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In this Snow White and the Seven Dwarves economy, the Happies, Grumpies and Dopies are fighting over the Bashfuls and arguing with the Sneezies.
Huh?
Cramer used the Disney [DIS
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] anology Monday night to explain the market's mixed signals. With Merrill Lynch downgrading the banks, UBS the credit-card companies and then once-bearish Dick Bove upgrading the brokers, it might be hard for investors to figure out who to believe. But first it's important to know who are the players. Hence, the Seven Dwarves references.
Dopies believe fundamentals are sound, Cramer said, while Sleepies, like the Federal Reserve, just woke up to the fact we're in a recession. These are the traders buying up defesive stocks like Colgate-Palmolive [CL
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], Merck [MRK
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], Kellogg [K
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], MedcoHealth Solutions [MHS
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] and CVS Caremark [CVS
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].
Ben Bernanke, the academic, is Doc, of course. "If only Bernanke were as authoritative and wise as the original Doc," Cramer said.
The Grumpies are the bears, the short sellers, the guys screaming about stagflation. The Happies, on the other hand, seem to think everything will work out now that the Fed's on the case. They're touting mortgage refinancing and Washington's stimulus package, saying both should boost the financials, homebuilders and industrials.
The key, Cramer said, is to know that each group has an agenda, so consider the source when one makes a declarative statement about stocks or the economy. "You won't get mixed signals as long as you know who's sending them," he said.
But it's also important to keep in mind that these groups are fighting over some of the other dwarves, so to speak. Grumpies don't think the Bashfuls -- consumers unwilling to spend on retail, restaurants and autos -- will open their wallets, but the Happies do. The Sneezies, or people who've been blown out and aren't working, would damage the Happies' case if too many lost their jobs.
So what's the magic mirror say about where this whole thing's headed?
"My mirror says Snow White," Cramer said, which is much better than any wicked-witch situation. "I'm betting with Happy. I'm saying that Doc and Sleepy have woken up."
Jim's charitable trust owns CVS Caremark.
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