If you want to know why it is so frustrating to be buying stocks up here think no further than the Goldman Sachs (GS) (Cramer's Take) push into the high-end retail stocks, a push that, even as flexible and chameleon-like that I am, I find flabbergasting.
All year the trade has been to be buying the recovery stocks, the companies that sell the most expensive goods, and abandon the dollar stocks which peaked last year in the midst of the worst recession since the 1930s. It was plain as day.
But Goldman never gave you that call. Nope. Not one bit. Until now. In the last two weeks we have seen Ralph Lauren (RL) (Cramer's Take) go on the conviction buy list after a 75% climb, and now Nordstrom (JWN) (Cramer's Take) and Coach (COH) (Cramer's Take) go on the buy list after about 160% and 70% appreciation, respectively.
In the old days, anyone at a research-oriented bank would hesitate to go to the investment committee to recommend stocks that have risen that much. I think they would have been reamed, just taken apart. I think it would have been brutal.
Sometimes never is better than late.
Then, to add insult to the process, the firm is telling you to sell the dollar-store stuff and downgrades Dollar Tree (DLTR) (Cramer's Take) because the fundamentals are peaking. Well, thanks so much, Goldman. I just bought Dollar General from you and if Dollar Tree is peaking I can't stay in the same cohort even if Dollar General has faster growth.
I think it is decisions like these made at Goldman -- and I don't really mean to pick on Goldman as just the other day Morgan Stanley (MS) (Cramer's Take) started pushing the diversified industrials long after they bottomed and took off -- that make so many veterans angry at the market.
Just when Nordstrom has truly gotten expensive, just when this low double-digit grower is trading at more than 20 times earnings, that's when Goldman goes positive?
(As an aside you can see why the "crowd" might like Meredith Whitney because she hates 'em low and hates 'em high and consistency is something that is worshipped by the veterans here.)
I can't blame people for being so angry and fed up at research that does this, that puts you in stocks that have moved a great deal already and takes you out of stocks that haven't done anything and include something you may have just bought on a deal last week -- at least it was hot.
But that's the new market. There's no "discipline" to the process.
Oh, and just so you know, there rarely has been these last 20 years, it's just that right now there is as extreme an aversion to discipline as I can recall in my trading life.
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 Goldman Sachs.
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Reader Comments (Page 1 of 1)
11-17-2009 @ 3:23PM
Iridium said...
You hit the nail on the head Virgil.
YOU CAN ONLY MAKE A PROFIT IF YOU ARE ABLE TO SELL HIGHER THAN YOU BOUGHT!!!
Goldman and the other institutions that have been buying heavily since March need to sell you the overhyped and overvalued stocks in order to bank profits before the market corrects itself from this insanity.
It is all one big scam. In the past they were able to con people into buying stocks at much lower levels. The average people just aren't biting. Now these morons have driven stocks up so high that nobody in their right mind would ever buy them.
The only way to get the average person to see any kind of return would be to inflate this bubble even higher. We could actually see the Dow get close to its gaseous perverted highs of 2007 with real unemployment higher than 20%.
There won't be a single American that believes in the stock market at that point. They will all ask a simple question. How can the stock market be at 13,000 points when millions of people don't have jobs and half the people on my street are losing their homes? The answer is, well it can't.