Jim Cramer and Doug Kass debate the direction of the market.
Path of Least Resistance? Down
8/4/2008 2:41 PM EDT This blog post originally appeared on RealMoney on Aug. 4. We are in free-fire zone for anything cyclical, anything with any economic exposure. That's because market participants are trying to beat a recession and have ZERO exposure to the economy, and in the hedge fund case be aggressively short the economy through anything with any points to it. I say "points to it" because it is too juicy not to be short, say, U.S. Steel ( X) or any rail. I couldn't believe the upticks that Barron's gave you with its recommendation of perhaps the most extended group out there now that oil and gas has collapsed. At times like this, you can take on any cyclical company that could suffer from the endless "demand destruction" cliché that everyone thinks is happening. I am not disagreeing with any of this. This is the first recession we have had where hedge funds are dominant players in the market, and they have to show they know how to play the downside -- it is so easy to knock these companies over it is amazing. But it is open-field running, because the buybacks aren't working, there is very little dividend protection among the commodity plays (not that the dividend of, say, an AT&T ( T) matters, because the quarter was perceived to be of such low quality) and there is simply no reason to own anything right now. There are no takeovers, as people think there is no financing to do anything. There are no stock-for-stock deals, because the companies don't believe their stocks should be given away down here.
The Anti-Cramer, Part Deux: Game On!
8/5/2008 10:08 AM EDT This blog post originally appeared on RealMoney Silver on Aug. 5. Right now, I find myself again at the polar opposite of bearish Jim "El Capitan" Cramer. Indeed, I expect that, sometime over the next several weeks, we could have an up 3% daily move in the indices. The short table is crowded by a lot of amateurs now, from my perch. And ignoring the schmeissing in the price of oil (something I always have thought of as crucial to the bullish case) could be harmful to your financial health. At the time of publication, Kass had no positions in the stocks mentioned.
We're Not So Different, Doug and I ...
8/5/2008 12:39 PM EDT This blog post originally appeared on RealMoney on Aug. 5. Nothing like some fisticuffs on the site, but I do want to clarify my position vis-à-vis my friend and colleague Doug Kass, because I don't believe we are all that far off from each other -- nor do I want to be, given that he has the hottest hand I have seen in years and has become so much read that people should be subscribing just for his insight. I believe the collapse in the commodities is incredibly bullish for the rest of the economy. I also believe the collapse is not done, and that the commodity stocks are reflecting most of that collapse and can be bought on a wide scale.