What a difference a year makes

Despite the current gloom, the market is in a heck of a better place than it was 12 months ago.

By Jim Cramer Aug 29, 2012 9:45AM

The gloom remains thick as I step away for a couple of days to do some first-class gardening and cleaning. I am reminded that Thursday brings a difficult 4 billion-euro auction of Italy's 10-year notes and that the numbers out of Spain remain hellish. China is nowhere to be heard from, and we know the emerging markets are pathetic.

 

But can we just stop for a moment and remember where we were last year? The S&P 500 ($INX) was at 1,212 on the way to 1,154 and then 1,154 on its way to 1,099 at the beginning of October -- a 19% correction from peak to trough that defined the year.


We had no plan for our own pathetic self-inflicted problems. We were worried about Social Security checks not going out, and we had a European Central Bank that had just finished some important tightenings.


Sure, Brazil and China were OK, but they were beginning to decelerate, too. We had hawks on our own Fed, including St. Louis Fed President James Bullard, worried about inflation and overheating. (And we take him seriously!) We had a tremendous period of uncertainty with no plan for it, which is the worst possible combination.


Now we have a Fed that's vigilant and ready to stand by even as we get some half-decent retail and regional Fed reports. We have Europe putting in plans to save the countries that would otherwise be left to go under. China? Hard call. The problem with China is it has no place to export to now that Europe is so weak.

 

And, most important, we have the beginning of a housing boomlet that might lead to a re-liquification of bank balance sheets.

 

All in all, we are in a heck of a better place.

 

You could argue that the S&P 500 at 1,400 or so fully reflects the good. I think it reflects some of it, but we have so many stocks that are still so far down that I think it is reasonable to speculate that we can go higher without stretching the boundaries of multiples to earnings.

 

Plus, if we are doing this well when things are still horrible overseas and China hasn't offered any serious cuts, who knows where we can go.

 

My perspective comes from being away for a couple of days and recalling how I lived through this period last year. I was so concerned that the crisis is, again, upon us.

 

It can be revisited, but it is harder to have a crisis when you have a fire department and the fire department is ready to help, not standing by or throwing gasoline on the buildings, as it was in Europe last year at this time.

 

So not all things are good. But things are always best at the top, and I don't see us there yet -- as easy as it is to conjure a frightening September. If you don't agree with the calendar, you could look like a fool. But if you do agree with "sell now" and "September is good," there will be no harm, no foul.

 

The bears have a great risk-reward when it comes to the media but a bad risk-reward if everything works out to the positive.

 

Random musings: I see everyone trying to rally around Nokia (NOK) post-verdict. I'm sure it can go up a bit, but I prefer Sprint (S). Over at Action Alerts Plus, where we never take a holiday, I think Bristol-Myers (BMY) has truly bottomed after shedding much more than it spent on the aborted hep C drug.

 

 

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 and is long BMY.

 

 

 

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25Comments
Aug 29, 2012 2:30PM
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Cramer, are you really that inept??  The market is only reflective of the Fed and ECB manipulation.   

Aug 29, 2012 11:52AM
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Only Jim would take a macro view article about the S&P and end it with a micro -pimp job for 3 businesses' stock. . . . . .
Aug 29, 2012 1:03PM
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...housing boomlet??? People need full-time jobs with paychecks to get a mortgage loan, Jim. Or are you suggesting that these new houses be given away for free again to people that will never be able to pay off the loans...???
Aug 29, 2012 2:21PM
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The difference a year or two makes is those advocating the invisible hand have become addicted to the visible handout.
Aug 29, 2012 3:28PM
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But . . . . we still owe the world a lot of money.  I hope they don't expect to actually get paid back.  We don't have that much money.

 

 

Aug 29, 2012 3:32PM
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Is Cramer living in the same country as the rest of us? Same planet even? Apparently he is looking at economic data from a completely different set of conditions than ours, because ours is at the door of total collapse is the wake of compressive contraction resulting from living way beyond our means, finite diminishing resources and the liberal misuse of credit. So this begs the question...is he trying to convince us or himself?Interesting.
Aug 29, 2012 1:53PM
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since nobody can be that stupid ..........cramer must be still trying to fool the few fools

who still believe in him

Aug 29, 2012 2:33PM
Aug 29, 2012 2:03PM
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What a flack for those who'd sell their mothers worthless stock if they thought she had any money!!!!!
Aug 29, 2012 6:01PM
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Bear Stearns is fine.  Don't sell it!!! - Cramer

 

no further commentary required.

Aug 29, 2012 6:10PM
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if you listen to fox news you woud think the market is down this year,but it is up 12 to 15 percent.

 

Aug 29, 2012 8:18PM
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Crammer doesn't even come off well when stating facts.  Facts are the Market isn't anywhere the same as it was 30/20/10 or even 5 years ago.  It's more of a BS market than ever.  You bet your future on if Apple will win its law suit  with Sanyo, or if Sony will buy Disney or vice-versa.  And why can't this site get rid of the Pro's trying to sell or give away their____ ____ _____!
Aug 29, 2012 4:16PM
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we worried about social security?

we had know plan for our pathetic self inflicted problems?

are you talking about you and your partner stephanie link when you say we?

 

how does msn let you write this drivel?

Aug 29, 2012 8:48PM
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A bunch of rambling words with no conclusion. A typical column.
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Other big market moving fixes -- such as a program that would re-start significant purchases of Italian and Spanish government debt by the European Central Bank -- have been pushed off into the future by Draghi himself when he said that the bank would only move after a formal request from the Italian and Spanish governments and after action from the temporary and permanent bailout funds.

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Aug 29, 2012 12:10PM
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GREAT INSIGHT JIM KEEP UP THE GOOD WORK BOOYA!!!!
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