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 importance of housing,
- the crucifixion of Buffett, and
- money on the sidelines.
for information on
, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
I'll Say It Again -- Housing Is the Key
Posted at 10:53 a.m., Jan. 26, 2009
Money for every interest. For car dealers. For parts suppliers. For bridge makers. For municipalities. For every bank, including banks just bought by insurers to stay afloat.
But no money to attack the root cause -- the lack of homebuying. No tax credit for buying a home from inventory, just when the numbers show that when price is cut, people buy. The numbers this morning were incredibly bullish for the market -- but just think what would happen if it were made sustainable by Obama.
Yet there is nothing being mentioned in any of these packages, even though you can see how the market cheers when we get existing-home inventory put away.
Why doesn't Obama follow up on this? Why doesn't he act to hasten the bottom in housing, which would then bring back so many of the reserves on banks' balance sheets to lend? Because there is no lobbyist for
homes. There are lobbyists for new homes galore.
-- they build homes. We hear that they put people to work, but we don't hear the flip side, which is that when they keep building, they build inventory. Their decision not to build any more in the West, where they can't make any money, is driving the inventory declines, as price is driving sales.
But the homebuilders give lots of money. So they might be able to line their pockets like those pork-barrel companies we are beginning to hear about that get snuck in and win the lottery.
But no money for the root cause -- declining home prices.
There's no doubt that mortgage rates have come down, and down big. That's obvious. They could come down lower if the
bought more mortgage paper. There's no doubt that price cuts beget sales.
But it doesn't matter other than in the West, where prices have collapsed, because the price of homes is coming down so fast in the rest of the country that banks don't want to give mortgages in those areas. You can't blame the banks, as they will be foolhardy unless they go 60% loan-to-value for a cushion. Then there won't be enough money to sop up the supply.
However, the Fed can keep lowering mortgage rates with buys -- that's what helped December, and if there were a substantial tax credit for old homes, that would make up the difference in down payments. It would also help trim the endless losses on existing loans, which would then take the pressure off the banks so they could have capital to lend against. It could also preserve the remaining mortgage CDOs that still have life in them (although they collapse by the day -- you just don't hear about them).
It's the answer, and people on the ground know it, but does Obama?
doesn't have all that much mortgage exposure,
have both first-and second-lien exposure, and they need housing to stabilize more than they need TARP money.
As I hear all of the infrastructure and clean energy figures being bandied about, I wonder why nobody yet will address house price depreciation, which is occurring at a rate that we will be bottoming out in the summer. With little new supply, you will simply have people on the sidelines and foreclosed homes selling very low to speculators who sense opportunity, instead of to real buyers who could make a permanent change in the supply.
I will know that the Obama administration is serious about this issue when a tax credit is given for old homes.
I also will know that he is serious about housing when he proposes some sort of forbearance and some sort of certificate program allowing the banks to build capital while selling off bad loans, similar to what was done in the 1989-1990 S&L crisis.
Right now we seem to have learned nothing from that crisis, pronouncing everything too big or too complicated to get better. Everything
get better if we attack housing. Why don't we bring back people who helped in that turn? Why don't we bring back the S&L execs who came up with novel efforts to turn things around? Those people know more than these people, especially the new Treasury team.
Yet, nothing indicates that we are going to take the bold action we need, including the very simple tax credit that would kick things off just right. We can wait for the whole country to come down as it is doing in California. I would not be against that, except does anyone think we can really wait that long? That's a long time in an environment where people are being laid off left and right.
: Glad that
didn't commit suicide. ... I love
. I think we need to wait for the conference call. I feel same way with
At the time of publication, Cramer was long Wells Fargo, JPMorgan and Freeport-McMoRan.
Lay Off Buffett
Posted at 3:07 p.m., Jan. 27, 2009
I'm getting queasy on this Buffett thing. The stock-picking's been horrendous of late, the buys just dead wrong.
But I am beginning to feel guilty. Doug's right, the salad days might be over.
However, I feel like I am lumping in Buffett with Bill Miller, the unfortunate totally momentum-driven manager at
who is now feeling like an emperor with thin raiments.
First, most managers are doing awfully. I am totally cognizant, however, that most managers -- including Miller -- do not have that skein of outperformance, of fabulous performance, that gives Buffett not several quarters of grace, but several
of grace, and those years are not exhausted in my book.
Second, nobody said you had to stick with Buffett. The bulls have been total pigs in this name.
Third, and most important, if Buffett were to come in right now and buy all of his stocks, the
that we know he has been dead wrong on, and if the market were to come back, I feel like I would have doubted this man at the bottom. Same with
( BNI). All of them act as if he is in there averaging down right now!
Maybe Buffett deserves better.
Am I saying is Buffett sainted?
You know what? Given his lifetime of successful investing, I think yes. Is he Willie Mays, unable to hit second from center field because he wants to hang on?
I think that in this market
almost every major money manager
is that late-day Willie Mays, but they were never the real Mays to begin with.
Or, to look at it practically, I would be a buyer of pretty much every one of Buffett's positions right here, right now.
So the bottom line, as much as I understand and respect and even agree that the man's got some clunkers, he's the only man in the universe who is allowed to have them, and unlike how I feel about the Bill Millers, the momentum players, I would be buying with Buffett right here if he were averaging down, and not against him.
At the time of publication, Cramer was long GE, Goldman Sachs and Wells Fargo.
Money on the Sidelines? Don't Count on It
Posted at 3:17 p.m., Jan. 29, 2009
How much is
on the sidelines? All I ever hear is that there is a huge amount of money on the sidelines, waiting to get into every stock.
I question that.
I still see lots of money waiting to get out, and not a lot eager to get in. Worse, I see a lot of money that's been obliterated, gone, and that isn't ever coming back from the sidelines, because it isn't on the sidelines -- it's just gone.
Today's a typical day in the "sidelines" game. Where's all the money that's been waiting to get into
right around their lows, or in
Black & Decker
( BDK), which is experiencing endless selling today (I think that selling is overdone). Where are the buyers of
( FO), a well-balanced company that's been around forever? Or
? Let's cut to the chase -- where are all the buyers of the
, for heaven's sake?
Here's what I think has happened. The stock market has taken on a level of risk that makes it a reckless place for 401(k)s. An article in today's
, talking about how much longer people will have to work
because of stocks
, pretty much says it all.
Individuals are now equating owning stocks with WORKING LONGER and HAVING LESS! They view it as a lying and cheating game where the dealers -- John Thain, Dick Fuld, Jimmy Cayne -- make billions and keep it while they themselves lose thousands buying their merchandise.
It's the asset class that is under assault here. An asset class that's made up of
Bank of America
, of Hartford and Lincoln (think of the bedrock savings and life insurance industry), of
(horribly performing stocks), and of
( EK) and
These are the stocks people own! These are the stocks that have been viewed as betrayals.
These are the stocks that have forced people to take on a second job and commit to working through the 60s to their 70s. These are the assets that have turned people off, perhaps for a generation. They are not dot-coms that the actives owned -- they are bedrocks that
They are now the enemy. We need to recognize that right now, people aren't going to rush in from the sidelines. They are FLEEING TO THE SIDELINES.
So, stop counting on money coming in. Accept that money's flowing out.
And prepare for it accordingly.
: I did expect the bank rally to last another day. It is amazing how vicious these declines are when they switch. ... Lots of people were focused on Cisco as a way to go on the stimulus plan. Now we have to wait until we see the quarter. ... People are truly freaked out about
, which is a real company that has simply been obliterated by Cessna after being obliterated by finance...
At the time of publication, Cramer was long Cisco, Black & Decker and GE.
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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