Jim Cramer's Best Blogs
NEW YORK (
) -- Jim Cramer fills his blog on
RealMoney
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:
- why this week was so important for the banks;
- why there's a lack of stock bargains out there; and
- the money-making opportunity created by the Fed.
for information on
RealMoney
, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
The Takeaway From One Incredible Week
Posted at 11:45 a.m. EDT, Friday, Nov. 5
Can the banks be fooling us again? Or is this the breakout that can make these companies leaders? Much has happened this week, so let's detail it:
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The yield curve has been changed by the Fed, and that makes the banks more willing to lend, because they make more money on the net interest margin, which has been awful. That's a typical way to value banks, and the bank buyers are heartened. With a better yield curve, the banks will be willing to lend more and lose more. It changes the risk/reward.
Although widely expected, the Federal Reserve's decision to be vocal about the banks' ability to return capital in the form of dividends makes some investors salivate, because these banks have been defenseless wards of the state. That could be over. This news is something that people have waited for for so long, and most had given up on it until next year.
Citigroup is breaking out, and that allows for the government to sell stock aggressively. Lots of people were opining that the government couldn't finish selling stock this year. They can finish selling today if they want.
The technicians are powerful in this market: the banking index (BKX) is breaking our here, and that's propelling the big BKX stocks even further, stocks like Wells Fargo and JPMorgan in particular, but also the smaller banks. These stocks are heavily influenced by the ProShares UltraShort Financial ETF , which is plummeting quickly, and that's the big 2x short bet against the group.
In a market where nothing is cheap anymore, people can embrace the banks simply because many of them are at book are near it. If asset values are going to be boosted by the Fed, the banks have lent against assets that had been losing value. That could be over.
The shorts over-reached. All over the Street, the shorts have been blasting out the put liabilities of these banks as if they are really going to have to raise equity to pay for them. The shorts have planted stories all over the media, from the TV to the blogs. The stories are outrageously one-sided, because they presume the maximum in losses and they all presume instant payouts. Of course, the opposite is occurring: It's all going to be drawn out in litigation. Brian Moynihan is a lawyer, and the CEO of Bank of America laid it out pretty clearly this week that his bank isn't paying. He was forceful -- for once -- and the shorts seem to have heard him.
The previous month saw more towel-throwing in the group than I have seen in a long time. The give-ups were so big, and they came from hedge funds and mutual funds. They finished ahead of QE2.
Fed data just coming out has shown a nice pickup in commercial and industrial loans. We have lacked loan growth throughout this period.
Consumer loans haves started to flatline after having fallen off a cliff in the rest of the year. More loan growth.
Financial regulation is done, and the proponents of the most draconian parts of it are retiring or have been retired. Headline risk has been lessened by this election, for certain.
These are all new. One week. One simple four-day period with so much mystery cleared up and so much sense of opportunity. It is no wonder the banks are picking up the baton of market leadership. They don't need to raise capital. They can pay capital back. Housing has bottomed according to all surveys except the one most quoted by the bearish media: Zillow. It is that moment. And the bulls and bears are seizing it.
At the time of publication, Cramer was long BAC and JPM.
After the Run, Not Many Bargains Left
Posted at 10:09 a.m. EDT, Friday, Nov. 5
Everyone who is a bull knows that we have a very high-quality problem. Most of the stocks we like have run too much to buy. The ones that haven't have some serious issues or truly missed the quarter.
You want to go buy a weak apparel maker that's down on its luck, a
Jones Group
(JNY)
? It catches a downgrade today. You want to buy the
Cirrus Logic
(CRUS) - Get Report
after that miserable quarter? The down-on-their-lucks are staying down.
Clorox
(CLX) - Get Report
?
Kimberly-Clark
(KMB) - Get Report
? The companies themselves are your worst enemies with their downbeat talk. Steels? Maybe -- we just got some price increases, but the raw costs don't intrigue, and the end-markets are weak.
Alternatively, you have whole cohorts that are begging you to buy them: natural gas and banking. The banks seem at last ready to run, with
Wells Fargo
(WFC) - Get Report
really making a sudden and strong move. But there are always articles and short-sellers lurking, and you can't fear picking up the paper every week. Nat gas is still the whipping boy as long as the fuel itself is under $4.
So we have to wait. We can't buy stocks on the fly. Somehow, after this incredible week, we have to believe we get a chance. Maybe with some stocks that aren't damaged. Or with damages cured, as some think that
Bank of America
(BAC) - Get Report
,
JPMorgan
(JPM) - Get Report
and Wells Fargo might at last be ready because the change in the House and the restart of foreclosures that have benefited them, particularly in California, where the robust nature of the foreclosures -- no judges needed -- helps immensely.
Random musings:
Has anyone been watching
Motricity
(MOTR)
? What a remarkable run for this cell-phone player. ... Congratz again are due to
, who has shot the lights out with this cell-phone and security calls.
At the time of publication, Cramer was long BAC and JPM.
Philosophy
Posted at 6:55 a.m. EDT, Thursday, Nov. 4
When does price trump time? When do gains become so compelling that they are wrong not to have been sought after? I think many of us are struggling right now, at this very moment, with the denigration of performance gained via the long side courtesy the Fed's actions. There's too much sniffing at them, and too much snickering at those who want to grab them, as if, somehow, they are "ill-gotten" because they eventually have to be taken away. I see and hear this more than any other topic right now: the notion of gains so ephemeral that they are reckless to pursue.
The logic is something like this. I posit that with the Fed easing and keeping rates low, there will be more money coming into the stock market and that money will take the stocks higher. Aggressive Fed easing will also trigger buying in commodities and, given the cause-and-effect nature of the current buyers, that higher commodity price will turn into higher prices in the commodity that is the S&P. The weaker dollar will also allow our companies to piggyback off growth in the rest of the world (one must ask, at a certain point, that given we are the world's military defender, is it so bad that some of their money that should go to their own defense goes to us? ).
All of that adds up to more money chasing stocks which might be cheap on an earnings basis because of foreign sales and will be cheap as long-dated assets versus fixed income long-dated assets.
For me, that's a recipe for making money. For others, though, actually for almost everyone I talk to, it is a recipe for the next bubble.
Here's the problem with the logic of everyone else. We are not economists. We are not pontificators. We are people trying to make money. All money made is good money unless it is stolen from someone. We are not stealing from anyone. And if anyone comes back with "we are stealing from our kids' future," then you really don't get what we do.
The logic I am using is Bernanke's logic. As I said the other day, he recognizes that the wealth effect can have some impact. He recognizes that confidence needs to be ignited. He sees that the other American asset, the house, is shaky. He knows that employment gains are nil.
So he devises a plan that creates some wealth.
My question to the bears here is why not participate in his plan?
Why are we always judging instead of taking action?
And what makes us think that his plan, short-term can't work? In fact, I think that many people actually think it can work short term but the period is too short to matter so why play?Which brings me full circle: If you can buy stocks that rally because of this Bernanke plan you can also sell stocks that have rallied after they have rallied. Seems a little silly, but that syllogism seems to have eluded many. In the time many have taken to argue that the plan has to fail EVENTUALLY, they could have made money relatively INSTANTLY.
I want to go back in time to the mid-to-late 1980s. That was a heady time in Japan, one where there was nightly levitation in prices. It was farcical. You would go home long 100,000 shares of
Tokyo Electron
at $50 and sell it the next day at $52. You would then do the same thing the next day with
Nippon Suisan
. Then the next day with
Sumitomo Metals and Mining
. It was intoxicating. I made fortunes for my partners doing these stupid trades.
When the Nikkei got to 37,000 I decided I had enough. I walked away. It went up about another 2000 points. But I made my money in that market, I had placed my bet and won a great deal. I didn't sit there and pontificate that it was all a bubble. In fact, I tried to justify every purchase I made. In the end though, I had had enough. I made a decision about "enough is enough" like you would make a decision to stop drinking at a party. Yes, it was that simple.
In 1999 I did much of the same. I played in every one of the
Qualcomms
(QCOM) - Get Report
and the
Redbacks
and the
Copper Mountains
and the
Lucents
and the
Nortels
. Everyone. I found reasons to stay in at Nasdaq 2000 and 3000. When the Nasdaq got to 4000 I still found reasons to justify buying stocks, talking about how some stocks could be huge winners. The operative term there is stocks, though, not companies.
In March of 2000 I decided I had had enough. The Nasdaq had stolen all of the gains I expected over multiple years and the insiders were selling like mad and the fundamentals in tech had taken a sharp turn down. I sold almost everything and shorted a lot. I stopped before I had drunk too much and then went stone cold sober.
I never said "I am playing the bubble." I simply stopped wanting to make money in that way because enough was enough.
Enough was enough is not a scientific thing. It is not based on multiples on earnings or sales. It is not based on valuation. It is based on the notion that "well that was a good run, and I want to ring the register."
It is based on common sense.
And that, the flexibility to recognize that there's money to be made, a la Japan in the 80s and the Nasdaq in 1999 until the end of the first quarter of 2000, is, to me what makes not a lucky investor, but a great investor. Making the money when you can make the money. Not pontificating on it. Not judging it. Not deriding it. Not betting against it. Not intellectualizing it. Not denigrating it. Just taking it.
That's what I think is happening and can continue to happen right now.
There will come a time when I, personally, will have had enough. A time when I think "that was terrific, but I am drinking too much." Just common sense. And then I won't play. It will most likely keep going up without me. But I will have had my fill.
That simple reasoning is regarded as, somehow, reckless and without foundation. The notion of profiting off a Bernanke plan is considered tawdry. The notion of going along for the ride is as bad as BELIEVING IN THE BUBBLE. The notion of justifying buying Qualcomm or
Whole Foods
(WFMI)
or
Motricity
(MOTR)
as tickets to the Bernanke show that pay off, win place show is regarded as foolhardy gambling or delusional.
To me, I say, get it when you can. There are so many moments when investing is nothing but a house of pain that you should recognize when there is some pleasure to be had and grab some of it even it is seems illicit or, yes, stupid. Stupid is and stupid does. So, I say play along. Find stuff you think is going to do well and bet that the rewards for doing well will be high. Find your
Medco Health
(MHS)
. Find your Qualcomm. Find your
Dine Equity
(DIN) - Get Report
. Find your
Novagold
(NG) - Get Report
.
Or, at least, look for it.
But thumbsucking and opining?
Save it for when you retire and own a boatload of munis.
Save it for when you want to get tenure.
Save it for when you want to get a Nobel.
Or, best of all, SAVE IT FOR AFTER YOU HAVE PROFITED FROM IT! Maybe that's the sweetest cogitation you can have. Remuneration first; rumination second. And never in reverse order because you will never get remunerated.
At the time of publication, Cramer was long Novagold.
Jim Cramer, founder and chairman of TheStreet.com, writes daily market commentary for TheStreet.com's RealMoney and runs the charitable trust portfolio,
. He also participates in video segments on TheStreet.com TV and serves as host of CNBC's "Mad Money" television program.
Mr. Cramer graduated magna cum laude from Harvard College, where he was president of The Harvard Crimson. He worked as a journalist at the Tallahassee Democrat and the Los Angeles Herald Examiner, covering everything from sports to homicide before moving to New York to help start American Lawyer magazine. After a three-year stint, Mr. Cramer entered Harvard Law School and received his J.D. in 1984. Instead of practicing law, however, he joined Goldman Sachs, where he worked in sales and trading. In 1987, he left Goldman to start his own hedge fund. While he worked at his fund, Mr. Cramer helped start Smart Money for Dow Jones and then, in 1996, he founded TheStreet.com, of which he is chairman and where he has served as a columnist and contributor since. In 2000, Mr. Cramer retired from active money management to embrace media full time, including radio and television.
Mr. Cramer is the author of "
Confessions of a Street Addict
," "You Got Screwed," "Jim Cramer's Real Money," "Jim Cramer's Mad Money," "Jim Cramer's Stay Mad for Life" and, most recently, "Jim Cramer's Getting Back to Even." He has written for Time magazine and New York magazine and has been featured on CBS' 60 Minutes, NBC's Nightly News with Brian Williams, Meet the Press, Today, The Tonight Show, Late Night and MSNBC's Morning Joe.
