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 perils of relying on the government,
- China's overwhelming importance, and
- the unfounded hatred for Sears.
for information on
, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
Don't Put All Your Eggs in Washington's Basket
Posted at 10:40 a.m., Jan. 5, 2009
It's hard to be as negative as we would probably like to be about 2009. We are all over the "so goes" stuff, as in "As goes the first day, so goes the year." How much I would like to believe that.
I do buy the parallel that it can't be as bad as last year. I also believe it can't be as good as the old days.
This year is
footrace: Can we stop unemployment at 9% vs. how quickly the stimulus gets passed. Literally, it matters when the bill gets passed. An Illinois Senate setback. A Richardson stumble. These matter. You cannot sustain the rally in stocks like
without fast action, and that's been propelling us.
Do we like the market without quick stimulus? Do we like the market with the banks still worried about collateral dropping the moment they lend against it? Do we like the market, knowing that the banks still do not have the funding -- I know, outrageous but true -- to make big bets? Do we like the market without M&A and IPOs?
It's all on Obama, which worries me -- I don't like the idea that Wall Street needs Washington to make things go. Does anyone really think that the Republicans want to back the Democrats to make the economy better?
I say, temper the enthusiasm about Washington and then draw conclusions. If there is a delay in stimulus, which there could be after the TARP blank-check fiasco, then we are "stuck" with the fundamentals.
Which means it's better to be a in a drug company that merges with
-- today's rumor courtesy of the
-- than to be in a roaring infrastructure stock that doesn't get to make its earnings for a year because of a jam-up in Washington.
from Doug Kass. Remember, these were almost all home run calls last year. I like
, but its predictions were way too tame this year, and I love Byron Wien, but his predictions aren't bankable like Doug's, because Doug offers what I call the "variant to the variant!"
At the time of publication, Cramer had no positions in the stocks mentioned.
In 2009, It All Comes Down to China
Posted at 7:21 a.m., Jan. 6, 2009
So 2009 starts with excruciating decisions right out of the box. We are more overbought than we have been in ages, yet we have tons of bears waiting to be converted. We haven't seen an ounce of good news, but you can't keep the cyclical down -- particularly the oils, but also the infrastructure plays. The techs want to rally -- witness the
futures up to their old tricks -- but other than an allegedly clean bill of health from Steve Jobs at
, some decent gallop from
(heaven knows why except for
share loss, certainly not ad pickup) and a bounce from
Research In Motion
( RIMM), we have nothing to hang our hats on. I recommended
last night on "Mad Money" because it is so obvious that tech wants to go higher, but that was the only tech that I felt good enough to push because the company has some visibility.
Meanwhile, the Homebuilders Index (HGX) looks like it is breaking out, and as for whom the
bells, it is ringing in the ears of the bears with that move back to $22. I am getting comfort from smart guys that the Bank Index (BKX) isn't as important as I make it -- including from my No. 1 guy, Matt Horween, or
, my fave tech person -- because there are too many zombies in it. Matt prefers preferreds, at least as a tell for the financials, and they are roaring.
So, my thesis: China. China is going to be leading us out of this. We see it in the right-out-of-the-chute move there beginning with the new year -- I even paid up for a China ETF yesterday for
-- see that product for the particulars. We see it with rate cuts and with off-the-chart stimulus. The moves in Asia are stunning, particularly when you consider that the gadget market is pretty moribund.
I wish it were confirmed by the Baltic Freight Index, but it isn't, and one of the highest-profile dry bulk tanker companies,
-- a Singapore-based company -- actually filed for a reorganization last night. I wish it were confirmed by more than just a blip up in copper and some talk that steel is holding up after a precipitous decline. I wish it were confirmed by lending in this country, although the St. Louis
released numbers last night that showed lending is pretty strong. Go figure. And I certainly wish it were confirmed by any actual orders to actual companies.
But it hasn't been.
I thought the spike up in oil is entirely because of Gaza; however, I am hearing that China's buying, although that's not even money-in-the-bank info.
Why is it so important? Because I want a thesis for why people are so excited about this market, other than "they are done selling." I want something more than just "stocks are cheap," because my best macro earnings-per-share people are saying that the market's really at 13 times forward earnings: no bargain. And I want leadership besides the fertilizers -- obvious to expect good numbers from those well-based stocks -- to take us somewhere.
So I settle on China. And the prospects that Europe joins with China in more rate cuts, which do matter.
It does feel like a train-leaving-the-station market.
Because of my discipline from long ago
to buy a market that is over +5 on the
oscillator that I use, available for a fee from the S&P Corporation (I endlessly push this and deserve a commission for it, for heaven's sake), I can't buy up here for AAPlus.
However, at least I have a thesis, which is more than a lot of other buyers have. Good to have one. Otherwise we know that it is just euphoria, and euphoria has a funny way of ending.
: Barclays has a good piece out on the distortions that the Ultra funds are giving us in individual stocks. Not as good as
for us at the end of the year, but nicely dovetailed. ... Yes, Madoff's split strategy actually lost money for the last eight years, if he actually did it. No, I don't know how the fund-of-funds guys got away with this one.
At the time of publication, Cramer was long Hewlett-Packard.
Why Is Sears So Hated?
Posted at 11:14 a.m., Jan. 8, 2009
It is time to speak the truth about
. All of the disaster scenarios
did not come true
. All of the stuff on TV and in the press about what was supposed to happen -- a true debacle -- didn't happen.
In fact, the opposite.
Now, I want you to put aside a couple of negatives: Eddie Lampert, a friend, who runs the company, should not have bought stock all the way up. That was a mistake. He admits it.
Put aside the fact that the stores may not be what you want to shop at. I have a nice one, but it is often empty. Forget for a moment that Lampert "missed the window" of selling lots of real estate at higher prices.
But let's look at what is happening here. Sears
in the fourth quarter. In fact, it made pretty much what it made last year. HOW MANY RETAILERS CAN CLAIM THAT?
Second, the debt that everyone was so worried about? Read the release: "We repaid all borrowings under our revolving credit facility as working capital needs declined as expected." That's what Eddie expected. It is
what the bears expected.
Third, sure the comps are down. But so are everyone else's. Yes, sales were boosted by "layaway" plans. But that's like a credit card, for heaven's sake. We accept the notion of credit cards, don't we? Comps may be down, but so is inventory. Impressively, actually.
Fourth, all of this was done
the rationalization of the store base. It took a while -- longer than I would like -- but Lampert is now ready to start closing underperforming stores. What would the comp stores look like without the bad ones? I bet substantially higher. Same with the overlap between Kmart and Sears.
Fifth, wasn't ESL Investments, the Lampert hedge fund, supposed to kill the stock of Sears with big redemptions? Wasn't Lampert on the ropes? Wasn't he supposed to be like
, or, for heaven's sake,
? Was he saving his hedge fund by "suspending redemptions," as the other guys -- the jokers -- did? No: he's fine. Long-term lockups. I would give him money if I were allowed. That's the highest compliment I can pay, as his long-term record is fantastic, and, excuse me, I still care about long-term records of hedge funds.
Finally, the balance sheet. Let's think about this. One-quarter of the market cap here is cash. ONE-QUARTER. The balance sheet is terrific. The buys of common stock this quarter were at $40 and change. There are only 120 million shares outstanding.
There is ample liquidity to continue to buy stock. You could argue that given how bad the consumer is, Lampert might be better off buying stock than putting more money in stores, which isn't working if you look at the other major retailers like
Sears also expects to make between $143 million and $243 million for the full year when we see the numbers reported for the quarter ending Jan. 31.
. If you listen to the endless parade of Sears-knockers, you would think it is losing money like so many of the retailers I follow. Now, Sears has the flexibility to close stores that are truly underperforming and the comp stores will go up vs. last year.
Now, what the heck happens if housing bottoms in 2009? What happens if things actually get
But let's leave that bullish scenario on the economy alone.
You have a company that could literally buy another 10 million shares here before this current buyback is completed. You can easily see this profitable company being worth $4 billion in market cap at some point.
I ask you, does that make sense?
Sure, the "multiple" is too high. Sure, the stores aren't what we want. Sure, the other guys are still taking share.
But do you think that the brands Kenmore, Diehard and Craftsman are worth nothing? Do you think the single biggest delivery service of hard goods in America is worth nothing?
How about this? DO YOU THINK CASH IS WORTH NOTHING?
Now, retail is struggling. I haven't liked retail in 18 months. It just isn't my thing.
But isn't it time to suggest that Sears isn't going out of business? Isn't it time to question, say, Sears vs.
? The latter is missing numbers, has a terrible balance sheet, bought back stock up huge and can't buy any down here. Why is Macy's so much better?
You never hear anyone knock Macy's
Here's the bottom line: The cottage industry of people who come on and say endlessly nasty things about Lampert and Sears should be questioning their thesis -- a nice way of saying they should move on.
You close the bad stores. You eventually get a turn in retail -- does anyone think that won't happen eventually? You get a company that at a certain point is worth more dead -- or to someone else -- than alive.
None of this is solace for those who bought the stock in the hundreds, including Lampert. But the critics never focus on the stock price. They focused on Lampert's strategy. It is time to ask, "Is his strategy creating any less value than the other guy?" How did you do, though, if you bought the much-beloved Target at $60? The universally beloved
at $82? The fantastic
at $38? A place where I do love to shop --
( JCG) -- when it traded at $50?
at $29? JC Penney at $51?
I never heard one bad word about any of those. None.
Am I asking for people to apologize to Lampert?
I am simply saying that if you listen to the critics, you would think that Lampert's stock has been far worse than all of the others. You would think that Sears is on the verge of bankruptcy. You would think that his biggest mistake was
not throwing money at the stores
. All are wrong!
I don't know about those guys. But I rest my case.
At the time of publication, Cramer had no positions in the stocks mentioned.
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
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