NEW YORK (
) -- 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:
- how to play China's rate tightening;
- why the GM IPO was priced right; and
- how many investors are confusing the macro and the micro.
for information on
, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
Game China's Tightening
Posted at 2:36 p.m. EST, Friday, Nov. 19
One of the best trades I can recall from the old days (when we were worried about the action
tightening), was to buy precisely the stocks of the companies that were meant to be cooled by the Fed. In other words, if the Fed were raising rates in order to stymie price increases by raising the financing costs of inventories, reducing speculation and cooling the economy, then you knew all the mineral, chemical and paper stocks would be hit.
But then what I always liked to do was buy them right after the tightening. Why? Because people either will believe that the tightening won't work -- that's a constant -- or it begins to dawn on people that you don't get a second tightening right behind the first one.
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In other words, picture yourself on Monday, a weekend after the Chinese tightening that drove down the prices of copper and oil. Do you think on Monday people will be thinking, "I bet they tighten again this week?" Or do you think they will say, "Game on." Do you think that
numbers will be cut?
Not a chance.
And that is why the stocks have been slowly recovering all day.
I think today's action shows me that, by Monday, China's tightening will be thought of as a failure or will not be thought of at all. Either case: game on, materials stocks.
At the time of publication, Cramer was long AA and VALE.
The GM Deal Was Just Right
Posted at 9:37 a.m. EST, Friday, Nov. 19
Even when they get it right, they get criticized. This morning's reviews of the
deal all say it was tepid or that it didn't do nearly as well as people thought, or that the Treasury reached in that last price move up.
This is nuts.
If they had priced this deal at $27 and it had opened up at $35, can you imagine the heat that would have been on about the "big giveaway" to the "rich investors" by the government? Can you imagine how the press would have said that the money left on the table was a disgrace?
Or let's say it opened at $33 and then broke price. How about that outcry? Government wins, and you the taxpayer lose. You bought from the government and you got hosed. That's some story. Greedy Geithner. Got more than they deserve. You got hurt.
Instead, they priced it just right. You made 2 points if you sold it at the opening, which is 2 points more than you had before, and it wasn't a disgrace or a rip-off for anyone. The deal was gigantic. You had to figure that we would get flippers no matter what. In fact I think that it was very well placed.
I didn't like
the deal was done. I think that there were many people who wanted a piece of GM who just didn't get it, and there could have been more demand if the Treasury had just been creative.
But given the traditional way in which it was done, the deal worked for everyone, something that's perfect if you are the seller and a great way to start owning or terrific way to scalp for the buyers.
The press is wrong: It was a Goldilocks deal.
At the time of publication, Cramer had no positions in stocks mentioned.
move is so big because of rampant rumors that the first month of the quarter was soft. Of course the first month of the q was amazingly strong.
The Fallacy of the Macro Trade
Posted at 6:11 a.m. EST, Thursday, Nov. 18
If the micro is good and the macro is bad, people short with abandon. But how about if the micro is good and the macro drifts to the background? What happens if we are happy if oil is rallying to $82 from $80 even as we were depressed that it just went from $85 to $82 with a pit stop at $80?
CurrencyShares Euro Trust
? Now it is great that it is at 136 because it is not at 135? But when it was headed to 136 from 140 we hated everything.
This is why I keep telling people that in this era pick your best stocks and turn off the darned commodity futures
to be able to buy the stocks of companies you like at prices that you shouldn't logically be able to get.
Every grand sweeping pronouncement of this market's demise never seems to come from the companies or the stocks themselves. It is all about Ben Bernanke or oil or gold or the Baltic Freight.
However, this week shows the total fallacy of this kind of thinking. A combination of Irish woes, a decline in oil and copper, Chinese price controls, and bad headlines and letters to the editor about
Chairman Bernanke took down the
fund and its retail components to levels that were too attractive, especially given that these companies are unique beneficiaries of Chinese price controls, lower oil and QE2. In other words, every bit of the negative macro that people trade off of endlessly is positive for the RTH. Doesn't matter. Retail's a part of the
and traders somehow, bizarrely, equate consumer spending only with the macro when that's been a failed strategy for several years now.
So what happens? All of the retailers that are supposed to be down in the dumps and doing terribly, retailers like
, were actually performing spectacularly well. Most of them were much more like
. The big negative bets were wrong.
You see, when you are shorting
because of Irish bailout worries or Chinese sourcing costs or no trust in Bernanke you aren't shorting some commodity, you are shorting a very well-run company that can use its muscle to get high quality goods for less than the little guys and take market share while keeping margins higher.
They have nothing to do with each other.
So, now you go back to Tuesday. You look at what happened and don't you stop and think to yourself, why did I sell? Or what was wrong that day? Or, perhaps it was just expiration?
The grand pronouncements of the death of the market may ultimately be right. Who knows. But looking at my screen this morning, knowing that Ireland will be fixed, that the commodities are on the rebound and free money is coming in
, makes me think, why didn't I just listen to the companies? Why didn't I just get on those conference calls and find out what is really happening rather than read the synopsis that was misleading or the news story that was just wrong?
I have no answers for you. I am a bottoms-up guy. I trade and invest in stocks, not futures or commodities or exchange-traded funds. I let the latter guys give me the prices I need to make money. I sure as heck can't join them because I would no doubt be at best market neutral today, and at worst, short, given that in the macro world nothing's really changed from the negative litany: Bernanke's off the deep end, no tax bill, commodities squeezed down with little drabs up, EU still on thin ice.
And I would have missed some amazing run-up in two days that would have made my whole quarter.
comes out of nowhere and starts the coal consolidation that I think will lead to just a few players.
Never forget that the GM deal lives, in part, because of GM's bet on electric cars, which are, alas, coal-fueled!
At the time of publication, Cramer had no positions in the securities mentioned
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 "
," "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.