This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Jim Cramer: That Despised Word, 'Compromise'

That is why it's time to prepare for the failure of talks and a potential December-to-January market decline, until the hardships become so clear that compromise on principles may become the only way to avoid a recession. That, after all, could mean new candidates rising up to try to take the jobs of the intransigents.

To put it another way, let's call it the 10% solution. That is the approximate level of stock-market pain I think Congress can take before it will capitulate. Why 10%? It's about where the Congress agreed to pass Troubled Asset Relief Program (TARP), which is about has hated as the compromise needed to solve the cliff.

But the U.S. must first go over the cliff to feel the pain, just like we had to see the market tumble to provoke the TARP passage. That can only happen when the paychecks shrink and the layoffs begin in earnest.

OK, that's the bad news. The good news? Because I believe a December-to-January decline will breed a deal, in the words of Warren Buffett this morning, you should not make any long-term investment decisions based on the cliff. But trades and opportunistic tactics? I think you need enough cash to be able to buy a down-10% market if the cliff is breached.

We are going to get plenty of "positive" deal talk, as we've got from House Speaker John Boehner (R-OH). We will also see negative deal talk, as we got this morning from Erskine Bowles, who champions a long-term solution to the U.S.'s budget issues.

The important change, at least for me, is that a December resolution is now looking like a lost cause.

This means that, instead of just a lack of hiring because of the uncertainty, we will see actual firings because the onerous provisions will come into play.

You know what's truly ironic? When Congress agreed to create the cliff, it was meant to be so catastrophic that an agreement would have to be reached or else. It turns out that it wasn't nearly draconian enough to cause politicians to rise above politics. The outrageously bad tax increases and the spending cuts simply can't trump the belief that compromise represents the lowest form of life and a total betrayal of principles, even if it causes tremendous strife for the voters.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Our Tweets

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs