Cramer: "The Lock-In Time Is Upon Us"
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Cramer: "The Lock-In Time Is Upon Us"
"The Lock-In Time Is Upon Us"
By JIM CRAMER
MAR 06, 2012
7:20 AM EST
"How many people are set up for a 7% correction? How many were set up for one last year?
How many people can change on a dime, from making a ton of money on the long side -- which I guess means risk-on now because people have to sound smarter than they are -- to losing a boatload on the long side? How many are that nimble? How many want to sell into a down tape because they didn't sell enough into an up tape?
The answer is 90% of the people out there, the other 10% having fallen so far behind since the year began that they need the Big Kahuna to recover and 7% isn't even enough for them.
I am picking 7% because that's what happened last year at this time and it is easy to see it happen again. We have oil up really high and now it is going to hit us because the raw costs for the quarter didn't come down and the quarter is almost to an end. We have China, India and Brazil guiding their economies down.
While those guidedowns had been lurking in the case of India and Brazil and have been feared in China, there's something new that happened in the last 48 hours and it cannot be ignored. I think the president gave Israel the yellow light to attack Iran. By saying that he isn't bluffing about armed force when it comes to Iran, the president basically allowed Israel to strike Iran. Perhaps the oil and oil service stocks have been acting so terribly because of fears of demand destruction as it is possible that oil could spike rather dramatically if that crisis spirals into a war.
In either case, war or no war, it is reasonable to think that a correction of some magnitude is at last at hand.
We have had a great run. The lock-in is now upon us because too many funds will be afraid to give up their year right here, right now.
Caution is now warranted. You could easily argue, "Jim, caution was warranted last week, now you tell us." To which I respond in two ways: I didn't think the president would be as hawkish as he was and I was too greedy and wanted more performance before the correction. Those who want to say I was wrong, be my guest. If I got cautious a couple of percent from the high after thinking we were OK, so be it.
As I said, 90% of the people are caught wrong. But I am willing to admit that because I play with an open hand for all to see, I will be the only one who admits it, as has been the case since I started this experiment with playing an open hand more than a decade ago. It is meant to show how right and how wrong you can be. It is meant to show how it really is not how people pretend it is.
A good exercise when things are got, a hapless and painful exercise when things turn on a dime. Or, as the hedge fund managers who no longer like to say "I am wrong, it's going down" and instead opt for the risk-off terminology, whatever you want to call it, the gains are either going to be locked in down 2-3% from here or we are going to avoid a war, Teheran will blink and we have a chance to keep the U.S. recovery going to the point where risk on will be in vogue again.
There, I feel better invoking hedge fund speak. I guess I, too, like to sound smarter than I am."
(in www.realmoney.com)
By JIM CRAMER
MAR 06, 2012
7:20 AM EST
"How many people are set up for a 7% correction? How many were set up for one last year?
How many people can change on a dime, from making a ton of money on the long side -- which I guess means risk-on now because people have to sound smarter than they are -- to losing a boatload on the long side? How many are that nimble? How many want to sell into a down tape because they didn't sell enough into an up tape?
The answer is 90% of the people out there, the other 10% having fallen so far behind since the year began that they need the Big Kahuna to recover and 7% isn't even enough for them.
I am picking 7% because that's what happened last year at this time and it is easy to see it happen again. We have oil up really high and now it is going to hit us because the raw costs for the quarter didn't come down and the quarter is almost to an end. We have China, India and Brazil guiding their economies down.
While those guidedowns had been lurking in the case of India and Brazil and have been feared in China, there's something new that happened in the last 48 hours and it cannot be ignored. I think the president gave Israel the yellow light to attack Iran. By saying that he isn't bluffing about armed force when it comes to Iran, the president basically allowed Israel to strike Iran. Perhaps the oil and oil service stocks have been acting so terribly because of fears of demand destruction as it is possible that oil could spike rather dramatically if that crisis spirals into a war.
In either case, war or no war, it is reasonable to think that a correction of some magnitude is at last at hand.
We have had a great run. The lock-in is now upon us because too many funds will be afraid to give up their year right here, right now.
Caution is now warranted. You could easily argue, "Jim, caution was warranted last week, now you tell us." To which I respond in two ways: I didn't think the president would be as hawkish as he was and I was too greedy and wanted more performance before the correction. Those who want to say I was wrong, be my guest. If I got cautious a couple of percent from the high after thinking we were OK, so be it.
As I said, 90% of the people are caught wrong. But I am willing to admit that because I play with an open hand for all to see, I will be the only one who admits it, as has been the case since I started this experiment with playing an open hand more than a decade ago. It is meant to show how right and how wrong you can be. It is meant to show how it really is not how people pretend it is.
A good exercise when things are got, a hapless and painful exercise when things turn on a dime. Or, as the hedge fund managers who no longer like to say "I am wrong, it's going down" and instead opt for the risk-off terminology, whatever you want to call it, the gains are either going to be locked in down 2-3% from here or we are going to avoid a war, Teheran will blink and we have a chance to keep the U.S. recovery going to the point where risk on will be in vogue again.
There, I feel better invoking hedge fund speak. I guess I, too, like to sound smarter than I am."
(in www.realmoney.com)
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