Here's what could really kill this bull market

Deals are the real worry, because they are the true measure of euphoria, which causes people to lose more money than just about any other emotion known to man.

By Jim Cramer Aug 27, 2014 10:52AM

Charging Bull statue in New York City’s financial district © Michael Marquand/Getty ImagesDarn that Snapchat with that $10 billion valuation. We don't need that kind of story now. That's the kind of stuff that always seems to stop the indexes in their tracks. Every time the market gets traction in the Internet, we hear some wild-eyed pricing for a company such as Box or Dropbox or AirBnB or Uber and we recognize that the overvalued mob has some fabulous evidence to use against the bull.


We are always trying to figure out euphoria. We try to gauge it because it is a sign of excess. I absolutely loved Scott Wapner's interview Tuesday with Jeremy Siegel, the terrific Wharton professor, on CNBC's Halftime Report. That's especially as it concerns Siegel's comment that the skepticism is thick and there's certainly not a lot of celebration involving S&P 2000.


Then we hear about $10 billion valuations for profitless companies and we have to go right back to the euphoria drawing board.


TheStreet.com logoNow, I know about the pressure the venture capitalists can put on any market. I know they will get their pound of flesh out of the hot ones. I know they could not care less about what it does to the market overall, because that is not their job.


Even when they get it right, the way Goldman Sachs (GS) did with Twitter (TWTR), you can still have problems when there are no profits.


That is why you never want to see these deals.


Most people are waiting for the Federal Reserve to kill the bull with higher interest rates on U.S. Treasurys. As Siegel made clear, rates could move up 200 or even 300 basis points and it might not kill this market if the economy is good.


I, on the other hand, worry about supply. I worry about too many bad deals overwhelming the market -- which is what happened in this year's horrendous Nasdaq downdraft.


You get too much supply, and you get Snapchat, and Alibaba and DropBox and Box and AirBnB and Uber all trying to get into this market via the IPO chute. This is a market, moreover, that has very little volume to begin with. That will deliver a severe blow to this tape.


Keep that in mind. That's the real killer -- not Fed chief Janet Yellen, not the dollar and not the 10-year bond.


It's supply.


Because when supply overruns demand, interest rates could be at minus 2 percent and it wouldn't matter. Worse, the politico-talkers who argue rates, not stocks, just confuse things further by saying that the Snapchat deal didn't work because of the Fed or some other nonsense.


Then the market gets really hammered.


Deals. Keep track of them. They are the real worry.


They are always the real worry, because they are the true measure of euphoria, and euphoria causes people to lose more money than just about any other emotion known to man, including greed.


Jim Cramer headshot


Jim Cramer's Action Alerts Plus: Check out this charitable trust portfolio for the stocks Cramer thinks could be winners. The portfolio is long GS.




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230Comments
Aug 27, 2014 11:24AM
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V.L.  Please attempt to control your postings to maybe one an hour.  When I come here and see you have posted numerous repetitive rantings every day I feel like leaving as your constant negativity makes me feel like throwing up.  Over and over and over the same useless meaningless crap day in and day out.  Make one concise definitive point and let it go dude.  You are destroying the mojo for other folks to come here and share.
Aug 27, 2014 12:35PM
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I believe the decline in standard of living and other things in the USA will continue until the people DEMAND the right to vote directly on important individual issues. These are the issues that "our representatives" have for the past 30 years or so routinely voted in favor of their contributors and exactly opposite to the way the people want and need. Voting for some party clone who then votes however he wants on the issues is what got us into this mess. And I don't care if corporations, Wall street, the rich and others are afraid of what the people might do. That's just tough! They should be very afraid of the people. Then we could get rid of congress altogether! What a wonderful day that will be.
Aug 27, 2014 11:49AM
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Jimmy, the same thing that killed the last massive Bull Run will be the very same thing that KILLS it this time around. That would be massive Debt and Leverage. Which by the way has grown at least 40% bigger since the Great Recession. Jimmy is all worried about the supply of Stock but he seems not all concerned about the massive oversupply of Bonds. Fake Money Printing can only mask this Farce for only so long. Then it's look out below for a very, very, long time. So folks better hope this House of Cards doesn't crumble anytime soon.
Aug 27, 2014 1:51PM
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The only thing that will kill this bull market is when the gov stops funding the DOW to keep it propped up.
Aug 27, 2014 11:37AM
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1.5% forcasted gdp growth for 2014 after 5.5 years of obama policies.  Thats going the wrong direction.  LOL
Aug 27, 2014 12:57PM
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big contributors to political parties picks your president,we just vote for who they want you to vote for.
Aug 27, 2014 11:48AM
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"They are always the real worry, because they are the true measure of euphoria, and euphoria causes people to lose more money than just about any other emotion known to man, including greed."....and Cramer and those like Cramer. 

You all do know why they call 'em 'Broker', don't you?
- Because they are not making you any richer.

Happy Hump Day, Fellow Investophiles.
Aug 27, 2014 12:11PM
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5.5 years of obama policies have created more poor people and less middle class.

 

5.5 years of obama policies have created a projected 1.5% DP growth for 2014.

 

RECOVERY!!!!  LOL

Aug 27, 2014 11:21AM
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One day here the next there Jim.  Two days ago it was the Russian Ukraine that would implode the market.  We all know it is the complete lack of a competitive alternative that keeps this market going up and up and finally today you agree about what we all know to be the truth.  Competition for the investment dollar is at present non existent.  And if you were a true capitalist you would agree without competition we are vulnerable to excesses and over reactions so when competition for this market appears we could see some real vomitility. Hence the FED is pussy footing all around and doing these little chit chat weather balloon bombs suggesting a rate increase would be somewhat harmless and some even trying to lead us to believe beneficial.  Not a lot different than the stories about how the Robots took all the American jobs.  I know dumb is a permanent condition and most believe it to be a non infectious non degenerative condition but as we continue down this path of total De Nile all assumption about human intelligence should be put back on the table. JMHO

Aug 27, 2014 12:20PM
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Does Obama create the middle class? Not sure any President has huge control over that since Congress does write the laws. Obama is in the executive branch remember people? He could create jobs and give benefits to those in the executive branch without Congress's approval via an executive order. However, Amy there is a limit to what he can do. We may be better off getting Congress to do it's job.
Aug 27, 2014 12:39PM
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Obama's policies according to Amy have killed GDP, but the market is at all time highs. Maybe we
are looking at the wrong indicators, data, measurements, etc. for this new global era ? Middle class wages are stagnant and the gap is widening. The trickle down does not seem to be working as planned. How do we fix GDP Amy?
Aug 27, 2014 12:21PM
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cramer is a shotgun analyst ...in the last 3 months alone he has predicted just about every eventuality. His advice is about as useful as a pair of nuts on a wooden horse.

As for all the numbers etc about how the economy is doing here's some anecdotal information. I spent about a month driving around the midwest watching baseball in the summer. In Kansas, St Louis & Chicago I saw nothing but people spending money ...every restaurant I went to was packed as were most of the hotels.

I know there are people not doing so well but this is ALWAYS the case -even in good times.

I am not buying any of this "chicken little" **** ...we will be fine as long as nobody gets us into another war in the ME.

Take heed sheldon adelson !
Aug 27, 2014 2:18PM
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euphoria and greed can definitely lose you money..............for those who don't know cramer ,beware
because buying his recommendations can bust you quickly

Aug 27, 2014 12:28PM
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Jimmy, don't forget that about a month ago you stated it would be Alibaba that unhinged things. So Jimmy, with all your various predictions, you are bound to state something that tied indirectly to the markets going up or down. Jimmy, you have covered so many angles, how can you ever be wrong?
Aug 27, 2014 1:45PM
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A month back he was saying the bull market had a long way to go and two weeks after an article similar to this one. Dont listen to anything this guy says or just do the opposite and you will be ok. Ive followed his show/articles for years so this is not just a random post.
Aug 27, 2014 11:24AM
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"A group of alumni that has previously criticized  for how much it pays its endowment managers is again finding fault after compensation more than doubled in three years at the investment arm.

Harvard Management Co. paid $132.8 million in salaries, bonuses and benefits in the year ended June 30, 2013, up from $63.5 million in 2010, according to tax filings. The company, which oversees the university’s $32.7 billion endowment, employed 324 people in 2012, 19 percent more than in 2009, the filings show.

“We are astonished by what we discovered,” nine members of the class of 1969 wrote in a letter to Harvard President .  obtained a copy of the letter dated Aug. 20. Compensation is “increasing at a much faster rate than the endowment, which still has a long way to go before it reaches its pre-crisis peak,” they said in the letter.

Harvard, with the world’s largest university endowment, is still seeking to recover from a 27 percent investment loss from the credit crisis. The value of the endowment fell from a peak of $36.9 billion in 2008 to $26 billion in the year ended June 30, 2009. It posted an 11.3 percent investment gain last year, trailing  peers including the, which reported a 14.4 percent increase, and , which had a gain of 12.5 percent.

The university’s endowment operation is different from most schools because it has a larger staff doing internal trading while others use asset-management companies."

$$$

A reminder folks... 60% of Harvard grads confess to cheating their way through. The others just don't admit to it.

Higher Education? Never have we had so many useless degrees in charge of non-productive non-enterprise business platforms and corruption like never before. GUESS who has to go?

Aug 27, 2014 1:33PM
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Gotta side with Cramer here.  The problem is that GOOD IPOs soon beget BAD IPOs.  Companies with unique products (TSLA) do well, but are followed by companies with invisible, theoretical, or non-existent products--and I include in that sphere companies with catchy names doing something the next hacker down the block can do the same, or better.

 

Too many bad IPOs, and yes, the skittish guy on Main Street is going to avoid the markets entirely.  We already know that half of the public that was in the markets prior to 2008 won't touch stock now.  They're at their nearest casino.

Aug 27, 2014 3:49PM
Aug 27, 2014 11:45AM
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Black Swan.... no one thought it existed because they had not seen it. So, how many times have
we been someplace/situation in the financial markets that we have not been before?
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