How many writers attempted to call the top of the market this weekend? Everybody from
, which is in the top-calling business, to
, which, I learned in
The New York Times
, believes that we had a top 1,400 points ago. Well, that's certainly a new twist, not to mention a real circulation-builder.
All of these top callers have one thing in common: If the market keeps going up, they will just throw up their hands and write about something else. In fact, most of them will just write about another top they spy, and ignore entirely that they have already called many other false tops.
In any other business we'd analogize to Chicken Little. In the writing business, however, it is called "prudence."
has an abundance of it. The
third section is incredibly prudent.
is amazingly prudent.
is as prudent as an old grandmother.
I, on the other hand, am reckless. I like the market. I guess that makes me downright DWI. In fact I think the market is going higher. Stop me before I kill again.
But there is a difference between me and the naysaying print journalists: I will lose money if I am wrong. If I am too wrong, they will take the money away. And if I am as wrong as these journalists, well, I guess I will have to become a full-time writer, because I will most surely be out of the money business.
Then I can start being prudent.
Look, you want to know what drives markets up and down? It's the same thing as what drives economies: inventory. When there is too much inventory in the economy we get a recession. When there is too much inventory in the stock or bond markets we get a correction.
Right now we are as lean as can be. The bond market had no problem putting away the recent multi-billion dollar government auction. In fact, despite (prudent) press reports to the contrary, the government could have sold another ten to fifteen billion in bonds without a problem.
And the stock market? I got guys on trading desks pleading with me for some equity to sell, begging for inventory. There is no merchandise around to be had.
That's part of the reason why
can go up so fast. Believe me, if someone wanted out of these stocks in any size, they wouldn't be climbing.
The chief reason why there is no inventory is that no one is printing any new stock. The American corporation is incredibly liquid. Not one of the
needs cash. Nobody is coming to market with any equity.
The underwriting calendar? Pretty light, let me tell you. Not only are there no big deals that tend to hang around the print price and then break down, there aren't any secondaries to speak of. Small-cap merchandise of any quality would shoot sky high, but there is very little in the pipeline.
This lack of inventory amazes everybody who is in the business. We are convinced that at Dow 7,000 there must be massive amounts of stock to sell somewhere. But there is no queue.
Why doesn't the press pick up on this? Oh yeah, too bullish. Wouldn't be prudent. Sorry.
James Cramer is manager of a hedge fund and co-chairman of
His fund holds long positions in Merck. As for Coca-Cola, Cramer says "I wish I were long Coke but I can}t think of a reason other than it is going higher." While he cannot provide investment advice or recommendations, he welcomes your feedback, emailed to