramer says most people are still leaning the wrong way on this market.
In August 2007 we went into a recession because of the collapse of housing. I pick August because that's when I went nuts on TV about how things were falling apart in the credit markets and you just couldn't see it yet in equities.
The deleveraging overwhelmed everything and everyone. The stock market didn't feel it until March, perhaps elated about the prospects of Obama winning, and then reversing itself when it looked like he didn't understand that saving the stock market and the 401(k)s was more important than burdening the economy with tax hikes and utility hikes that would obliterate both housing and stock wealth.
When he became more market-focused, and the Fed took rates to zero and offered financing -- leverage to buy asset-backs -- and took mortgage rates down to record lows while homes lost huge percentages of their value, the fire caught. Lending started again.
And the depression ended. I think it ended in the first week of March. I think that's what Doug Kass saw when he went bullish. I think I saw it when I realized that even if every financial went under and most companies cancelled their dividends, we only had 1,000 points to drop, and you had to start buying. There just wasn't enough downside left.
These are not disputed calls.
Now the end of the depression has to be priced in. Does it mean the Dow goes to 8000? 9000? 10,000? We are obviously still in a recession, so it is not clear yet.
But we know this. Most people are still leaning the wrong way. Most hedge funds are still biased short. Most people who write for this site have hated the market and continue to hate it with few exceptions.
I think you look at it like this: With the depression over, you simply can't hate the market as much as you once did. You must buy things. It is tough to buy up here.
But not as tough as it was down there.
And therefore it's a lot less lucrative.
So, wait for some dip if you have to, some bad piece of information that could rock stocks.
However, you simply cannot be an ursine major when lending starts. Ultimately, YOU CANNOT FIGHT THIS FED.
It will crush you.
It will ruin you on the short side as surely as it ruined you on the long side all the way down to 6300.
At the time of publication, Jim Cramer was long Wells Fargo, JPMorgan, Goldman Sachs and Morgan Stanley. 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.
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Reader Comments (Page 1 of 1)
4-02-2009 @ 10:35AM
aliabassi1 said...
....you said take your money out for 5 years....is it flip flop time?
You went crazy on t.v in August? Dude, you go crazy on t.v everyday!
People don't hate the market cause its a bear market they hate the market because it is irrational. Unemployment is showing no bottom and credit markets are pointing toward total chaos while main street is becoming Yao and Castro fans. This is a silly Trojan horse rally that is probably going to wipe out the sideline money that gets confident.
About 3 weeks ago you told Dick Bove he was irresponsible for recommending BAC at about $5. About 3 weeks ago a guy called into your show and he said something about his method of technical indication and how he believe that today was the day you get in and you know what you did. You opened your sleeping bag and fell asleep while he was talking and he you said I don't think your right... You owe him an apology
4-02-2009 @ 11:39AM
Iridium said...
The depression is getting worse because the real economy is getting far worse. The real people who do real jobs for a living are getting destroyed.
The people that live in a fantasy world where you can make a fortune trading paper may think we are doing great because the stock market that is based on speculation and conjecture seems to be heading up.
There is no rational explanation for what is going on in the stock market. Every day stocks trade up and down all over the place for no real reason. Oil goes up $2 one day and down $2 the next day. The dollar swings wide in both directions every minute of the day. A rational market based on facts wouldn't have these massive swings.
The market right now is based on whatever giant hedge fund makes a play. Everyone else follows. This current rally was kicked of by a BS statement of profit by a bank that still has billions in writedowns off the books. The rally today is based on a rule change that lets the banks off the hook on valuing the assets.
The market has lost its damn mind. It is total insanity. Job losses are at a record with no end in sight. Foreclosures are up with no end in sight. Manufacturing activity is still at record lows. The US automobile industry has been taken over by the government. We have $14 trillion worth of spending. Yet the picture is rosy and the DOW should shoot up to 9000.
My god what will it take to bring some reality and perspective back to Wall Street. I forgot they don't want reality. The major players want to icrease thier net worth by billions and laugh all the way.
4-02-2009 @ 12:07PM
Kay M. Cooper said...
I saw you on "The Daily Show". I don't believe anything you say. It's all for your own personal gain.
4-02-2009 @ 12:33PM
beachpaul said...
Reality? The stock market does not like reality. You spin a great story, Cramer. The market is beyond irrational. Computerized trading is driving this rally and when the hedges decide to clip, it will go down as fast as it went up. "Fight the Fed", is that a song you are working on, a new T-shirt slogan. Let's see some earnings. Let's see some hirings. Whoever bought at 6500-7000 should be sold off by now. If not, do it today.
4-02-2009 @ 12:30PM
Jim in AR said...
Ease up on the caffeine and you may begin to sound normal in a few days.
4-02-2009 @ 12:32PM
Mike said...
Has anything changed? Are the fundamentals of this market changing? YES. Now we send EVEYTHING off shore! ALL the jobs and ALL the money. Look at the employment rate this week. Good Lord, what a joke.
4-02-2009 @ 1:12PM
robnoce said...
Michael:
you are starting to sound patethic. And you are definitely terminally dangerous and irresponsible. You give advise and that is how you make money regardless of whether what you say has any chance of meaning anything. The entire global economy and markets are irrational. What makes you an authority on picking now as the time to invest in the market? Do you have a connection we do not know about with Someone higher up or are you hearing voices again? Cut the caffeine. Get a grip. Shut up for a while. The world needs a sanity check and you ain't it!!!!!!!!!
4-02-2009 @ 1:15PM
bobbyKnight said...
you go RobN
4-02-2009 @ 2:19PM
DAVID L. WEST said...
Cramer fails to mention that the DOW was at about 11,000 way back in March 2000. It is now at 8,000, 3,000 points less than it was 9 years ago!
So much for "dollar-cost-averaging"! Anyone who can predict the market is foolish and unrealistic. Cramer never did answer a question posed by a lady several weeks ago regading our nation's outrageous national debt.
4-02-2009 @ 4:09PM
Fred said...
The stock exchange always precedes the real economy, so if it goes up it will filter through to the real economy, this lag happened on the downside too.
And yes it is irrational, both to the up- and the down-side, NOBODY knows where it will go in the short/medium term, news is bad, buy now, not when the news is good again.
4-02-2009 @ 4:11PM
Donato said...
If Aol wants to be a legitimate financial resource, they would thoroughly check Cramer's comments about past recommendations before allowing him to post them.
Either that or, do us all a favor and exile him to Siberia. There he can't hurt anybody with his advice.
4-02-2009 @ 4:20PM
Danny W said...
Crooked Cramer, strikes again in a few weeks he will be proven wrong again and will he admit he was wrong noooooo.
Never does the prison cell is waiting it is only a matter of time,tick,tock,tick,tock.
Aol sucks and people hate them as much as him crooked Cramer crooked Cramer crooked Cramer 3 wishes you go away forever.
4-02-2009 @ 7:53PM
Beltway Greg said...
Somebody is going down. On one side we have Obama and Timmy the G and the democrats and on the other we have the republicans, Krugman, and Roubini. The line in the sand is drawn at 8000. Where do we go from here? That is the question.