"Why the long face?" my wife asks me last night when she catches me staring at my screens after hours in one of her now-rare trips to the city.
"I hate selling stocks when the bonds are this strong. I just hate doing that," I reply.
"Oh -- I get it. The market goes up 600 straight points, and you aren't supposed to take something off the table," says the woman I know as the Trading Goddess. "That's a real smart way to trade. I see I've taught you well."
"Ah, come on, Karen. You know that I am a second-guesser from way back. Heck, I'm the king of the second-guessers."
She pauses, hands on hips. "That's what I hated about trading with you. The constant second-guessing."
And then she says what I know is right:
"When the day comes that taking profits is a sin, you better get out of this game once and for all."
Yep, it is all so ingrained in our thinking that selling, any selling, is a criminal event that, even for a professional trader like me, the remorse is now as deep as the Marianas Trench. Even after the market went down! For my wife, who stopped trading full-time in '94, after 12 years of professional batting, the whole notion of bulls, bears and pigs -- and not being slaughtered like the latter -- is what keeps you in the game.
What an amazing world it is that you can be reviled as a bum for taking something off the table, but that you can be a hero for staying and playing, even after you think the tape -- or the shoe, or the horse, or the team -- is overextended.
There is no double irony intended there. There is an element of probability that is positively sports-like about the way stocks trade, and if you don't believe me, try reading the collected works of
. His biggest subtext, other than productivity, is speculation. He defines speculation as someone willing to pay too much too soon for an asset class, sometimes with borrowed money, with the hopes that someone else will want to do the same and take you out at an even more unrealistic level. You don't want to be a rank speculator under that definition.
I am far afield at this point vs. my modest profit-taking from yesterday. I did that selling, after all, so that if the market came down, I could redeploy in the areas I think make the most sense -- the financial, consumer, telco-tech and Net stocks. Nothing's changed; I still like the market very much.
It's just that I want to be out of the stocks that need a strong economy because I just don't see one staying strong once we have spent all of those tax refunds. Already I see weakness in everything from aluminum to construction (
being the latest victims), and other than a potential nascent rally -- is that enough of a caveat? -- in Japan, I think the world is decelerating. That will make it very tough for some companies to meet earnings, particularly those involved in PC technology.
In that environment, which is different from the white-hot one a few months ago, shifts in stocks have to be made. But the way I make shifts during a period of downshift is first I sell stocks that thrive in a strong economy and move into bonds and stocks that do well in a weaker economy, or one where rates may be headed lower. I am doing that right now, but the first thing that has to happen is I have to do that selling, and there is no better time to sell than when the tape is as strong as it has been.
"Then stop second-guessing already," my wife says. "Discipline says do it, and discipline is what got you here."
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 a letter to TheStreet.com.