Editor's Note: This article was originally published on Real Money on April 25. To see Jim Cramer's latest commentary as it's published, sign up for a free trial of Real Money.NEW YORK ( Real Money) --Is there such a thing as too much protection? Maybe, at a certain point, you'll want to say, "You know what? I want a ton more risk." I mean, what happens if something actually gets better? What happens if the policymakers in Europe decide that growth is better than austerity, and they'll use the low bond rates to raise money, refinance debt and put people to work? What happens in the U.S. if President Obama decides to harness the energy hand he has been given, and actually says that we are going to bring industry back? What if he decides that, for now, we're going to make the air cleaner and wipe out OPEC, instead of focusing on plug-in cars and solar energy? What happens if Europe comes back and China can get back to its exporting ways? What if, at the same time, China figures out how to actually follow through with its plan of bringing 400 million people to the cities? What happens if China decides it is going to repatriate the bond money it has overseas in order to bail out all of the banks that are overleveraged, and basically start all over again, as the U.S. did in 1990 with the savings-and-loan crisis? What happens if commonsense prevails and the politicians everywhere decide to emphasize a growth agenda until unemployment goes down and jobs are plentiful? The first thing that would happen is that everyone would suddenly be in the so-called "wrong" stocks. The classic growth stocks in the market would be whacked, along with the biotechs that have gotten to such lofty levels; the retailers with the double-digit-plus same-store sales; the concept stocks with no earnings; and the 3%-plus dividend yielders. We would recognize that the Federal Reserve doesn't need to keep interest rates down, so bond competition would step in. The rotation out of Clorox ( CL) and Procter & Gamble ( PG) and into Caterpillar ( CAT) and Terex ( TEX) and Dow Chemical ( DOW) would be mind-numbing. The money flowing out of the utilities stocks and the telecoms would stagger you. You'd be blown away by the money that would go into the prosaic techs -- the stocks like Microsoft ( MSFT) and Intel ( INTC) and Texas Instruments ( TXN) -- as well as the blocking-and-tackling banks such as Citigroup ( C) and Wells Fargo ( WFC).
The haves wouldn't have it. The have-nots would be showered with money. The major averages might not even be able to detect the shift underneath, but that shift would be tectonic in nature. You would hear lots of wrong people saying wrong things about how the market has to go down now that the Fed is "done" -- just as they've said, in the past, that the market will have to go down because one day the Fed would be done. But those are the same knuckleheads who have thought that stocks are "risk-on" and bonds are "risk-off," and totally miss what this business is about, but sound really smart on television. Maybe they will be revealed as having no clothes after all. But, then again, I can't be on air or awake long enough to do the job by myself, and the others who are cowed by this nonsense are going to have to kick in. But the main thing that would happen in this scenario is that you'll wish that you'd bought the shares of pretty much everything that is currently within 10% of its new low, and that you'd sold everything that is now within 5% of its new high. In short, you will have had to do what we've started seeing Wednesday: Sell the winners and buy the losers. There's only one problem with this scenario. We are in the hands of the policymakers and the politicians, and it just seems like a horrible bet to think the politicians and policymakers in Europe, China and the U.S. doing things right. The idea that the same people who have gotten it wrong are suddenly going to get it right seems just ludicrous. Now, it's not a total impossibility. Six years ago our current Fed chairman, Ben Bernanke, and his closest advisers thought nothing was going to go wrong with this economy, and they tightened rates as the other branches of the federal government ignored the chicanery and greed that was ripping through our banking system. That put the housing crisis on a collision course with the rest of the economy, and we are still paying the price. Remember that, when that collision took place, the U.S. economy was at 5.5% unemployment, in large part because of the terrific housing market -- although the stooges I listen to daily rarely credit housing with that important a role.
But Bernanke switched. He recognized that growth, not austerity, was the elixir. As a result, he's been providing our economy with the liquidity we need even as Congress and the president seem to be focused on doing the opposite. Bernanke is allowing companies to refinance and grow their cash, but not while they can put it to work. That's because, as a cash-rich and confidence-poor society, we still don't have a climate conducive to growth. But, other than Bernanke, what is the likelihood of all of those other things really going right? Have you noticed the total ineptitude in China? Have you noticed the corruption that is rampant there? Have you noticed that, despite that country's ability to steal U.S. jobs, pay people slave-like wages and pollute the whole world with noxious gases -- killing about a million of their own people each year -- China still can't grow its economy like it used to be able to do? China's crony capitalism is actually dirtier than its air. Europe? These countries put in austerity because they were afraid their economies would go belly-up due to interest rates that had been heading too high. Now rates are plummeting and the leaders are in a position to let their economy grow -- to aid and nurture it. But the same people who ran it into the ground before are still in charge. What makes you think they will change their stripes? Did they get brain transplants? As for the U.S.? Like it or not, the only real thing we have going for us, besides some awesome management teams and well-educated technologists, is this: For the first time in about 100 years, we are flush with natural resources to lower the cost of our means of production and put many millions to work. But I am more convinced than ever that the president and Congress don't care at all about the energy revolution. The debate has been hijacked by those who think that fighting carbon at all costs is more important than putting people to work, becoming energy-independent, smashing OPEC, dropping the subsidies to corrupt regimes and cleaning the skies with natural gas. They have their biased anti-fossil-fuel professors, and their interest groups who want solar wind and ethanol, and these parties are much more powerful than the commonsense contingent.
So, to sum it all up, I think that the idea of the politicians doing things right is so slim that it would be fanciful to consider anything that makes you want to rotate into the losers for more than a couple of weeks. You can play a shift to the losers from the winners, and you can add some more of the better financials and techs in a hedged bet on the possibility that the people in charge worldwide will actually get it right. That's for certain. But remember: You would be presuming that the leaders of China, Europe and the U.S. will do the right thing for their economies -- not for themselves or for their current predilections. That, ladies and gentlemen, is one gigantic sucker bet. And nothing more. Random musings: See you at Villanova! At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, had no positions in the stocks mentioned.