Jim Cramer: Why the Cliff Makes the Short Side Look Good
Second, you will see some substantial layoffs made by prudent executives from publicly traded companies as well as definite layoffs from defense companies. The issue here is that when companies report in January, only foolish CEOs would say that they can have better growth once we go over the cliff.
Who wants to be a buffoon? Why not take down numbers because of the cliff? And when you take down numbers, your stock goes lower.
The final and far more insidious issue is this stupid alternative minimum tax. It is an impenetrable escalation of taxes that could be relatively larger than the current tax bite for perhaps 30 million Americans. You don't know until the bill hits you. So you better save up for it. Those people are critical to spending, and they don't even know who they are yet. Tax bills would increase an average of $3,000 for these people.
Now here's the problem with going over the cliff. While you can reverse the spending cuts, while you can revert to former tax rates, even if we go over the cliff, no one knows how to put the AMT back the bottle. I have yet to hear how that can happen. Tell me if it can. I haven't read a single positive word about how it can be reversed if there is no deal. If we go over the cliff before the end of the year, it seems etched in stone, and it is the most dangerous of the tax increases.I believe there could be a deal. I believe the president might be able to "seduce" some Republicans to break their pledge to Norquist, which means the short side could be tough. But if you think the president can't seduce some Republicans to break the pledge, "seduce" being Norquist's word, then how can you be big long? Why not short? Just asking the question. Not telling you what to do. Just asking the question. Because it is the most important one out there to ask.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV