Time to be disciplined

Sell your debt-resolution plays and focus on stocks that won't be derailed by a US default.

By Jim Cramer Aug 1, 2011 8:41AM

thestreetthestreetBack to individual stock picking -- for now. That's how I view this debt ceiling deal, which I believe will pass simply because every single reporter says it will, and I have to trust the consensus like everyone else or be run out of town on a bull.

 

To me, if you bought "exposure," meaning deep-in-the-money calls or some higher-beta stocks on Friday, as I suggested here, you sell them into strength, take the profit. You didn't get to build the position, but you did get to make the money.

 

Then I would just wait. I would wait for the people who have to come out and say:

 

1. Didn't matter, too small, we will eventually be downgraded.

2. Nothing's changed. We are still dysfunctional.

3. Things are even worse because now there will be less spending to prop up the economy.

4. It's too late, as the second half has been killed by this wrangling.

5. The deal does not clarify taxes enough to make companies feel good enough about spending.

6. China is still slowing, although not as fast as we would like, because the tightening goes on.

7. Spain

8. Italy

9. Greece

10. Country to be named later

 

In other words, the whole litany of woe -- it hasn't changed, it won't change. We are in a new, bad world that makes it so we lurch and lurch until bonds are no longer the issue. That's the real problem, by the way: trying to figure out where the bond issues hit the stock road. It has been the problem since the beginning of the sovereign debt issues in Europe and since both former President George W. Bush and President Barack Obama decided to authorize a huge amount of spending that was embraced by Congress.

 

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All you have to know, though, is that bond markets affect S&P 500 ($INX) futures, so even if you think some stocks shouldn't go down when the S&P futures go down, you are helpless to argue that because the issues are so big, meaning you can't get your arms around what a real Spanish default would do. There's so little clarity about who owns what and who insures what that you have to presume every country is Lehman Bros. until proved innocent.

 

For the moment, though, we aren't Lehman, and that's why after the rally, but before the parade or woe, it is time to shuffle the decks and get rid of exposure. Then you can focus on buying the stocks of companies that performed quite well in this environment that aren't all that expensive and will no longer be derailed by a U.S. government default.

So sell banks into this strength. Sell tech into it. Both are wrong. Consumer stocks that needed a stronger economy should go. Pick and choose the Chinese-levered industrials. And let the rest meander, unless you bought it Friday for a pop. Be disciplined. Sell that pop.

16Comments
Aug 1, 2011 11:25AM
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Politicians have managed to make this country look like clowns to the rest of the world. Hopefully voters will try to restore our respect by voting out the men and women who do not deserve to represent hard working and honorable citizens of the greatest country in the world.

Aug 1, 2011 11:50AM
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Chris makes a good point. I used to watch cnbc but got tired of listening to Kiernan and Kudlow tell me about their views on politics instead of ways to make money in the market. Bloomberg is better at informing us on markets instead of lecturing us on politics. CNBC needs to realize we understand the need to cater to advertisers but  reporters should keep political ideas to themselves. Kiernan and Kudlow should go.
Aug 1, 2011 3:42PM
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why is it that every time congress meets as a group common sense is the first thing that jumps up and runs out the back door?
Aug 1, 2011 12:12PM
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Hey Jim, How come MSN Money is not showing the insider action of GE et al. Gives "This information is temporarily unavailable but will be restored as soon as possible. Please check back later." notice? Has for the last several days.
Aug 1, 2011 7:14PM
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SmileHi, it does not matter who is in office, if me and my family are doing good it is because me and my wife are savers and  keep working hard every day, stocks and bonds are still the best long term investment anyone can make, stocks are lower priced now it is time to buy,  I am an adult I am suppose to save money for my family when we are old so I am not a burden to society in my old age!!!
Aug 1, 2011 3:20PM
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He should change his headline to "Time to Keep Pretending Everything is Okay and Kiss my Corporate Masters Butt Again."
Aug 1, 2011 2:08PM
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   Look like they are playing the same game, after lots of talk and yakking, they up the debt a few trillion more.   No words from either side about serious spending control or cuts.  Serious cuts are, abolish the automatic balanced budget system that ups debt every year a few trillion,  dump Obama care before it kills us all,  dump EPA and a few hundred other worthless programs, FIRST THING IS  put a stop on the printing press, how did the Fed. get such unlimited power?   Have the people given up all power to a show in Washington?

   Simple problem, Washington has taken control of this nations money, and they are not going to let the people have anything to say about money, lots of talk from both sides but no real action.  They are all in the same bed together, put on a show for us  while they plot how to take the next dollar from the people.   Same show for the last 100 years.

    HE WHO CONTROLS MONEY, CONTROLS ALL.      FOLLOW THE MONEY.

 

Aug 1, 2011 11:57AM
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Don't feel to bad about the CNB tripe.  I learned long ago its not a bad show.  "Just turn off the sound"!
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Jim  I think you got it backwards. It's Congress that authorizes the hugh amount of spending  - and the President who embraces it by signing it.
Aug 1, 2011 10:25AM
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I've buying high quality, nice dividend paying stocks for several years thru my own auto monthly investment plan along with div.-reinvestments. This has been working out very well for me.

I collect SSI and have set up a direct investment thru a bank where my monthly SSI check is direct deposit. Then a specified monthly amount is direct investment in several stocks I've chose. This amount plus the dividends and the possibility for capital appreciation works out very well., especially over time.

One benefit by investing this way is you don't even have the opportunity to spend the check. Out of sight out of mind more or less.

I started collecting SSI at 62 and will continue on this plan until at least my normal retirement age of 66   2/3rds. After this I will decide if I want to continue or not. Plus I will have the option of any type of draw down from my investments. This option would not be available if I had waited to 66  2/3rds. to begin collecting SSI.

This plan isn't for everyone but if you don't need the monthly SSI check to live on it can be a viable option.

Aug 1, 2011 11:30AM
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   My mother use to say , if you have nothing good to say, say nothing at all . I did not listen very well, Cramer sucks , Cnbc in the morning sucks, to bad Mark and Erin are gone, I'm a Bloomtv guy now watching Margret Brennen  ..
Aug 1, 2011 10:35AM
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After this guy was exposed, why is it that any reasonable person would listen? He is in the opinion of knowledgeable people an idiot. He is perfect for MSNBC where today they said Gold was falling after picking up $14 from lows on the day. So full of it and himself that he is exceedingly more difficult to tolerate every day. ENOUGH!
Aug 1, 2011 11:43PM
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NOK with their Div. and at less than 6 bucks/share...heck of a buy folks!

Also when will GE come storming BACK?

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Time to SELL SELL SELL

haven't you been following the debt ceiling debate Cramer????

ROFL 
The legislation would slice more than $2 trillion from federal spending over a decade and permit the nation's $14.3 trillion borrowing cap to rise by up to $2.4 trillion, enough to keep the government afloat through the 2012 elections — a key objective for Obama, whose poll numbers have sagged as the summertime crisis dragged on.

ok folks economics 101-- they are cutting $200 billion from a $2 trillion dollar deficit (you have to include the interest on the national debt folks) And hoping things will get better in ten years when we will have been adding an additional $2 trillion plus a year to the deficit each year. 

Cutting $2 trillion over ten years and raising the debt ceiling by $2.4 trillion for another year is just not good math. Folks they needed to have cut $25 trillion from the budget over the next 10 years to even come close to solving the debt problem.

We are no where near a solution and some time in the next three years the US government will suffer a total collapse of it's budget. The US economy is already broken beyond fixing. And the budget depends on the economy therefore the budget is going to collapse sooner rather than later folks.

Green Backs is the only way to go folks. Lincoln printed debt free green backs to save the US economy during the civil war and it's time we do the same now. $15 trillion green backs printed in one day by Congress and the national debt goes away forever.
Aug 1, 2011 3:34PM
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and while we're at it inport duty, lets get rid of the oil and and gas subsidy entitlements you enjoy every day, along with the 2/3rds of the welfare budget corporations get to "compete", lol. If they can't compete on their own merits, then screw em. Let them go down on their own.
And lets get rid of the dept of transportation. we don't need roads or railways either. We certainly don't need clean water either, so I'm with you on dumping the EPA as well. We can just drink oil.
Oh wait, I almost forgot. Lets get rid of parks and forest protections too. After all, we've proven nature can be controlled and manipulated and we'll never run out of minerals or trees, right?

Monsanto has shown us we can be better than nature with their Genetically Modified Organisms. Who cares if a few million people and their goats die from eating it, as long as the company can still make a profit. Right?


Aug 1, 2011 11:51AM
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Give it up and get a real job Cramer.  If there's any way to make money while the Tea Baggers are running the show it is probably at least immoral.
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