Keeping the Faith in Cramer's Law

Cramer comes up with an anti-Murphy's law for the markets: What can go right, usually does.
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Being bearish requires faith, a faith that things will go wrong. I just don't have that faith.

Last night I was debating this very concept with a reader,

Rudolf

, about how I found it very hard to believe that things were so bad that I couldn't find something I wanted to buy that would go up. Rudolf -- and I mention him because it would be too much hubris (even for me!) -- to attribute the following to myself, suggested that I codify my philosophy into

Cramer's law

.

He distills my viewpoint about the stock market to one simple, Moore-like statute: "What can go right, usually does." The beauty of this astounded me. It fits. Yesterday, in order for the stock market to go up, we needed to have a signal that the

Fed

would not ride herd against us. We needed oil to come down, and we needed the marketplace to believe that the anti-

Intel

(INTC) - Get Report

article in

Barron's

had no traction.

Those things had to go right. They did. You should have bet that way. Ever since 1982, when I first began trading like a banshee (an aside, but in the movie

Darby O'Gill and the Little People

, a terrific

Disney

rent for those of you with 8-year-olds, the banshee is the grim reaper and not much of a trader), this simple concept has worked well for me. A corollary naturally stems from it, which says that the way to take advantage of this law is to be long.

Skeptics must choke on the concept that what must go right usually does. It is antithetical to what

Murphy

taught us. But Murphy hasn't made you much money when it comes to

Microsoft

(MSFT) - Get Report

or Intel. Murphy hasn't made you a dime with

Sun Microsystems

(SUNW) - Get Report

or

Cisco

(CSCO) - Get Report

. (He has made you a ton of money in

Mattel

(MAT) - Get Report

!)

Where I've made the most money not knowing that this was indeed my philosophy, is in gaming the market itself. Anytime I have gotten too skeptical or too cynical about the "insurmountable" obstacles the market faces, I have been wrong. Even in 1987! While in cash for the crash, I did not redeploy the cash soon enough because I didn't believe things could go right enough again to restore the market's upward bias. I believed that there was not enough faith in the system to produce higher prices again any time soon. As the market began climbing in 1988, not long after the October '87 crash, I saw how strong and underrated the system really is. What had to go right, went right.

Now, here we are in another October, and many, including myself, are frightened that a big downturn could occur. But what can go right usually does. If we have a big selloff -- and I am beginning to believe that if we don't have it by the week after expiration, we aren't going to have one -- there will be people calling for the Big Kahuna downturn because things are so out of control.

Remember, that's wrong. That's too pessimistic. That requires too much faith in Murphy and not enough in the market itself. It simply won't help you make money, which, in the end, is what this game is all about.

Random musings

: At last, tonight, a night

Mets

game I will be able to see. I figure it will be in the 6th inning when I get up in the morning!

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Intel, Microsoft, Sun Microsystems and Cisco. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.