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.

By Jim Cramer Nov 23, 2011 11:17AM

the street logoSo 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

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.

62Comments
Nov 23, 2011 2:37PM
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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?

Nov 23, 2011 2:27PM
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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....

Nov 23, 2011 1:23PM
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'Who knows what the truth is?'  Cramer, you know as well as anyone if you have to borrow or print your way out of debt  you only appear good on paper until everyone finds out your government owned. Same as over here in the states. Nothing, and I mean nothing the bailouts are going to do to help unitl the system is fixed with drastic measures sewn into those bailouts.
Nov 23, 2011 2:09PM
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I've said it before, and I'll say it again:" In the not to distant future, there is going to be a generation of Americans who will live no better then their pioneering grandparents". Start now teaching them the pitfalls of materialism, and maybe they'll come to understand that having less is best.
Nov 23, 2011 2:59PM
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Every day I read every report in all the financial newspapers, and on line blogs and honest to God, I'm not sure anyone knows what to do. And I'm not talking about individual investors. I'm talking about whole countries with hundreds of professionals helping them sort it all out. What a mess.
Nov 23, 2011 3:15PM
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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. 

Nov 23, 2011 2:43PM
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They know Nothing!  . . . NOTHING ! ! !
Nov 23, 2011 2:05PM
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Tax cuts do not create jobs ! If that was true we would have unemployment rate at 2% America has cut taxes across this nation for over 10 yrs in some cases, from state to state city to city county to county and guess what ? NO JOBs ! So the next republican mandate , or any republican running for President or congress says tax cuts create jobs ? ASK THEM WHERE? And corporate welfare does not count ! Balance the US budget with a balanced approach with REVENUE and CUTS in all corporate welfare and subsidies! Tweak soc sec and Medicare and the USA will do just fine !
Nov 23, 2011 2:30PM
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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.

 

Nov 23, 2011 3:55PM
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At least Cramer finally admits  its all about "GUESSWORK" and who  said what when where. Nothing has changed in the  markets from 2 weeks ago yet the dow has dropped more than 5%. I smell sensation journalism  combined with short sales. The little  investors are the ones who will get hurt again. Sold  to late and buy to early. They should disalow shortsales like they did in Europe and you will see how quick the sentiment becomes positive.
Nov 23, 2011 4:33PM
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Cramer you are such a genius.... almost like you just got done draining a pond and taking all the fish home, then you come back and tell the poor guy dropping a line in the water there aren't any fish in there. What a crystal ball calling the past out and calling it the present, just a week or two late and millions of dollars short eh. I truly believe all you day traders and shorters just love to swing everyone into opposite positions of your next move. I jumped out right before the peak and hopefully as I usually do jump in just a little bit off the lows, it's all I can do with my little 401K is try and get a few droppings from you massive market movers gambling all day. I'll take your big market swings into my once a month moves. I sure as hell don't follow any kind of traders advice, I make my own luck using common sense and sentiment.
Nov 23, 2011 12:50PM
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Who is just mouthing off to the press?

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.

Nov 23, 2011 2:09PM
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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)

Nov 23, 2011 1:49PM
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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.

Nov 23, 2011 3:23PM
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Cramer, are you out of your mind?  The time for extreme caution was a loooooooooooong time ago. How could anyone in his/her right mind think that the European problem was going to go away. Italy's debt alone will sink Europe, and we've known that for a long time, America's debt is totally out of hand. You can raise taxes on the wealthy all you want, and it will not put a small dent into the american problem. It's over. No leader on either side of the world has the guts to make the toughest decisions. They are too interested in their political careers. Making money in the market is going to be really tough, unless, of course, you're skilled at shorting the market. They you can earn a lot.
Nov 23, 2011 1:47PM
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Don't be so harsh on Jim Cramer. After all, he is primarily an entertainer. Nobody should take him seriously as a financial advisor. If you do, you deserve what you get. Cramer appears frequently on the Today Show for Pete's sake, right before Martha Stewart!!

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. 

Nov 23, 2011 4:53PM
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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.  

Nov 23, 2011 2:27PM
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please please will the market tank and finaly take out the oil speculators with it so we can get back to a sane price of gas that is actualy based on the real supply demand curve which capitilisim is supposed to be this bll sht 40% speculators tax is just that  bill sheet and its killing the american consumer this is the 1% screwing the 99% example alamode
Nov 23, 2011 3:57PM
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I agree with Dranuc. BAN SHORT SALES. Then we won't have any more Cramers and maybe news will swing back towards unbiased real reporting from then on.
Nov 23, 2011 1:14PM
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There is no guesswork in the European debt crisis.  Italy is too big to bail, Greece is not worth saving and Germany's (the rock of the Eurozone) bond sale went horribly because now even Germany is considered too risky.  This is exactly why Germany  - or anyone else -should not help Greece because they will weaken themselves to the point of failure.  All the debt is unsustainable and the system needs to flu****elf out. 
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