Look for overseas exposure
Europe and Asia help to prop up stocks as the US economy sags.
If you do business overseas, a lot of business overseas, it looks like that is the difference maker. People keep asking me how, given all of the downbeat activity in this country, it possible that so many of our companies are doing well, I keep coming back to "how much Europe and how much China do they have?"
I think Washington truly did hurt the U.S. economy, but the U.S. economy has become all about housing and autos. While I think that the latter remains strong, the housing market has gotten much weaker. That's a large purpose that needs confidence and if there is waning confidence, as we all know from the confidence polls, then there will be fewer homes purchased and fewer new homes built. There will be less money spent on a home, which is why all of those groups, including Home Depot (HD) and Lowe's (LOW), fell despite the rally after the deal.
Now, like anything in this market, things have gotten very relative. If the whole market has been pulled up except the housing stocks, then I think it is fair to say that they can't fall much. But still, when the averages are this high you are going to be left behind if you aren't in the stocks of companies that are leveraged to the world's economies.
Case in point: General Electric (GE). GE has spent years trying to become independent of the United States. The timing was hideous because the expansion was heavy into Europe at a time of a big decline and into China when China was pausing. But if you go through the numbers last week you realize that GE was saved by Europe and Asia. That's one of the reasons why I think GE is just beginning to go higher and while there were plenty of doubters, particularly those focused on the revenues, it was all about the margin expansion that GE is now going to have as things get better. They've taken out a huge amount of costs without cutting back in their reach.
I am betting when we hear Ford (F) talk this week it will be similar. Ford didn't need to distance itself from the U.S. because car sales somehow came to be more secular than cyclical because of the age of the auto fleet in this country. Given that gasoline's never come down -- notice that? -- despite all the oil we have found, the payback for a car with heavy incentives is pretty decent. Plus, as more people are hired, more need cars. But Europe is what crushed Ford, not the U.S., and if you notice, Ford still isn't back to where it was almost three years ago, again because of Europe.
It's all about leverage right now. Who has leverage to the very markets that hurt companies so badly? Who is not going to have the swing from red to black pretty much in the way General Electric did?
But one more word on those. When all stocks have run this high, even these stocks can be pulled up by the entire tide. In other words, they are not good shorts. They just aren't great longs.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long F and LOW.
More from TheStreet.com
the rats are fleeing the ship.
we've finally tipped the scales to where USA isn't such a nice place to be anymore.
Why does Obama feel the need to always have a group of people standing behind him for examples as he talks?
SEEMS YEARS AGO TO HAVE this exposure, you would get bombarded with advice to buy or stay invested in certain Funds invested in Japan, Europe or SAmerica, then eventually China or India..
We finally got tired of Political strife or changing economies in those areas, ridding ourselves of Japanese, Taiwanese, Chinese and Euro investments...
And just go after larger positions in Multi-Nationals, and let them worry about how they will invest or profit from business in the other Countries...
I found they could do a better job at the decisions, then we could; And their exposures are layered in all the locations for diversification and profitable operations....or not.
And a few of dozens are mentioned in the article..
Barry, I`ve got news for you.After working my way up to Distribution manager I retired 2 years
ago.Now they want me to come out of retirement and work full time.I declined.However,I`m going
to do consulting work for them for big bucks.I`ll make some training videos and help in other ways
for as much or few hours as I choose.
NTU.....Yeah, pretty much true; But we have to remember all our trading partners have their own Central banks propping up their economies or injections from the IMFs or Governments.
Seems their biggest fears are of tapering by our own FED, probably causing World inflation spreading from here, and tipping the scales back to another major recession on a Global level...
If our Consumers aren't buying and theirs are already in trouble, it becomes a dire situation to many of those trading partners..
One of my biggest concerns are of Foreign investment in this Country of Real Estate, and outright ownership of established Corporations...And next is inroads to our Energy Sectors...Or Infrastructure.
"".....Obamacare is a disaster, a train wreck and slowly but surely even the libtards and low information voters will realize it...""
It never ceases to amaze me the way that people talk about the ACA. It seems as if they're Monday morning quarter backing during the first play of the game. We have a ways to go before we see if the ACA will work or not.
If you just look at the Massive Recession the Economy had to deal with coming out of the Financial Crisis, it's literally a Miracle the Markets are doing as well as they have. Record setting comebacks. We can debate all day long as to why along with Monopoly Money involved. Fact is, the vast Majority of that Monopoly Money was created before Obama took office. $500-700Trillion plus in Scam Derivatives and counting.
Barry, I`m sorry your life is in the tank.I`m retired and living great in the land that never sleeps.
It`s 84 degrees,no NY hate,polution,crime and cod weather.Hope you don`t get mugged today.
They would tell you if you didn't have a JOB, that's a YOU problem. So when you go on these sites mainly used by Republicans, RECS won't give you a true indications most times to what the American Majority actually thinks. Fact is, most folks are too busy surviving to get involved in the Details which affects their lives.
We all should be more involved but I can understand the difficulty when Corporations are refusing to pay a living wage and most outlets to better wages have either been outsourced and or dismantled.
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