What do you do when it comes over the tape that Rubin resigns? You sell drug stocks.
What do you do when bonds swoon? You sell drug stocks.
What do you do when productivity improves? You sell drug stocks.
What do you do when you wake up and come to work each day? You sell drug stocks.
Yeah, you get the picture. This group is for sale. It is for sale every day the sun seems to rise. It is for sale every day that the earth seems to move. I bet it would be for sale Saturday and Sunday if the markets were open. Twenty-four-hour trading days will be more hours to sell the drug stocks.
For the longest time, this market was just the opposite from what we see now. I am sure when we see the second-quarter reports from mutual funds six months from now (who else gets away with that kind of late reporting?) we will discover that the major firms all sold these drug stocks and moved into cyclicals. This kind of wholesale liquidation is the only way these firms, which are mirrors of the
, can beat the S&P. They must bolt from underperforming sectors and move into performing ones or risk just being costly, high-fee index funds.
So, despite my love for bonds, only deepened now that I "know" what bond sellers knew (that's how you always feel when you discover bad news that, once it is out, causes something to rally, as the bonds just have), I am not buying the drug stocks, even though the strategy has made me money for years. I own none, either.
It just doesn't work anymore.
: "It's not like they put Ernie Grunfeld in for Rubin, you know," my partner
says, noting the strong reaction of the bonds to this change.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. 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