Did Abbott Laboratories (NYSE: ABT) (Cramer's Take) scare the shorts? Or was it so easy to get people to buy winners and sell losers at the end of the quarter that the market had to go higher? What makes a thin market levitate rather than decline?
I got to thinking about this and the incredibly bullish comments by one of my favorite strategists, Byron Wien -- comments that are even more bullish than usual for him -- and concluded that the single best thing that the bulls have going for them is that the market is up big and you look like a real knucklehead if you aren't invested or haven't made any money on the long side going into the fourth quarter.
In fact, it is so bad that when I speak to my friends who are in hedge funds, they are uniformly culling those without exposure or those who didn't have exposure when it was lower and blasting them for staying too negative in what is now looking like one of the greatest rallies ever. That self-fulfilling prophecy coupled with takeovers that people like, such as the Abbott deal, not to mention Affiliated (NYSE: ACS) (Cramer's Take) - Xerox Corporation (NYSE: XRX) (Cramer's Take), and a sense that things are better in technology -- Apple (NASDAQ: AAPL) (Cramer's Take), Hewlett-Packard (NYSE: HPQ) (Cramer's Take), Cisco (NASDAQ: CSCO) (Cramer's Take), Juniper (NASDAQ: JNPR) (Cramer's Take), Western Digital (NYSE: WDC) (Cramer's Take) being the kinds of things that are working -- have made it so that days like yesterday produce buying, not selling.
In fact, I sense more antipathy toward underperforming managers than I ever have in my life. People do not want to give a break to anyone who sat out this rally, which means there is going to have to be a lot of performance made between now and year-end. That performance will be hard to come by on the short side without definitive letdowns in earnings and employment.
I am not going to ignore important data. But I am pretty sure that excluding tech, the data is simply mixed, not bad -- including retail, housing and autos. (The bears would have you believe that there is shadow inventory lurking everywhere in the system, but that's not what happens when you order less, fire more, build less and work off old inventory, which is what is happening pretty much everywhere.)
So, we can carp. We can say "oil futures down, sell." We can bemoan how bad things are. But managers are going to lose their jobs this year for not being bullish enough unless they turn.
I think they are going to turn now. And that's what yesterday was about.
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 Abbott, Cisco and Hewlett-Packard.
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Reader Comments (Page 1 of 1)
9-29-2009 @ 9:48AM
ebrandler34 said...
If these managers are so far behind, do you REALLY think the smart thing to do is jump into an overbought market with both feet?
I don't deny your observation, but your conclusion is either wishful thinking, sophistry or obtuse.
9-29-2009 @ 1:14PM
Iridium said...
The only explanation we can get from anyone on the street as to why the market is up is, WELL THE MARKET IS UP SO ITS UP, YOU DON'T WANT TO MISS IT GOING UP.
Nobody can explain a 65% increase in the NASDAQ while unemployment rose to record highs, foreclosures hit record highs, consumer expenditures are way down, and credit has been cut by trillions.
The rally defies all logic and all laws of economics. The market is in fact going up because it is going up and people don't want to miss it going up. Sadly it seems like that is all people need or care to know.
Cramer will write a post about how the fundamentals do not support the market but then the market keeps going up. So he then says that he was wrong and the fundamentals must support the increase because the market keeps going up.
SO what we have is fund managers that knew better and stayed out of the market because they watched the fundamentals. All of a sudden Brian at the other firm is going to get a $10 million bonus because he invested in the BS market. Joe doesn't want to miss out on a big time bonus so he decides to throw caution to the wind and invest as well. SO the market goes up because fund managers don't want to look bad compared to other fund managers and they don't want to miss out on bonuses.
WOW WHAT A GREAT REASON FOR THE MARKET TO RALLY!!!
9-29-2009 @ 4:10PM
Beltway Greg said...
Yeah, that's what she said.