Picadors, where are you when we need you? The Street has gotten so bullish that you have to wonder whether it's worth it to take something off the table.
What a rough call. On the one hand there is the dramatic run-up in prices to the point that if bonds don't come down in yield, we will be remembered for paying outrageous price-to-earnings multiples. On the other hand, there is a simple fact: People have to keep up with the averages, which means the public will switch from money markets to equities and the managers will put every penny to work lest they underperform because they have too much cash.
Discipline says you have to take something off the table. The animal spirits of the market say, Let it run, let it go to levels it has never been to and hold out for the capitulation of every last bear.
As usual, I am anti-ideology. I can justify higher prices for the financials, because they have low P/E multiples relative to the rest of the market. I can justify a couple of Net stocks because anything that survived that downturn might be more bulletproof than I thought. I can even justify some of my telco-tech because these stocks are way off their highs.
So I am selling a little bit of everything because in the end, my conviction at 9700 can't be as great as I would like it to be.
If you wanted to pin me down, you could put me squarely in the Byron Wien camp at
. That's the one that says we could go to 10,000 but when we get there I want to have a lot less on than I do now. I want to have a small amount of inventory when I think the buyers run out, and I would guess they run out around Dow 10,000.
I want to check my bullishness for the same reason I should have checked my bearishness in October of last year when I lost my cool. Just as everything was not wrong then, not everything is right now. We don't have the earnings that we would like from tech, from the cyclicals or from the consumer stocks. We have huge multiples for the drug and health-care stocks. And we have a lot of nervous money that just got tossed in solely to perform as opposed to belief in the markets at these levels.
So, I am done buying up here. Time to let stuff go. That way I can have some capital when everyone decides that things aren't so hot again. Which, judging by the schizophrenia, could be any day.
Don't get me wrong. This is not a sell call. As a trader, I like to take something off the table after these straight up moves, because I find that there can be setbacks and I want to have capital to buy them.
That's all. We have had a great run. I don't want to be too greedy. Period. No more than that.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. 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 by sending an email to firstname.lastname@example.org.