Still too much guesswork in Europe
With no way of knowing how the eurozone crisis will play out, investors should continue to exercise extreme caution by holding cash and high-yield stocks.
So many disparate voices. So many people talking to you. The IMF on a lifeline -- how big? A Spanish prime minister. An aide close to Merkel. Someone close to Sarkozy. Nameless people in the Greek government. Finance ministry people from Italy. ECB bureaucrats. Who the heck knows?
And that's what's so hard about this tape. Sure, we can look to the CurrencyShares Euro Trust (FXE). When it drops off, we know we are going to have a tough day, but all we can do is root around to find out why it is dropping off.
We can follow the travails of the actual markets and the financials in the markets. They, too, can tell you how things are for the moment.
None of these indicators, though, will say "We are all clear." And none will tell you what's going to happen tomorrow, just what's going to happen that hour or that minute.
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The classic case of the confusion came Tuesday from an International Monetary Fund statement that looked as though the organization had stepped up and was ready to play a major role in trying to stem the contagion.
Stocks rallied.
Then, almost instantly, we heard that it wasn't true. The IMF still wants to be a bit player.
Market goes down.
Who knows what the truth is?
And that's why I keep coming back to wanting to show extreme caution. If it were just earnings, we could deal. If it were just interest rates, we could deal. Or currencies.
But it is about who knows what. Who can speak for whom? Who is playing a game of chicken?
Who's a turkey?
In that world, you have to be circumspect and act as if at any moment a bank could go under and no one will do a thing to save it. You have to, because we have no idea who is really important and who really has the marching orders and who is just mouthing off to the press.
It is maddening, but if you look back at all the pronouncements and the admonitions from these "sources" at all levels, none of it has elucidated what was about to happen. None allowed you to have a coherent worldview. None are helpful.
So we struggle. We admit that at times we are guessing, and we recognize that if we are guessing, extreme caution is the only way to go. Remember, to me, extreme caution is a hefty cash position and a diversified portfolio that emphasizes yield.
All the rest might work out very well if things get better, and longer term it might work out no matter what.
But at the moment, it's too risky for most, and most is what I worry about in these columns.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for his charitable trust.
Has the American people ever thought of electing "successful" business people for political office holders and to lead this country, instead of professional parasite politicians that could not hold a job or make a living in the real world?
It is hard to believe, most of our senators and congress people have been on the same public nipple for decades. Is there any wonder why the country is broke?
SO...Here we are...First we should be Thankful for Europe so we can get a glimpse of what will happen to the good old US...except 15 times worse. My question is this...We have a 15 TRILLION (and growing) Federal deficit , most of the 50 states are broke, most every city in every state is broke or close to it, counties, school districts...basically anything to do with the government of any form is Broke. When the spotlight shines on America, which it surely will...Where is all the money going to come from to solve these problems? We have states running BILLIONS in normal deficits, which does not include the under/un-funded pension liabilities. Seems like a very simple Math problem..Not enough money. They say they have not raised taxes..well, why is everything we buy more expensive..Tolls go up 100%, water bills go up 100%...Food, living expenses...everything going up...Kinda like a tax...eh.
Also, the inability of the "super committee" to do anything is exactly what they want. At the end of 2011 the Bush tax cuts expire as well as the payroll tax reductions...In addition we will get 20% budget cuts (supposedly) across the spectrum...Isn't this EXACTLY what the want...Now they can blame no one and each side can point at the other and in the meantime they get it all...In the meantime, Congress goes on vacation and does nothing while still maintaining there nice salaries as well as benefits we normal people could only dream of..Last time I checked they work for us. It is time to figure this out, except no one wants to be the person that speaks up....losing their chance at re-election and all of the trimmings...
Wake up folks...There is NO Place to hide anymore....
The people to thank for the first and second down turn is the World Leaders that keep spending and spending the money they don't have. If Obama starts talking about QE3 we need to all take to the streets in protest. We can't just keep printing money and robbing Peter to pay Paul. This has to come to an end and we let the losers lose.
saph500,
I have no idea what point you are trying to make. So you don't feel that you are taxed enough already? If you can't pay your household bills now, what's going to happen when they raise taxes on you?
There are a thousand things our Govt can do to reduce our deficit without continuing to hammer on the tax payers.
Jim, unless this fact has completely eluded you, you ARE the press.
Anyone who says they have a modicum of intellect to have been successful in the market is either a liar or candidate for POTUS. The market has ALWAYS been a coin-flip game yet guys JUST LIKE YOU turn it into something more complex than it ever had to be.
All the sliderules, triangulation algorithms, kentucky windage factoring, and excel spreadsheets in the world wont tell you what has always been true....when you flip a coin you have a 50/50 shot of being right. What they WILL tell you, is how to scam the percentages in your favor to screw those that play by the rules. Left well enough alone, ALL had the same 50/50 shot of being right or WRONG.
So PLEASE dont act now as though just yesterday you realized that "it is crazy" or that "hmmmm maybe this is just a large experiment in human nature" when what you SHOULD be saying is "Yes, I am and have always been an instrument of manipulating the markets by simply seeing if I speak, will the sheep follow my crooked-staff opinion".... because, they have and you know it.
I'm buying @ 9500 and again if it gets down to 8500. I'll keep another bullet in the chamber in case Europe really implodes and we dip below 8000, but I doubt it. High beta stocks like FreeportMcMoRan (FCX), Halliburton (HAL) and more ConocoPhillips (COP) to take advantage of their upstream/downstream split in 2Q 2012.
I'm not missing another 2009 opportunity...
Otherwise I'm standing pat with the high dividend stocks I hold right now (BP, AT&T, COP, PSEC, Intel)
You’re worried about a eurozone crisis?!!! Wait until next year about this time or sooner perhaps. I expect the first of a series of dollar crises that will end the USD as the default world reserve currency. You haven’t seen anything yet! We are headed for a debt driven monetary collapse the likes of which this old planet has never seen. Those things tend to be exponential in nature so most folks won’t realize what is happening until it’s too late.
“Who knows what the truth is?”
Here is the truth. This is beginning of the total collapse of the western welfare state model. Get ready to be up close and personal with the third world!
Don’t believe it. Wait a few more months it will become much more apparent.
I'm not a financial advisor either. The best advice I can give is to stock up on ammunition, gold, and non perishable foods. Things will likely get worse before they get better.
Watch on Friday they will try to get the market to rally! They will say everything is going to be ok and that Buffet is purchasing just about everything under the sun. That way they hope everyone else will run out and buy some stocks for themselves. I think the next couple of quarters is going to be real tuff. We have a lot of problems going on through out the world right now.
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