It's time to turn neutral

Here are 10 reasons I've altered my previous long stance. Traders who still insist markets are stock-centric ought to get a bond terminal.

By Jim Cramer Jun 20, 2013 10:05AM

thestreet logoTapering vanished as a theme Wednesday. Just take it off the table. The bond market called the tune, even as most of the commentators insisted on looking at the stock market because they have forgotten which is bigger.

 

When the 10-year Treasury traded to 2.3% as stocks were still waffling about the direction -- that's off a point -- it was as close to a lay-up short trade as I have ever seen.

 

I have been leaning long for most of this whole move, but it is time to move to neutral.


  1. The bull market in bonds has ended. That doesn't mean bonds can't move up in price and down in yield, but those are now a minor chord.
  2. Companies without growth, or with minimal growth. The REITs, for instance (not the mortgage REITs, which have been disastrous because they were caught on the wrong side not of the taper, but of the real market, which is now very different), have very little growth and must now be priced lower to where their growth takes them, not their yield.
  3. Most emerging markets will continue cratering as they were being bought by the misinformed and those reaching for yield. Anyone who reached for yield will be a casualty here.
  4. The Federal Reserve, perhaps deliberately, is letting the market decide when tapering is over. The data is too good to keep the program in place. So all that matters is you watch the 10-year, which will now reflect either the growth of the economy. If it slows, rates go down as it is self-fulfilling and if it strengthens, where bonds stop nobody knows.
  5. Arrow Down (© Photodisc/SuperStock)Real-economy stocks with growth do better after the S&P futures mow everything down to levels where they are cheap.
  6. The rest of the world is hurt far more than our country over our higher rates because they were either trying to stabilize (Europe) or sinking (emerging markets, including China, which is very worrisome).
  7. People who have been in the market for a decade don't understand the power of bonds because they have had a benign impact. They ought to go get a bond terminal.
  8. All interest-rate-sensitive stocks will now be killed until they tell us how they are doing in this new environment. They are wrongly in the blast zone, but who cares.
  9. High-growth stocks will do fine as long as the rates don't move with great velocity. They always are.
  10. It will be hard to part with the stock-centric nature of the market, but that's now over until all participants recognize bond supremacy.

It is that simple. Neutral is cool. Lots of money to be made in neutrality. But stocks went guilty until proved innocent. If the market goes higher, watch who attacks me on this. They will be blown out, and you can't own their stocks. It is time to get mentally serious and stop dealing with all yahoos, as they are children. The ad hominem attackers are about to go the way of those who owned Scient and Viant.

 

Sorry to be so pointed, but in a Twitter-dominated world, you have to recognize that the opponents are ignorant, because they don't have bond terminals, because they are too expensive.

 

I am glad I am now neutral. It was difficult to be as bullish as I was after this run.

 

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.

 

 

 

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189Comments
Jun 20, 2013 10:28AM
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Long large term sentiment is for the US economy to move slowly over time to more resemble the combo of Korea, China, India, and Mexico.  They have 10 times the population and will continue to drag us down to their level.  The calculations all say the same thing.  The American citizen will need a 60% pay cut to match up to the competition our masters have signed us up for. Long slow drudgery is the horizon for the American worker, taxpayer, citizen.  Lets just get it out in the open.  Free trade and Globalization will be paid for on the backs of the American worker without a voice, a future, or honest representation.  This is the biggest crime ever committed against the American citizen.  The New World Order continues unabated.  You think it is bad now wait till we can no longer afford $trillion deficits and interest rates skyrocket.  All seems very clear and easy from my perspective.  When there are ten times more of them than you,  RUN!
Jun 20, 2013 10:36AM
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Watching the market today reminds me of a herd of sheep running fron a lil boy crying WOLF!!!!!! fundamentals don't mean a dam thing to these people,,
Jun 20, 2013 10:52AM
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Without the 85 Billion a month stocks should collapse...   Obamanomics will sink the economy yet...

Did you really think you could PRINT and TAX your way to Prosperity?   Did you really think you could BORROW and SPEND your way out of Debt?

Well the party is over, Ben just shouted 'Last Call'....  Now comes Obama's 'hangover' phase....

This will not end well...

Jun 20, 2013 10:44AM
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Well Bernanke just killed the jobs market by stating that QE will diminish as jobless rates decrease.  Companies no longer will hire to keep the numbers on their side to make the crack money keep on flowing. 

People talk about market corrections, well we need a societal correction where the american dream, american workers, americans can live again and thrive by getting work, fair wage. 

Jun 20, 2013 11:14AM
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 I think Bernanke recognizes futility.  We just have to bite the bullet or change policy.  It isn't a correction in my opinion it is an arbitrage.  We can no longer live in a vacuum. We are in essence paying for raising the kids in the Asian countries.  Their parents work to make stuff that is sent to us for us to buy or put on a guberment credit card.  The magic of capitalism is to create something through a process whereby we add value with our time and technology.  Our masters have relegated that to someone else and consequently our work has less and less value to be imparted.  So we sit while our next generation flips burgers, our tax base and our ensuing social values like social security, medicare, education,  all whither away, and the rich and elites amass all the money.   Why people have soo much difficulty figuring it out is beyond me.
Jun 20, 2013 11:06AM
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I learned a powerful lesson yesterday - short term investing is gambling.

Jun 20, 2013 11:03AM
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Did they think the stimulus would last forever ? It was a artificial high. The unemployed  ran out of benefits,  but there still unemployed just off the map. Bring back the WPA. Pump the money in at the bottom.
Jun 20, 2013 10:53AM
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It wasn''t that long ago that Jimmy wanted everyone to buy buy with both FISTS. Now he's neutral. Oh Jimmy, what a wicked Web we Weave.
Jun 20, 2013 10:37AM
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Geez Tog tell us how you really feel.

and I think it's going to be a long long day.......

Jun 20, 2013 11:00AM
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"Well Bernanke just killed the jobs market by stating that QE will diminish as jobless rates decrease.  Companies no longer will hire to keep the numbers on their side to make the crack money keep on flowing."

 

WHAT job numbers? They've been FALSE since 2007. There are 90 MILLION unemployed and under employed fully able workers in America. Bernanke funded the BLOCKADE, not the recovery. EAT THE RICH, THEY ARE TENDER.  

Jun 20, 2013 11:59AM
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I see everyone's point of view, but if it's true what's going to happen, then you have to think what really is next? Of course "WAR" Do you actually believe USA dollar crumbles with riots,high unemployment and possible revolution? In past history, countries will go to war to conquer other counties wealth and at the same time bring down the population of the world. All the resources in the world are diminishing quickly. Just sit back ,close your eyes and imagine if the stock market started to crash really bad and the all mighty dollar goes to zero with high employment.  You could see a action horror movie in high definition right from your head. That's why BEN is leaving Jan 2014.After that, the rich and powerful gave him a 3 to 6 months head start to hide before the lynch mob grab him first. Then who's next???
Jun 20, 2013 11:12AM
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Neutral? So you sold all your long positions? Tell us Jim. If you still have long positions you are not neutral. Cash is King.
Jun 20, 2013 11:32AM
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kramer is so full of crap it is all about his bloated ego. apparently all of his sheep are in love with his stupid clown act as well as his many documented money losing "tips"
Jun 20, 2013 10:27AM
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All this bullshidt is just excuses, and I spend relaxation time here for what...?

Listening to doom & gloom..

People wanting Markets to Crash..

Others accusing Bernanke of being an azzhole or idiot...No MATTER WHAT he does.

Others blasting Obama, some of it coveted racism....When they should be looking at their own Congress and the time they have Fiddled, while America has been burning...

They haven't taken up an important issue in 10-15 years...And you/we have allowed it.

Other people(not so much here) whining and bitching, crying about this and that..

When they should be getting off their dead azzes and pulling their part of the Load..

Or as in Humpty Dumpty, putting America back together again...

THEY ARE NOT THE AMERICA, I USE TO KNOW....

And I've been dumb enough to listen to it, and partake of it wasting my time.

 

Jun 20, 2013 10:20AM
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huh? 

 

Terms like:  interest-rate-sensitive stocks; They ought to go get a bond terminal.; Real-economy stocks with growth; confuse me……  they sound like fluff comments

Jun 20, 2013 11:10AM
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Did anyone else notice that Uncle Ben stated the intent of rolling over the current FEDS balance sheets regardless of how much else they do or don't buy. That was very revealing.

How many times can you rollover what will amount to over 4 Trillion Dollars.
Jun 20, 2013 4:02PM
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Whats disturbing is the heavy volume...  extreme light volume on up days, and waves of selling and extreme high volume on selling days....  very bearish signal...
Jun 20, 2013 1:22PM
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Ahhhh, think this is post/comment... # 11,111...

V_L...The Kool-ade truck isn't parked out front; The Ice Cream Truck just went by, and we couldn't stop him...He was headed down towards the Lakes, where are all the Republicans live..

 

Yes Regal and Ice....There are some buying op'rts out there on the chopping block..

We've got a little cash on hand, gonna try and pick up a little, tomorrow and next week will be another day...And the Sun will probably rise in the Mornings..

 

Mirage ...My only hope for you is you don't die a bitter old man; Life has been too good to you for you to waste it away, ranting about some President or FED Chief, you are accomplishing little in most cases.

Take the Family or kids or somebody out to dinner tonight, and tell them you love and respect them...You will feel better about yourself and life in general. Forget about Donkeys and 50 States.

Life is too short...

 

ABS....Keep slapping the Cretins around and keeping them in-line, think of it this way; You will only have your buddy Obama around for a few more years...Then you can beat up on Hillary...

We all know that(she) will be your next target. Plus, take a course in Latin..Good luck guessing where we live...Everyone has been wrong so far I think.?..I live in the hearts of Mankind.

 

Veritas....Lay a little more of the Pope talk on them, there are a lot of "catchy phases" that might fit some in this Group...Your buddy Monica, is going to take a course, maybe.

We have a Latin/English/Latin dictionary...And Miss Lilly knows several Latin words or phases.

I've always liked, "In Hoc Signo Vinces" off my cigarette pack..And "Que Sera,sera."(latin??)

 

Evil keep giving the Canadian viewpoint, maybe we will take-away a few good things..

 

NTU....Hit them long and straight, but the money is made around the Greens..

Better days are coming, start looking for them..

 

DLH.....Don't let any of them get away with any bullshidt, you've got my nomination. Reminds me some of Delky..

 

Steve....Keep your head screwed on straight, I've got a lot of hopes for you, reminds me of some of my kids, but think you are just a couple years older....Sounds like you have a plan.

 

Fatty Cakes....Watch out for my 4-wheelin truck coming down the road; I've been thinking about putting or adding one of my crash bumpers to the front...Got a couple in the Barn.

Do you prefer Chrome or just Anodized Black, as the last thing you might see..??

That finger won't stop anything.

 

LOM... and a few others on here, don't panic; Just another little blurb so Wall St. can get some more Press time..."Go where others Fear to Tread"..."Live long and Prosper."

A list of 10 things that may not mean shidt in a few weeks.

 

You will always have Cramer, Antman, Blaine and others to kick around or Praise..

And CGT1 will be there to give you the "straight skinny" until they fire his azz.

 

Yesterday was Good...At the VA, they said I might live another 50 years, IF I changed my ways.

Casino after that (in a far-a-way town) won a little..

Miss Lilly and I went to another late last night....I lost my azz, Miss Lilly won nicely..

Free food coupons for dinners...We just loaded up on Subs, Hoagies, Po' Boys....So we could eat at home for a few days or weekend junk food...Yeah life is Good..

I'm gonna go out on the Deck with a Whiskey, and Look at it....Ciao, me swabbys.

Miss Lilly just back home from the City, gave me a kiss and made my day...Still after 48 years.

 

 

Jun 20, 2013 3:35PM
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And if you think this is bad, wait till the last 10-15 minutes...Scumbags in heaven.
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