Jim Cramer fills his blog on
every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- the Madoff effect,
- what works now, and
- the latest tug of war.
for information on
, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
Madoff Fallout Won't Be Felt Till Next Year
Originally published on Monday, Dec. 15, at 8:39 a.m. EST
All weekend, I -- like others who follow the markets -- tried to figure out how Bernie Madoff may have lost $50 billion, not the $17 billion he started the year with, given that, by nature, you can't leverage a Ponzi scheme. You can't borrow 9-to-1, as a hedge fund might have, because you have to keep sending money out and because he apparently was captive to himself.
It is possible, of course, that he sent out so many fraudulent statements showing much more unrealized profit in his fund than his fund had assets, but that would seem to be the only way it could happen, unless he got so much in this year and lost it all before the end of the year.
So many questions remain unanswered. Did he ever make money? What did he do with the money? Was every monthly report simply backdated and too impenetrable to raise questions? When did he start the scheme? Why did he have to start the scheme?
And perhaps the most important question for now: Why does none of it matter? I thought for sure it would matter on Friday, but Friday was a nice day because of the auto bailout from Treasury. I thought it would matter this morning because of the incredible foreign bank exposure -- and did they
do anything right, those foreign banks? But Europe's very strong.
Yes, the biggest mystery remains how this $50 billion scam hasn't affected anything at all. It's akin to how the gating of Citadel after horrendous losses really doesn't mean anything.
What's the real impact of all of this, besides being, somehow, bullish for the markets, as everyone is excited that the markets are shrugging things off?
I think it has to do with new money. How much new money can we expect to come into this market? How much do we expect would have come in if it weren't for these scandals? Take the European money. Much of it looks like it came in during the last year. Why did it come in at all? Who had new money at the beginning of 2008 to give?
Maybe next year will be the year where it finally happens -- we run out of new money from the sidelines that comes to the stock market.
Any market needs new money to propel itself higher. Markets don't just jump up because sellers are done. This market has not had a new IPO of any significance in months, but the banks have flooded the joint with deals and the buybacks have slowed to a minimum.
I think the Madoff misery and the Citadel-like freezings won't cause much more damage to the markets. They are being discounted now.
I think the scandal and the hedge fund debacle is just part of the withdrawal of money that will make next year another stuck-in-the-mud year for equities unless somehow new wealth is created somewhere. And I cannot see where that will be.
: Kudos to Doug Kass for being the firstest with the mostest on the Madoff scandal last Friday. Very proud of his coverage.
At the time of publication, Cramer was long JPMorgan and Goldman Sachs.
Everything Works Now
Originally published on Tuesday, Dec. 16, at 3:04 p.m. EST
Not often that so many things are working, but after this statement from the Fed, which is the Malcolm X plan -- by any means necessary -- you can pretty much spin a scenario any way you want. Those who like a weak-dollar theory have a ton of things to buy -- all of the drugs and foods and exports:
. Those who believe the slowdown will be long and we'll have low rates for a long time can buy the high dividend plays --
Those who believe the stimulus will work can buy
Black & Decker
( BDK) or
. They can buy
When you think that there is a slow-growth environment, you want
growth, you can buy
Research In Motion
( RIMM) and
. You want hypergrowth? You can buy
If you think that housing is going to run up, you can buy
Bank of America
All of these work.
Heck, the people who are worried about inflation can buy gold.
All of these are on the line right now because the chaos is so great at this moment.
People are regarding it as big-time opportunity.
I can't blame them.
At the time of publication, Cramer was long Black & Decker, JPMorgan, Gilead, Celgene, Freeport-McMoRan, Hewlett-Packard, McDonald's and General Mills.
The Latest Tug of War
Originally published on Thursday, Dec. 18, at 7:36 a.m. EST
Preannouncement after preannouncement after preannouncement. Yawn after yawn after yawn.
I've never seen anything like it. Worst ever. But, did anyone really think
, cut in half here, would make the quarter? How about
? I figured they would all miss. I bet the ones that preannounced last night hardly go down. Why should they? ITT's up nicely. Eaton's unchanged. Not even glancing blows. Nucor's up 10! Ten from a preannouncement.
Most glaring: the 10% miss by
( JOYG) with the almost 15% rally! Now that's gigantic.
That's why people feel better about this tape. In the end of that big run up, stocks failed to react to even the biggest beats. Now they fail to react to the biggest misses.
Makes you want to go out and buy all the
, the one that
miss, that you can!
But that's the true tug of war in this market. We are all fearful from the top down. I mean, think about it. There was a guy on
TV last night saying that anyone who can even pretend to know where things are going to be next year is lying. Anyone.
Yet the stocks reflect total and utter uncertainty and then some. No, I don't want to buy Nucor up here. I sure wish I had when it was reflecting imminent collapse of the system rather than just prospective collapse, which is where we are now.
Like everyone else, including the policymakers, I know that there is no lending going on whatsoever at any prices that can be considered sane unless it is from the FDIC. I know that things are just awful in the credit markets.
But I know that the stocks are going higher. The worst tug of war for a rigorous investor possible because the stocks are forecasting that Bernanke and Co.'s plan wins.
Or at least that it doesn't lose.
Here's where I come out. I know it may not win, I know things are very bad, but I also know that if he had done nothing, I would be laughing at all of those people who bought and are buying.
Now it just doesn't seem very funny. Seems like the joke's on those not playing...
At the time of publication, Cramer was long Eaton.
Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer),"
click here. Click
here to order "Mad Money: Watch TV, Get Rich," click
here to order "Real Money: Sane Investing in an Insane World," click
here to get "You Got Screwed!" and click
here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by
TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon.com purchases by customers directed there from TheStreet.com.