"What an Awful Moment"
By Jim Cramer
RealMoney.com Columnist
9/5/2008 6:52 AM EDT
"No big mergers and acquisitions (although my fingers are crossed about Altria (MO - commentary - Cramer's Take), because MO needs growth and UST's (UST - commentary - Cramer's Take) real good). No initial public offerings of any consequence since Visa (V - commentary - Cramer's Take) despite a huge queue of private-to-go-public deals.
No private-equity deals despite incredibly low valuations, valuations so minuscule that deals would have been done at gigantic premiums from here and still be much less expensive than they were. No threatening stakes by swashbuckling hedge funds. No new huge buybacks or dividend boosts, save CenturyTel (CTL - commentary - Cramer's Take), not that anyone cared about that one.
No nothin'.
It is an amazing time. It is the first week of an admittedly almost always bad month, but that's almost always because we are up going into September and funds want to lock in good gains.
Nothing to lock in now.
This market's like the Nasdaq in 2000 except the companies being sold off are great companies with huge cash flow and honest managements and great earnings. But there's nobody around to take advantage of the declines.
For all of the capital raised and the locked-up funds in hedge funds, for all of the trillions on the sidelines there is just nothing to buy. It is like the whole world's been caught out of position, much of it because the marginal buyer of just about every commodity -- China -- has disappeared and the marginal owners of most of the stocks that go down are margined and their investors are disappearing.
I keep thinking, well, where is Fidelity? Aren't there any buyers at T.Rowe? Trust Company? Capital? What happened to all of the money? Does no one have another dime?
It sure as heck looks so.
Everyone, from the mutual fund managers, to the strategic Europeans and the monster big Chinese, has just taken a powder.
And, incredibly, the declines are so swift that I believe even the biggest pools of capital are frightened. Of course, it doesn't help when Bill Gross, the best bond guy, says, "No more buying until Hank Paulson recognizes that we need an additional $500 billion in capital to get things moving" -- and, by the way, that seems right given that I expect about 25% of the mortgages taken between 2005 and 2007 to default, more than 3 million homes.
Why should Gross keep buying when a better moment could occur (although the Wells Fargo (WFC - commentary - Cramer's Take) deal he passed on, a 9.75% preferred, sure looks dandy and went to a premium)? Gross is right though, with Paulson not helping, just talking -- where's that Barron's plan? -- and with the Europeans being as deer-in-the-headlights as the Fed was 13 months ago, who the heck should buy bonds?
Still, I come back to a simple precept: There are tons of companies with great balance sheets and unimpaired earnings power that are declining as if they are small-caps with a couple of big sellers liquidating. The hedge funds are larger than the stocks they are trying to get out of, and there's no mercy from the brokers, who would just as soon let the hedge funds drown then throw them a bid themselves on merchandise that they will be inundated the moment that things unravel.
Treasury, so more pain has to be expected.
What a moribund time. It's just wiping out years of the market's goodwill, and it's leaving the public thinking, "Never mind!"
At the time of publication, Cramer was long Altria. "
(in
www.realmoney.com)
Enviado: 6/9/2008 23:52
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