," my trader, Mark Kantor, shouts at me this morning. "But Brazil?" I say immediately. "They don't even have an ATM in Brazil," he shouts back. "I don't care," I say. "Others do. Heck,
Bank of Boston
might as well call itself the Bank of Brazil."
Welcome to the world of execute before proven innocent, the world of bank stock investing right now.
On Wednesday George Salem from
put the fear of God into people about this group. He talked about East Asian contagion and sniffed at those who think that American banks will come out unscathed.
In 1990 I went to hear this guy. The banks were falling apart. They were all teetering on bankruptcy. People were even doubting the worth of
. And there was Salem, standing right in the middle of it, a calming force, telling people to load the boat up with
at historic lows, in single digits.
This guy was, at that bottom, the biggest blowhard, scaredy cat, Chicken Little I have ever seen. He didn't like anything. I went back from this meeting and shook my head and said it simply can't be as bad as this guy makes it out to be. No way could the world be collapsing. I even went back to Schlesinger's treatise about
in 1932 to see "if the center will not hold."
And I bought and I bought and I bought some more. And when I was done buying common I bought calls. And I made a fortune betting against this guy.
Was he right about the balance sheets, the near-term impact, the dangers of the group? Somewhat. But was he right about the direction of the stocks? No, he was as wrong as anyone I have seen in my lifetime.
So was I out there shorting Chase yesterday on Salem's advice? I don't think so. I probably wish I had this morning given the bad news from Chase on Thursday morning. But I have faith that six months from now that Salem will be revealed as creating a bottom again. Certainly Chase and other banks will be lower before they go higher, but what about six months from now? It's tougher to see how these banks will have trouble in the longer term. The reason: Unlike the balance sheets of the Japanese banks, the Korean banks, the Brazilian banks or, for that matter, the European banks, our banks have excess capital and have never been in as strong a position as they are now to weather a third-world or fourth-world or fifth-world implosion.
My take? This guy should have the same warning on his research that comes with a pack of Salem's.
James J. Cramer is manager of a hedge fund and co-chairman of TheStreet.com. At the time of publication his fund is long Bank of Boston. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Mr. 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 welcomes your feedback, emailed to