Scared? Don't bet on a falling sky

As folks fear their own shadows these days, Jamie Dimon's incisive words should urge you to take more risk.

By Jim Cramer Apr 10, 2014 11:35AM

Businessman scared of his shadow © 237/Martin Barraud/Ocean/Corbis"It seems that just about everyone has become a risk expert and sees risk behind every rock. They don't want to miss it -- like they did in 2008. They want to be able to say 'I told you so.' And therefore they identify everything as risky."


That gem, one of many you can glean from JPMorgan Chase (JPM) CEO Jamie Dimon's annual letter, is meant to describe banking in America and in the world today.


However, it might as well have been meant for people who invest in the stock and bond markets these days.


TheStreet.com logoDimon's letter is chiefly about the post-recession landscape and how it has changed us -- or, more accurately, scarred us. Although he simply can't bring himself to say it, the massive and greedy screw-ups by businesses, particularly on the part of bankers, have led to a backlash against capital.


That, plus the partisan warfare in Washington, D.C., has produced a world in which everyone is scared of his own shadow. And bizarrely, given this litigious and harsh new world, where regulation does lurk everywhere and compliance costs are through the roof, people now believe it might not be worth investing in anything that's remotely risky. So confidence is low and fear of failing is both high and justified, outside of Silicon Valley.


Dimon backs up these points with dozens of sharp details. He cites everything from the amount of cash everyone holds and a seeming aversion to debt, the principal merchandise that a bank offers, to tax and immigration policies that make it daunting to do business in this country.


But I keep coming back to the notion of risk that paralyzes all but Silicon Valley and, in particular, the fear of risk among people who invest in U.S. capital markets. Put simply, managers of all sorts would rather cry wolf with the idea that there is a wolf -- they would rather say the sky is falling, betting on a falling sky -- than bet positively on the future.


That, more than anything else, is why stocks can go higher still. We just need to cling to cash, to shun debt and to try to look as if we've gotten it right for the next financial apocalypse, even as we just had one and we have ample controls to be sure it doesn't happen again. As long as we do all that, this market will continue to have too much pessimism to roll over.


It's ironic, but the pessimism seems plausible. Dimon does pay homage to a positive future, including an odd reference to Martin Luther King's beautiful line "The arc of moral universe is long, but it bends toward justice." But, despite that, he paints a picture that doesn't seem positive at all. Despite ample evidence, including myriad data points of catalysts that are potentially positive but extremely ethereal, if not gossamer, you want to take issue with his optimism. You want to disagree with him when he says, simply, "The world has been getting better, not worse."


Or, to put it simply, the pessimism seems placed, and not misplaced. The opportunities in spotting those who don't feel this way, then, only become even more bountiful.


Take Silicon Valley and the social, mobile revolution. Managers, as we know, periodically see such intense risk in these investments that they shun them on a dime. Opportunity. Or take oil and gas. Managers see such intense risk from government intervention that they turn against this fount of progress and profit in an instant. And it's all because they want to be able to say "I told you so" about Facebook's (FB) deal to buy WhatsApp, or the Permian Basin, or virtual reality, or the Eagle Ford shale. They don't want to believe, because if they believe, they will get caught with their pants down.


That's why this letter is a must-read. When taken in its entirety, it is a document that aids the bull, but it is filled with enough instances and data to provoke fear of even wanting to bet against risky investments such as stocks. In short, it is the perfect letter for the moment. It should force you to take more risk, as you actually don't want to be the one who fears what's lurking because, alas, it already lurked -- and it is now, mercifully, in the rearview mirror of reality.


Jim Cramer headshot



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




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37Comments
Apr 10, 2014 1:13PM
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17 Trillion in debt and a FED that keeps proping up a market most folks see as phoney and you Jim say relax and not to worry.   We all should be running like hell from all the fraud.   But where do you run to when no one any longer argues that  we have a corrupt bought off Guberment that is most concerned about the workers in India or China than our own families, friends and neighbors here at home?  Did you notice when the market showed a little weakness the FED; which we have all been sold on being a seperate unpoliticized entity, jumps in to promote confidence. People are scared to death Jim and profits like we have seen in the past will no longer be there period.  The Japanese market at a time was at 36,000 and now 14,000 and looking like it is still vulnerable to free fall.
Apr 10, 2014 1:13PM
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"It should force you to take more risk, as you actually don't want to be the one who fears what's lurking because, alas, it already lurked -- and it is now, mercifully, in the rearview mirror of reality."

Jimmy, the Core issue which caused the Great Recession was never solved, only delayed for a future date. That Day is coming far sooner than most will admit and there is literally nothing the Global Feds can do to stop it.

We are not just talking about the FED's over $4Trillion Dollar Balance sheet nor just the National Debt now over $17Trillion. Jimmy, we are literally talking about $500-700Trillion in Scam Derivative Risks. You no doubt have heard about those Scams, that I am sure of.  The Real Deal 800 Pound Gorilla that the Mainstream Media refuses to talk about these days.

That's what continually Lurks in the shadows, just waiting to once again cause massive terror throughout the Global Markets. Jimmy is well aware of these facts, he is just as terrified as the rest of the Frauds on Wall Street to talk about it.
Apr 10, 2014 1:52PM
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The sky may not be falling but the markets sure are.
Apr 10, 2014 3:16PM
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I try listening to these market pros and their permabull nonsense in the afternoons and after the first sentence or two I just sneer.  Everywhere you look you hear how everything is so good and wonderful and profits and success are right around the corner.  How can so many people get so off track they lose their common sense.  I was listening to a young woman bank analyst just yesterday talking up how the market will do this and that just after a FED governor said he believes we will need to have FED intervention for much much longer than previously thought.  Me thinks we need a come to Jesus moment and soon.   Lord help the young and naive who know no better.  17 trillion in debt and  FED already with 5 trillion on the books and seemingly seeing no end to their coercion.  Healthy markets stand on their own and don't need a socialist guberment screwing with them.  This is the law of the Jungle folks, believe it.  If they are screwing with them they are doing it because they know there is a problem.  A trillion and a half or so a year in debting and zero percent interest rates until forever and we should all jump in the market?  DAH!   I wonder why I'm half nuts all the time.
Apr 10, 2014 12:07PM
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Keep hyping stocks Jim..and I look forward to the day the Fed stops buying billions of dollars of bonds and treasuries just to keep the economy afloat and then we will see the truth and reality of whether or not we have a "house built of brick or a house built of straw" that will crumble under any adverse storms.  Also..I wouldn't use Jamie Dimon as a symbol of a corporate leader with fiscal accountability as he himself is part of the banking problem because of his greed, deception and lies.
Apr 10, 2014 12:24PM
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What does a perma-bull know about bear markets. This guy missed the 50% correction in 2000 and 2007. I don't expect a know-it-all to call every 10% dip. But if you don't see a 50% correction coming you are a FDA. Looking back it was totally obvious. And it is as obvious right now. But all the Jim Cramer's are in denial and pretending there is all this negativity. There was negativity in April 2009. It is nothing like that now. And the market was in the dumpster. That is when you buy. Low. The market is very near its all time high. The #1 rule is buy low and sell high. Why is that so hard?
Apr 10, 2014 4:18PM
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We must have had a record year for number of cars recalled.

 

 

Apr 10, 2014 4:31PM
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Days like today are when you learn if your Money Manager is everything he says he is. 
Apr 10, 2014 12:19PM
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Yellen and the Fed made it painfully clear yesterday - they are laying the groundwork for YEARS of more QE and extremely accommodative monetary policy.  We could easily see trillions more injected into the economy before the decade is over.  It would be stupid to fight that.  On the other side, the Fed announcement has further weakened the USD against the Euro, and for purely selfish reasons, I thank them for it.
Apr 10, 2014 5:24PM
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What is not getting much press is the record high stock margin debt. Just surpassed 2007's record high recently. Scarey.
Apr 10, 2014 12:53PM
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Bobo Cramer can only peddle his snake oil newsletter/fund when times are good ...remember he said stay out of the markets in 2008 when it was 50% lower than today ....

Just another greedy putz ......
Apr 10, 2014 2:07PM
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"Got the call to accelerate the selling at 1200, " my azzz !!


Looks like they came out swinging about 10:30 am. and never stopped...

I was on my third or fourth coffee, and our meeting just getting over...


Well little ones, there may be some buying opportunities out there, BUT think I would wait and see what early A.M. on Friday brings, watch out for "lurking scumbags.."

Just like those ones hanging around slot machines at Casinos...

Hey !! That reminds me of something...?

Apr 10, 2014 3:18PM
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Yes take more risk Cramer ! Prophetic words from you and Dimon  !   How is this for advice the market is rigged !   HFT !  TAKE YOUR MONEY AND RUN !    BUY GOLD !
Apr 10, 2014 3:04PM
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Scared? I think YOU are scared, Jim. Jamie Dimon is REALLY scared. He might actually have to come down and touch Earth.
The whole financial tyranny thing is a racket. Rackets always end and generally-- catastrophically. 

Are YOU still in stocks? Can you be THAT stupid? Got your joo-joo bead good luck charm near-by? Check out-- Four Blood Moons in your search. Check out when they last came. Check out what the financial world suffered when they did. Check out older historic references. April 15th. 
Apr 10, 2014 2:24PM
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All I see are "falling knives"....Time to go to a Casino.....ciao
Apr 10, 2014 1:54PM
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First I've been wondering who that pigfk is that uses Pusitin's picture...??


Secondly I go away, leaving you guys to mind the store...Go to play Golf or pool with the old guys...

And you all let the Market crash...

You can't be trusted for 3 hours, let alone a whole day...

Even Slackimoto, is trying to show you the way; You abandoned Fatty and CGT...

Apr 10, 2014 5:16PM
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Well, we are sure, at least we hope nobody got caught in this aberration since we warned you at about 1200 hrs that manipulators called to accelerate the selling and the goal was to bring all indexes down big, very big...And they did what they said they would...Plenty of smiles among these pieces of trash after the close today....What justifies this you may ask? Why did we drop this much? Because when scumbags take over on and off the floor they rule, they scared people and caused panic, which they love to do, and down the toilet we went....Remember, that is how these dirt bags make their money; in one day they made more than they made the last couple of weeks. And the sad thing is that they cheat without fear because they know nobody will do a thing about it. Be careful in the morning folks, they will want to have another awesome day....Oh well....So sad.
Apr 10, 2014 12:12PM
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Like we said earlier folks, be cautious, after yesterday we all knew these scumbags would come out with swords drawn doing their thing this morning and at 1200 hrs they called to accelerate the selling so we are now down about 120 in the Dow...Their goal is to erase all of yesterday's gains and bring markets down big, we mean big...Remember folks, that is how these cheating dirt bags make their money, or better say, steal their money from the rest of Americans....Lets hope this afternoon we can at least minimize the damage....A heck of a task, they are in complete control on and off the floor....More later.
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Gee Cramer the Japanese government has just put a stop to the yen carry trade by saying they will not print anymore zero interest money. The US is starting to quit printing zero interest money

So all the carry trade people now have to sell off their stocks they brought on margin which is going to depress prices for a long time.

The Feds are not pumping up the stock market and the carry trade is not pumping up the stock market and 10,000,000 new retired Americans are sucking their money out of the stock market
so we are in a final decline of the stock market to near zero levels.

TIME TO PANIC AND SELL FOLKS.

Apr 10, 2014 1:00PM
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Attention all morons, that means all previous posters, SELL, SELL, and hide under your beds!

BTW, I sleep peacefully at night 100% invested with a fine portfolio of stocks and bonds that continues to climb higher and higher!

Yes before the end of the year, we'll be seeing $17K and looking forward to $18K! Har har har!

BTW, the mid-term elections are right around the corner, and I'll be votin' for God fearin' gun totin' Republicans! Well as long as they are Republicans, I'll be a votin' for them!

Har har har!
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