Does it really matter why stocks are up?

When it comes to the market, it's not really important whether something is true, only that people believe it is. And if you can make a profit off that, all the better.

By Jim Cramer Jun 14, 2013 9:27AM

thestreet logoStock market Up (© Corbis)All rallies are phony. All selloffs are real. Every plus-1% day is manipulated. Every down-1% day shows the market's true colors.


That's the conventional wisdom, especially these days where the path is set in cement: stocks must go down and rates go up because all that mattered the whole way up were the actions of the biggest manipulator of all, the Federal Reserve.


Take Thursday, for instance. I hate up openings -- those big up openings on nothing but good foreign news. But down openings where everyone sees the gloom and the gloom only, those are made for reversals and that's just what we got.


Once the market reversed, Ben Bernanke picked that moment to have a conversation with his go-to guy, John Hilsenrath, in what was a master stroke moment where the bears were busy betting against the big, phony rally because the truth about rates, and therefore stocks, is now out of the bag.


So, Bernanke manipulated the market, right?


When I suggested that Bernanke picked a terrific time to spread the gospel that you can't presume the tapering is soon upon us, initially people were suspect. Did I believe the Fed did anything substantive? Was I that naïve?


Darn it all, I am anything, if not naïve. What I was saying was Bernanke has learned to play the game. He knew his words were going to have an impact because he wasn't trying to stem a decline. He was saying basically, "look, intelligentsia, I know your game, you think I am done, think again."


Those who believe that he is too unsophisticated or doesn't know the impact of his words; he knows all too well the impact and he needed to undo his testimony of a few weeks ago.

So, the rally gained steam and people realized that rates can go both ways and Bernanke's not happy with the velocity of the move.


Now, on to the charge of manipulation. My take's pretty clear. The truth is an abstraction. When it comes to the market it really doesn't matter if something is true, what matters is that people believe it is true. Does Bernanke really have the power to contain rates? Maybe, maybe not. But with rates down Thursday and Bernanke squawking, how can you believe that he is impotent. More important, how do you know that the trader next to you doesn't believe he's for real and says we gotta cover and we gotta cover now?


Which all comes back to the first point about whether one market is true and the other market is phony. I have lived with this ridiculous dogma for 14,000 phony Dow ($INDU) points. I have lived with this fanciful judgment during the fabulous runs for so many stocks. All I can say is that nothing's phony if a bid can be drilled for a stock that moved up big on the phoniness. Nothing. If you are able to sell a big piece of merchandise at a good price, what's phony about it?


Of course, my view is viewed as having no rigor vs. the views of those who know it is all a big, rigged market. But the joke's on them. You see, I don't care who rigs it. I don't care what's real. What's wrong? What's different? What's fresh? What's stale? What's known? What's not known?


All I care about is what's working. That's because I am not a bull or a bear. I am a practical person who accepts manipulation on both sides, who understands that people lie and cheat and do whatever's necessary to make money. I have said that before and gotten in big trouble for it by speaking about how I have seen it done, not how I do it or did. I just want it to be known that it happens and I want people to be able to see it and game it for what it is worth, a wave to ride to profits, and nothing more.


But also, nothing less. 

 

Cramer

 


Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust.


 


More from TheStreet.com

79Comments
Jun 14, 2013 10:09AM
avatar
Our economic success has; in my opinion, been based on Americans ability to trust.  Try constructing a 25 story building.  We have bankers, architects, construction, zoning, and so many others.  America was and is still able to go anywhere in the world and build stuff for other people.  Trusting the participants is a very integral part of the process.  We arguably are losing trust in our political and economic participants.  Being 20 trillion in debt doesn't build a lot of trust Jim. Standing back and looking at each tree gives you a better indication of the health of the forest.  Do you really think the behind the scenes political movements that fail to consider the long run success of America are a non issue?  Ask yourself how would you like to be in an airplane with an hour to the airport and twenty minutes worth of gas?  Oh yea we are flying, but for how long?
Jun 14, 2013 10:59AM
avatar
The above by Cramer is a great exposure to and lesson in the way a money grubber thinks and acts. He actually admits that he doesn't \care about the details, but just that he can make a profit on it. Wow! That is no more than a glossy way of saying "the right or wrong of it doesn't matter to me, only that it makes me money". It is so sad to see that destructive 3rd world attitude has now become entrenched in modern-day American finance, and especially so in Wall Street types like Cramer.

That cavalier disregard for fairness, ethics and, yes, even morality, is prevalent on Wall Street today, and is at the root of the public's abject distrust of it and of the gov't entrusted to oversee it.

Jun 14, 2013 10:40AM
avatar
People lie and cheat on both sides, Jimmy, stop looking in the Mirror. How can you get in trouble when none of the Big Banks were held accountable. Big Banks and the FEDS are teaching everyone it's fine and dandy to be crooks. You certainly haven't helped things.
Jun 14, 2013 10:42AM
avatar
We are now a more divided corrupt and segmented society /country than ever before Many new  Immigrant s come to make money get what they can and leave  Many.citizens have  truly lost faith in Government and the System It is all being sacrificed for short term gain.We want to care but  greed and corruption are oft times rewarded and people are often more concerned with only their own financial well being and disgusted with Govt/Laws and the state of the country  What will be left???
Jun 14, 2013 10:36AM
avatar
True that it´s just a game, although it shouldn´t be. The Fed chief is out there, leading the gambling. Pouring gazoline all around and hoping a incredibly leveraged derivatives market doesn´t go bust. Dangerous game.
Jun 14, 2013 10:18AM
avatar

you picked Alcoa at 18 as the stock of the year 3 years ago and it is still at 8.....

recently you picked gold at 1900 and aapl at 700..........the evidence shows you are a hack

Jun 14, 2013 10:58AM
avatar
Unless you are in on the rigging, chances are you will lose more than you will gain. That's the trust the market has shown. Like a marriage if you have no trust why be with the person.
Jun 14, 2013 11:00AM
avatar
"If you can make a profit off that", that´s the problem. You can´t. Not consistently. Because as in any random game, the odds are against you. You better go to a casino, at least they serve you complimentary drinks.
Bernanke took away the power of natural market forces. Now he has it.Worse, he doesn´t know what to do with it. he needs to restore a minimal natural interest rate, that some people think is around 4%p.a. for the 10-year bond. And it makes no sense to do it gradually.
By the way, gradual QEs, delivered in installments, don´t make any sense.
Jun 14, 2013 9:40AM
avatar
true enough.  if you're in for the long term.  enjoy the ride.  it gets dicey when we get close to retirement and restructuring our betting schemes
Jun 14, 2013 11:22AM
avatar

I like Cramer, but he is totally wrong on this subject. There is more to America than fast money that benefits not the companies being traded but the traders only. Cramer's, "Do your homework" means nothing if the game is fixed. Hell, even Meyer Lansky forced Los Vegas to keep the games clean.

 

I hate the CNBC rants against any form of government regulations, regulations being considered because of abuses by financial institutions. They complain about delays, but the delays are caused by the actions of thousands of lobbyists fighting every regulation or attempting to word it in such a way that keep them from being accountable. Now we hear the great, honorable financial institutions ahve been fixing exchange rates. "Honorable" is a word that should not be applied to crooks. I am disgusted that the crooks are never put behind bars. If they are guilty, the shareholders pay the price.

 

The biggest laugh is their constant complaint about a "lack of clarity." When has there ever been clarity? There is always risk, but the risks should be knowable to all.  If the only way the financial players can make money is by cheating, fraud, etc, banks and other financial institutions are no more than Mafia bust out joints. "Our Crowd" of crooks is to be treated as honorable men. I think not. They will ruin America and CNBC will still gush all over them.

Jun 14, 2013 1:25PM
avatar

The stock market has been rigged for a long time...The relevance ot the market to the majority of consumers is just about non-existent. The game is manipulated by the big players and the small fry  investors get fleeced. 

The Wall Street "Masters of the Universe" are nothing but crooks with expensive suits.

 

Sometimes I wonder 'what willl the game look like when no one wants to play"....Let the 1%'s play with themselves...this is about the way the game is shapping up...

Jun 14, 2013 10:46AM
avatar

It doesn't matter as long as it builds value, that is true..

Hopefully we won't have too many Depressions or Deep Recessions in our Lifetimes..

Seems just about every 2-3 Generations,eh.

 

I was a baby at the end of last Depression or born just after...

It effected my G-parents and parents some....But they came from the farms or rural America..

Late 50s were a little tight in some places.

1987 was somewhat of a scare, but recovery was somewhat quick..imo

My Parents and them before were never investors in Stocks...

Our parents were also very quizical about us and our siblings as investors..Attempting to teach or warn us of always be alert to a 20s-30s type disaster...But never telling us not to save or dabbling in investing..

2007-early 2009 was a Wake-up call or scream...We learned and better yet, our kids learned..

I assured them not to panic, (like we were quietly)....My job was to give them confidence.

But we have recovered very nicely....And they are back to normal, except maybe with some loss in the value of their homes yet..

As a bonus at Christmas time, besides Gifts...We pass out a few thousand dollars...

It always generates a lot of smiles, hugs and kisses...Before dinner.

And gives the kids confidence that Mom & Dad (and grampa&grandma) didn't lose it all in the downturns...

 

Jun 14, 2013 11:15AM
avatar
Jim Cramer an honest man, for today anyway, wow!!! Next phase of the economy - inflation - remember the consumer, they haven't got the purchasing power to survive inflation. How will the fed handle it. I believe they already are by, in effect, telling the big boys to get out.
Jun 14, 2013 12:42PM
avatar
At 1130 hrs they called for another wave of selling and tested negative triple digits; of course that is their goal and unless something great happens this afternoon here, they will manipulate their way there. Do not blame it on consumer confidence, please, this economy sucks and for the umpteenth time, these markets are not correlated with the economy, if heaven forbid that were the case the Dow would be up 7k or 8k, certainly not 15k...More later.
Jun 14, 2013 11:24AM
avatar
Dude, your damn articles are abstractions, not to mention distractions.
Jun 14, 2013 2:10PM
avatar
Yesterday we learned Currency traders were on the take (they get their info before everyone else), today we learn elite traders get consumer sentiment reports early. Is this evidence of Wall St being rigged.?  YES!!!. A group on investors is banding together to insist the SEC investigate and jail the guilty!!! GREED,GREED, GREED.  Little wonder the volume is getting lower and,lower. What is also shameful, Squawk commentators laugh it off.   This is no laughing matter!  We deserve better
Jun 14, 2013 10:55AM
avatar
This morning they are not waiting around, at 1045 hrs the call came to accelerate and selling orders coming in fast and furious so we dropped another 50 points...Its Friday folks, scumbags favorite day and like we mentioned before, after yesterday, they don't want to take any chances and want to bring these markets down big early...Consumer sentiment did not surprise anyone down here, we know the economy sucks.....Lets see if this afternoon anything can be saved.
Jun 14, 2013 1:06PM
avatar
Is the market rigged ? Great question Mr. Cramer  ALL HAIL WALL STREET   (TO BIG TO FAIL)   (TO BIG TO JAIL) !
Jun 14, 2013 4:29PM
avatar

What difference does it make if the market is rigged?  It makes a great deal of difference to those of us who are logical.  'It makes a great deal of difference in how we analyze the market, use history as a guide and generally THINK not "feel."  It makes a great deal of difference in predictability, intelligent investing and not pounding our money down a rat hole.  

Jun 14, 2013 12:36PM
avatar
Only goes to show you that either investors are that stupid or the point that who cares if the stock I own plummets as long as I sold in time and made piles of money on it!  I love how all these writers in their articles claim that the investors are worried about the conditions around the world.  I guess that is nothing more than a pile of crap also. Wall Street is nothing more than I care about myself and the hell with everybody else. Back to the stupid investors, it only goes to show you that investors are nothing more than animals being led by a master with a leash. And who is holding that leash?  The broker is holding the leash.  Investors are not leaders they are followers. And in my eyes they are no better then the brokers who mislead them!!!!!!!!!!!!!!
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123
123 rated 1
273
273 rated 2
482
482 rated 3
661
661 rated 4
635
635 rated 5
639
639 rated 6
619
619 rated 7
489
489 rated 8
277
277 rated 9
166
166 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
ATVIACTIVISION BLIZZARD Inc10
BIDUBAIDU Inc10
CTSHCOGNIZANT TECHNOLOGY SOLUTIONS10
LUVSOUTHWEST AIRLINES CO.10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.