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A Strategic Look Through Rose-Colored Glasses

Riding on a little careful assessment, a little irony and a little blind faith, the trader goes a little long.
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How about a nondisaster scenario? One that bets we have come far enough down? I am selling my puts and buying some calls, so I can't say I am betting against such a course. Let's put on rose-colored glasses for a second and think about what could go right. This kind of exercise has stood me well many times since 1982, so I have to do this or else!

First, everything with the exception of the


is down 10%. That's usually an appropriate time to buy, not sell. While we have gone through the 200-day moving average for the


futures, that doesn't necessarily mean that we are headed to oblivion. In fact, I could craft a scenario that says this might be a suitable place to try to bottom.

Second, I have seen the air thick with despair. Many deals are canceling.


has me on tonight bemoaning the dot-com thing, and they are totally washed out so you might be forming a bottom.




reports tonight. I can't recall the last time I saw Cisco sell off so brutally ahead of a quarter, but I don't believe it made sense when it did. This is my favorite stock, so I don't want to give up on it.

Fourth, we had an



downgrade today by Raymond James. EGRP is the quintessential bull stock and for it to be downgraded has to mark something. Irony gods would say it marks the bottom.

Fifth, we could be reaching a good bottom in Treasuries ahead of the refunding. That would be typical of August refundings and could lead to a decline in rates. A good set of inflation numbers and bonds would be ripe for a rally.

Finally, I don't know anybody who likes stocks. That's enough to cover my shorts. (I have very few on right now.) Last time I did this I said, Why not go long a little? So I am.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund was long Cisco. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at