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We don't like beatings, even in the name of ultimate performance. We don't like to buy stocks and be down 15 points on them from the get-go. We do, however, like to buy stocks and be up 15 points on them a few hours later. Ultimately, though, if it is a push, if we can be down or up 15 points, we don't want to play at all.

That's what happened yesterday. As someone who is responsible short-term and long-term for results, I can't get involved if I know that I will lose so much money so fast. The essence of performance is maximizing risk with reward. If the risks are stepped up and the rewards opaque, I am not a player.

Many individuals with long-term horizons are probably saying to themselves, "So what? Where will it be months or years from now?" That's right. That's how you should look at it.

But remember, this column has a varied constituency of readers. Some are long-termers trying to understand the market. Others are mutual-fund buyers thinking of taking the plunge into individuals stocks. Still others are do-it-yourselfers who are trying to take control of their finances in a daily or weekly fashion. And finally, many of you are professionals, in the trenches with me, who want to know what I am doing and thinking.

Those who have been reading my series "

Manifesto for a New Market" know that most of these risk-reward tenets apply to those who ply the trade professionally or full-time.

They do not apply to individuals who are traditional buy-and-holders. For them the game goes on unchanged, particularly those who use mutual funds to invest their


Knowledge, however, makes even the buy-and-holder more cognizant of when to pounce, and often that is the difference between a good and a great investment.

Why is it so unclear near-term? Again I come back to supply and demand and the quality of the owners in this market. Last week's decline was so swift that it only wiped out the most leveraged of players. (Witness the excellent story by

David Faber

about the

hedge fund that almost lost it all because it was borrowing money and playing new tech.)

That decline only temporarily halted the supply of new merchandise. In fact, a couple of deals that were postponed were right back on track a few days later. It did nothing to tip the balance between supply and demand that has become so awful of late.

Why should we care about these short-term considerations? Because if you look at every big run this market has had over the years, it has come from a real washout -- where the market became extremely inhospitable to the primary and secondary sellers of equity (the companies and the individual investors in underwritings, respectively). Remember, that's the true barometer of the market.

I had hope last week that we were seeing a change after the mini-crash where underwritings would be scratched and the

lockup expiration would become less meaningful.

It didn't happen.

That's one of the reasons why the bears had a darn good time yesterday. Supply was right back in your face. When I was reading my yesterday morning, I was struck by how nothing seemed to have changed at all by the tumultuous events of last week. There was that large deal calendar percolating along as if the greatest bull market of all time had received nothing but a glancing blow.

I think that's way too glib and very worrisome. People are still heavily underwater from almost all of the secondaries of the recent quarter past. We are inundated with merchandise that we have no place to put. The Street, in the vernacular I was taught by my hedge-fund trading wife, is "very long" or "full-up" with all the merchandise recently pumped into it.

That merchandise must be marked down before it can be moved again if more merchandise is going to come into this store.

Hence the action you saw yesterday.

Random musings:

I hope when you get home you tune in to the

Night Watch for coverage of the markets as I do. We had great






stories last night that certainly beat the competition. That night package has become a must.

I also thought both the

Shiller and

Zell interviews made a ton of sense to parse through. I am almost antiacademic in my understanding of the market, though, stemming from

serious, manifold

attempts to use the work of academics to make money --

all of which have failed miserably

. Alas, that is the problem. Had I listened to the academics I would believe that you could not make money in this market because it is a random walk that always regresses to the mean that cannot be gamed because information is perfect and stocks are priced too high anyway relative to ratios that were hammered out by our economic forefathers.

To which I only have a one-word response: WRONG!

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund had no positions in any stocks mentioned. 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