NEW YORK (Real Money) -- "It seems that just about everyone has become a risk expert and sees risk behind every rock. They don't want to miss it -- like they did in 2008. They want to be able to say 'I told you so.' And therefore they identify everything as risky."
That gem, one of many you can glean from JPMorgan Chase (JPM) CEO Jamie Dimon's annual letter, is meant to describe banking in America and in the world today.
However, it might as well have been meant for those who invest in the stock and bond markets these days.
Dimon's letter is chiefly about the post-recession landscape and how it has changed us or, more accurately, scarred us. Although he simply can't bring himself to say it, the massive and greedy screw-ups by businesses, particularly on the part of bankers, have led to a backlash against capital.
That, plus the partisan warfare in Washington, have produced a world in which everyone is scared of their own shadow. And bizarrely, given this litigious and harsh new world, where regulation does lurk everywhere and compliance costs are through the roof, people now believe it might not be worth investing in anything that's remotely risky. So confidence is low and fear of failing is both high and justified, outside of Silicon Valley.
Dimon backs up these points with dozens of sharp details. He cites everything from the amount of cash everyone holds and a seeming aversion to debt, the principal merchandise that a bank offers, to tax and immigration policies that make it daunting to do business in this country.
But I keep coming back to the notion of risk that paralyzes all but Silicon Valley and, in particular, the fear of risk among those who invest in U.S. capital markets. Put simply, managers of all sorts would rather cry wolf with the idea that there is a wolf -- they would rather say the sky is falling, betting on a falling sky -- than bet positively on the future.
That, more than anything else, is why stocks can go higher still. We just need to cling to cash, to shun debt and to try to look as if we've gotten it right for the next financial apocalypse, even as we just had one and we have ample controls to be sure it doesn't happen again. As long as we do all that, this market will continue to have too much pessimism to roll over.
It's ironic, but the pessimism seems plausible. Dimon does pay homage to a positive future, including an odd reference to Martin Luther King's beautiful line, "The arc of moral universe is long but it bends toward justice." But, despite that, he paints a picture that doesn't seem positive at all. Despite ample evidence, including myriad data points of catalysts that are potentially positive but extremely ethereal, if not gossamer, you want to take issue with his optimism. You want to disagree with him when he says, simply, "The world has been getting better, not worse."
Or, to put it simply, the pessimism seems placed, and not misplaced. The opportunities in spotting those who don't feel this way, then, only become even more bountiful.
Take Silicon Valley and the social, mobile revolution. Managers, as we know, periodically see such intense risk in these investments that they shun them on a dime. Opportunity. Or take oil and gas. Managers see such intense risk from government intervention that they turn against this fount of progress and profit in an instant. And it's all because they want to be able to say, "I told you so" about Facebook's (FB) deal to buy WhatsApp, or the Permian Basin, or virtual reality or the Eagle Ford shale. They don't want to believe, because if they believe, they will get caught with their pants down.
That's why this letter is a must-read. When taken in its entirety, it is a document that aids the bull, but is filled with enough instances and data to provoke fear of even wanting to bet against risky investments such as stock. In short, it is the perfect letter for the moment. It should force you to take more risk, as you actually don't want to be the one who fears what's lurking because, alas, it already lurked -- and it is now, mercifully, in the rear view mirror of reality.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long JPM and FB.
Editor's Note: This article was originally published at 7:14 a.m. EDT on Real Money on April 10.