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.
Tapering 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.
- 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.
- 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.
- 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.
- 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.
- Real-economy stocks with growth do better after the S&P futures mow everything down to levels where they are cheap.
- 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).
- 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.
- 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.
- High-growth stocks will do fine as long as the rates don't move with great velocity. They always are.
- 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.
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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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.
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
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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.
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We have a Latin/English/Latin dictionary...And Miss Lilly knows several Latin words or phases.
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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.
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That finger won't stop anything.
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And CGT1 will be there to give you the "straight skinny" until they fire his azz.
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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..
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I'm gonna go out on the Deck with a Whiskey, and Look at it....Ciao, me swabbys.
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