Wait! Sometimes the Majority is Right
After another 100 points shed in the market today, Cramer says only one thing would make him feel better: if just one portfolio manager would come out and admit that this is, in fact, not a good time to buy. Instead, there are a whole lot of "experts" out there insisting that they love this market and it's a great time to buy -- there's a lot of money to be made in the volatility, they say.
Cramer doesn't get it. Sure there are bumps up that investors might make a quick buck on, but then there are the inevitable "smackdowns" too.
Cramer points out all the negative mainstream press towards stocks and investing now -- "how people no longer trust the market." These articles, he says, work as reverse psychology for these money managers and other experts. They seem to be saying that if the average person on the street is loath to invest now, that means it's the perfect time to invest.
Cramer feels that's a load of baloney. He thinks the general public is smarter than that -- smarter than these money experts. If there's a general feeling of disgust with the market, it's because it's deserved. With all that's happened (including the Madoff scandal, Cramer mentions), you can't blame people for preferring U.S. bonds over stocks.
This is a "range-bound market," Cramer calls it, and says "you'd have to be a fool to let it get your hopes up." It is perhaps the most perilous time to be trading we have seen in a long while. "Keep that in mind," warns Cramer, before you let the temptation of making a fast buck lure you into trading in volatility.
A lot of financial pros are making predictions that 2009 will be a "huge 'up' year" so now is the time to invest. These pros advise going contrary to the overall public majority, who are sick of the stock market. But, Cramer says, sometimes "the trend is not to be contrary." Sometimes the majority is right. "The people aren't dumb."
Even the appearance of some companies bottoming, like Caterpillar, Nucor or US Steel, cannot be taken as real indicators. They were "accidentally" high, Cramer says, but are now at levels where you may get "pulverized if you start buying them aggressively."
There are plenty of examples of false indicators. Apple, which stayed somewhat strong last week, was "slaughtered" yesterday. There is no sure winner in this market. PG opened today on a high note even after last night's low preannouncement. By afternoon, it took a dive. FedEx? Sure it's off its worst recent lows, but "whenever it recovers a couple of points, it gives up a couple points." How about fertilizers? They "stink" like what they are, according to Cramer. "Four points up, seven points down." In almost every case, "every rally is met with a cascade of selling."
What do these expert, money managers and analysts see? Are stocks just too cheap to pass up for them? Are financials stabilizing? Whatever the reason, Cramer sure doesn't see it.
The short-lived rallies that we do see are led by "zero sum stocks" like Apple, Google and RIM -- when they rally, "everybody else in the category loses." And Exxon? It's become a "totally manipulated S&P 500 name that has nothing to do with oil."
The stocks that we need to see improving are the financials like Bank of America, JP Morgan, Citi and Goldman -- and they're not improving yet. Without improvement of the credit crisis, it doesn't matter if there are momentary rallies in other sectors like tech.
Bottom line: There's nothing so compelling in this market that it must be bought. All good things come to those who wait in this market and all bad things come to those who force it -- so wait.
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