Investors walking a market tightrope

If you aren't in 1 of these 3 areas, you are playing an earnings-and-macro game that rides more on luck than skill.

By Jim Cramer Oct 17, 2012 9:00AM

TheStreet.com logoamana productions inc., amana images, Getty ImagesThe measure of this market isn't Citigroup (C), which, alas, is just a $3 stock times ten. It isn't IBM (IBM), which I think will ultimately bottom sooner than people think.

 

It's the ones like Murphy Oil (MUR), companies that take matters into their own hands and you are instantly rewarded with points on the board.

 

Murphy did nothing more than what the other guys are doing, splitting the company up, doing some value unlocking, going about the simple game plan that Third Point, a hedge fund suggested, and there are instant riches.

 

It's a shake-and-bake restructuring. Doesn't matter that there's a fiscal cliff ahead or that Iran might soon join the council of real nations instead of terrorist ones -- don't hold your breath -- or that there is a huge glut of natural gas. You do the unexpectedly expected, and the market laps it up.

 

Throughout this rally, which seems pretty endless by now, there have been three kinds of winning companies: the ones that are involved in consumer spending, the ones that pay good dividends and the ones that decide they are going to take matters into their own hands.

 

The consumer-spend plays confound people because of the high unemployment, but we know that the consumer balance sheet is one part home value, one part stock value and one part paycheck (and two out of three ain't bad). People keep wanting to short these stocks, so they rally hard on any good news at all because that is truly unexpected.

The good dividends? Consider Lilly (LLY), Pfizer (PFE), Merck (MRK) and J&J (JNJ). They are all paying you to wait. Abbott (ABT) did, too. Just remarkable how the obvious plays worked out so well. And keep working. They will continue to do so as long as the Fed keeps working its magic -- or alchemy, if you want to be all negative about it.

 

And then there are companies like Murphy and Sara Lee (SLE) and Conoco (COP) and Marathon (MPC) and Kraft (KRFT), and they are simply loved for what they do.   

 

If you aren't in one of those three areas, you are walking an earnings-and-macro tightrope that rides more on luck than skill. You are at the mercy of whoever spoke last. You are in China hell or Europe hell or fiscal-cliff hell. Two steps forward and one-and-three-quarter steps back -- except the latter happens just when you get into the second of the two steps.

 

It's been like that seemingly forever.

 

It's so simple to see, but people get impatient or they think it's a watching-paint-dry situation to see Clorox (CLX) or Kimberly (KMB) climb.

 

It's been a thoroughly boring, common-sense rally in which the consumer-spending plays, the dividend plays and the shake-and-bake plays are all you need to be able to outperform.

 

Somehow, I feel it will be that way right until the end of the year.

 

Obvious. Too obvious.

 

Jim Cramer mugshot, thestreet

 

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 IBM.

 

 

 

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72Comments
Oct 17, 2012 10:45AM
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A quick Poll...

Thumbs up for Romney:

Thumbs Down for Obama:

Oct 17, 2012 12:43PM
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"   A quick Poll...

    Thumbs up for Romney:

    Thumbs Down for Obama:  "


Both deserve the finger and not thumbs... This is no choice, it's an ultimatum; either way, we loose.

Oct 17, 2012 9:50AM
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Decided to pull your crap article about the new bull run and replace with a tightrope article, Jim? The Dow is dead. It hasn't had legitimacy in years. Here's one you can think about with your Harvard brain...

Last night in a fit of frustration, Romney blabbed to Obama that Obama's pension included China investments, just like his own. Don't you think it's WAY PAST TIME for FULL DISCLOSURE of Wall Street activities? When you make a living off of trashing America, we should bear the right to throw your sorry asss off your Ivory Tower. If you can't fly, that's your tough luck.

Close the banks. End the Federal Reserve. Get RID of Wall Street. Invest 100% in job recovery RIGHT NOW and flush the Ivy League completely out of executive roles. You want to be rich? Start from scratch in your own venture that isn't financial services or consulting. Get some sweat and blisters or GET THE HELL OUT OF AMERICA.

Oct 17, 2012 12:16PM
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Isn't it great that Food Stamp recipients just reached a record high of 46,681,833 million!  LOL, it reached that record high at the same moment the stock market reached it's 5 year high!
Oct 17, 2012 12:03PM
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Markets don't go up forever. My paycheck doesn't go up forever either. Fair value for the stock market is between 10,000 and 15,000. That's it. Period. Then it takes a 6 month elevator ride down and we embark on another slow but steady three year recovery.

As soon as it starts to hit 15,000, sell everything. Even if it seems to be doing well. Go take a vacation and come back at the middle of next year. Buy back in at 10,000 and then make 30-40%.

Then repeat process all over.

Oct 17, 2012 10:39AM
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V_L, you scare me. Have you considered the real consequenses of your suggestions? You're suggesting financial chaos would be better than the system we have. You're right, the current system is not without its problems, but to throw it all away is lunacy. Maybe you've been burned by the system but most of us have. We just regrouped, started over or found out that working smarter really does pay.
Oct 17, 2012 1:34PM
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defpotec...

I agree with you so some extent. Neither are great choices and both work for the same puppet masters. But...Obama will, and is working hard to destroy what is left of this country much faster than Romney will.

At least with Romney we have a chance to save a sinking ship.

 

Oct 17, 2012 12:16PM
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awww obama fell on his face again, hard to defend a record of pure destruction, meanwhile have you ever seen the show BAit car?? well if you want to see the 47% chk it out, tons of obama phone takers there
Oct 17, 2012 1:29PM
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LETTER TO THE RULING CLASS:


You control our world. You’ve poisoned the air we breathe, contaminated the water we drink, and copyrighted the food we eat. We fight in your wars, die for your causes, and sacrifice our freedoms to protect you. You’ve liquidated our savings, destroyed our middle class, and used our tax dollars to bailout your unending greed. We are slaves to your corporations, zombies to your airwaves, servants to your decadence. You’ve stolen our elections, assassinated our leaders, and abolished our basic rights as human beings. You own our property, shipped away our jobs, and shredded our unions. You’ve profited off of disaster, destabilized our currencies, and raised our cost of living. You’ve monopolized our freedom, stripped away our education, and have almost extinguished our flame. We are hit… we are bleeding… but we ain’t got time to bleed. We will bring the giants to their knees and you will witness our revolution!

Sincerely,

The middle class that built this country
Oct 17, 2012 11:34AM
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Cramer the only TIGHTROPE FOR INVESTORS IS THE DEMISE OF GOLDMAN SACHS AND BANK OF AMERICA ! DIE DIE DIE !
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Never fear Bernanke is here to save the day.

Got $2 trillion dollars of national debt no one is buying.

Have no fear Buzz Bernanke is here to print monies to infinity and beyond.

Stock Market having a little $trillion downward pressure as retired people suck their money out of the stock market along with jobless people and working people no longer pouring money into the stock market as they are pouring it into their gas tanks???

Have no fear Buzz Bernanke - "prints monies to infinity and beyond" is here to save the day.

Need a few hundred billion to keep the stock market up Bernanke is your man.

Bernanke laughs at the Chinese when they say they are cutting the dollar ties and making their currency the world reserve currency and kicking the dollar to the curb.

But but but Bernanke says they are holding more than a trillion dollars in US T-bills they will not kick the dollar to the curb.

Chinese laughing in back ground. "Silly Americans we used their worthless US T-bills to secure our lastest building phrase. If the dollar collapses we merely don't pay on the nice new manufacturing plants and skyscrapers we have just built and the silly American investors don't get the buildings they get worthless US T-bills. LOL"

Oct 17, 2012 10:23AM
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There are very few players left in the market. The Dow just swung some 40 points from a drive down to near par. That can ONLY happen when Ben Bernanke gives a bank a boost and we get stuck with the cost. IT IS CRIME, not business or finance. CRIME.

Time to Close the banks, end the Federal Reserve and GET RID of the pariah collapsing America that is the financial sector. Hey Congress... why haven't you arrested Phil Gramm, Leach and Bliley and abolished the Gramm Leach Bliley Act? It's blatant TERRORISM. Do you know why no lawyer or Ivy League graduate is here with me demanding the same? Because they BENEFIT from America's dire economic circumstance. Do we really NEED banks? NO. Do we EVER NEED pariah? NO. You've GOT TO GO.

Oct 17, 2012 2:17PM
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good thing mr fat cat didn't pull his money off the table when obama was elected the first time...

following that faulty logic would have missed the dow doubling in less than 4 years under obama

Oct 17, 2012 11:33AM
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Please Crammer it has been soo nice that you have not commented for days. Please crawl back under the rock and silence. This will help people truly interested in buying the market instead of the crap you speak or and shovel.

 

Oct 17, 2012 1:27PM
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 I see a lot of people are confusing the government with Wall Street. 

Wall Street has purchased our government - mostly the Republicans because they love the system and are in agreement with Wall Streets values - but they own both parties - yes even the tea party Republicans - the system has been set up so that candidates can't get elected without Wall Street.

 Wall Street is never satisfied, they want your Medicare dollars, Social Security dollars, your 401K until there is
nothing left - it is all consuming.
 
They are counting on the stupidity of Americans to keep choosing R's of D's to bicker against each other and name call while they steal the rug out from underneath you but until we wake up - if we ever do - we will be responsible for our own demise.
Oct 17, 2012 12:02PM
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"Groundbreaking on new U.S. homes surged in September to its fastest pace in more than four years, a sign the housing sector's budding recovery is gaining traction and supporting the wider economic recovery.Housing starts increased 15 percent last month to a seasonally adjusted annual rate of 872,000 units, the Commerce Department said on Wednesday."

PROOF of stupidity. Builders have this property they've been defaulting taxes and interest payments on, all over America. as we ALL know... housing prices continue to fall because no one qualifies for credit without steady income. Ben Bernanke assures America everything is okay. "I will buy crappy credit from banks and give them more crack to blow on bad investing and the bailing of previous bad investing". Banks go-- whoa... why are we scamming America one under-valued suburban home at a time when we can help our builder-collusion partners and get them to build homes NO ONE CAN AFFORD! They get paid from the shoddy credit we will then scam to Ben who will start the scam ALL OVER AGAIN!!!!

Close the banks. end the Federal Reserve. GET RID of Wall Street. Snap out of it, or we will be seeing if you can off those Ivory Towers sooner... nothing is wrong with America that a massive purge of financial pariah won't fix instantly. We don't need grubbers, we need economy.
Oct 17, 2012 12:18PM
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"Cramer the only TIGHTROPE FOR INVESTORS IS THE DEMISE OF GOLDMAN SACHS AND BANK OF AMERICA ! DIE DIE DIE !"

Makes you wonder A LOT about Goldman Sachs... WORST financial in history and won't die without taking America down with it.

Check into it's 10,000 small businesses failure of a venture. The BEST of Ivy League schools on it's Advisory Board. I think it helped ONE wallpaper hanging company or a cookie bakery outfit. DO YOU SEE IT INFLUENCING ALL THE ALTERNATIVE ENERGY RISKS OUT HERE TRYING TO SURVIVE WHILE BIG OIL SABOTAGES THEM? Nope... but they're really heavy in China and shorting America's job recovery efforts. You'd have to be an ANTI-AMERICAN to be one of their clients!!! 
Oct 17, 2012 8:24PM
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Old Mitt put Candy Crowley in her place and women back in the kitchen with his Bain show at the debate... You go Corporate Raider you go !!!

Oct 17, 2012 3:16PM
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"And frankly I bet the dude building the house could care less whose hoops he has to jump though to get the loan, be it private OR public money, as long as he gets it. Ditto for the recipients of the trickle down cash. What the ultimate source of circulating dollars is, is of little interest to them, only that it flows"

And then the credit gets sold to Bernanke regardless of whether the house does and the bank gets 100% of the participation back, plus fees. That's called racketeering.
Oct 17, 2012 7:43PM
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Want to know how much the first few gallons of gas were? Probably $100,000 grand per according to the logic of the tea baggers .... I would bet back is the day they were thinking "hell why spend taxpayer money on oil wells when we can have people and horses we can use to drag our sh*t around ".....

When the "investment cost" is amortised solar and wind are virtually FREE..

That is what RENEWABLE means ....why the greedy hate the idea is because they cannot monopolize the Sun and the wind ....although I am sure they will try !!
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