TheStreet.com- James Cramer

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TheStreet.com - RM: What's Really Wrong With the Market
2004-07-15 16:51 (New York)

By James J. Cramer
RealMoney Columnist
7/13/2004 9:22 AM EDT
GE MSFT

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Sometimes, when big fulcrum events occur, days like June 30 a few
weeks
ago, and nothing of consequence happens, you have to step back and ask,
"What
the heck is wrong with this market?"

That's what I have thought about endlessly these last two weeks.
And I
have reached a sobering conclusion: This market is sick from the top
down.
That's right, the problem with this market is that we have lost a
tremendous
amount of faith in our leaders to control the situations that currently
determine the risk profile of equities.

Look, this market suffers from a radical shrinking in the price
we are
willing to pay for any earnings save the earnings of oil stocks and a
handful of
overpriced tech stocks that are the darlings of the mutual funds.

You get multiple shrinkage from a number of economic areas,
chiefly higher
rates and inflation. But you also get it when you have incompetence at
the top.

I have to go back a decade to find a time when we had multiple
shrinkage
like this, to the period when President George H.W. Bush cast a pall
over the
market with his lack of understanding about the way the economy really
worked.
The first President Bush surrounded himself with people similar to John
Snow,
the current Treasury secretary, and Don Evans, the current Commerce
secretary,
uncreative, unthinking people who didn't have the ability to see or
articulate
what needed to be done to improve things.

I have been slow to recognize the bigger issues that are just
killing this
market in part because I wanted to believe that the current President
Bush is
smarter than he sounds or looks. I wanted to believe that he could
articulate
correctly why we went to war in some foreign land where a thousand guys
have
died and billions have been spent. But he hasn't. He had terrible
intelligence
and bad homework, stuff I fire people for regularly and always have.

The market senses this, and that casts a pall over every day's
trading.

What we see now in the market is a gradual realization that Bush
will be
forced out in November and a new man will be president, a man who may
not be
better for the stock market but one who arguably may not be worse if
simply
because a gridlocked government is better than the drunken spending and
the
no-vision team we have in now.

Of course, that new government will have its predilections. The
health
care business will be reined in from excess profit if the new team has
its way
-- I as much as gave up on one of my drug stocks because of that
Monday.

But with the Democrats will come the hope of some intelligence
when it
comes to broader policies. The other day, I happened to notice that I
was
spending a Laurence Summers dollar bill, one signed by the former
Treasury
secretary, and it reminded me how far we have descended in intellect
and pure
smarts with this team we have now. I actually was waxing nostalgic for
the
Clinton team!

So, we can keep talking about how great the earnings are -- and
they are
indeed great -- or how low rates are or how good stocks are. I think
the truth
is quite different: Stocks, except for the exotic few, aren't going to
do
anything here to speak of, not with this team in the White House. Not
with the
uncertainty of the election ahead.

I know that President George W. Bush has been a good friend of
the market
when it comes to taxing those of us with lots of money. We've done
great these
last few years.

But it is time to recognize that things aren't working. Time to
recognize
that the stock market is out of favor because we don't trust it, and
that the
trust is more a function of the leadership in Washington than it is of
anything
the companies have to say.

It would be so much easier to blame the companies, but as you
will see
when earnings are reported, they aren't to blame at all.

In short, as much as it is "bad for business" for me to admit
this, we
will do nothing of consequence in this market to speak of, save for the
speculative world . It's too bad. But I have been nothing if not honest
with you
readers for so many years now, I can't start lying to you: This market
is sick
of the leadership; not of the stocks like General Electric(GE:NYSE) and
Microsoft(MSFT:Nasdaq), but of the president and the vice president,
and nothing
that comes out this week or the next or the week after in earnings will
change
that.

That only changes in November.

to read a letter about this story.
 
quote:

My question remains, what is Kerry going to do to "heal the market"?

That is my question as well. It's really hard to say at this point. Bush as done some good things, some ok things and some bad things. Kerry would be the same.
 
I think you guys may have missed the point. The GOP has firm control of the Legislative Branch. The only way to divided government is for the GOP to lose the Executive Branch.

Just like in business, competition can be a healthy thing...

Not that Kerry can do much to "fix" anything, but like Arnold in California, he could bring in some smart people to help him out, not sycophants that blindly read their braile scripts...
 
quote:

Originally posted by Pablo:
I read this before. My question remains, what is Kerry going to do to "heal the market"?

That's easy. It's all part of the JFKerry plan to create 20,000,000 million new jobs. The plan will be explained in due course.

Keith.
 
First of all, Cramer is a Democrat. His point is biased, not necessarily wrong, but biased just the same.

We, as citizens, usually benefit more when the nation is in gridlock when it comes to spending. I don't know how this works in a time of war, maybe it works well?

The market actually works independent of the economy. If the economy appears to be too strong, the market can actually retreat. By the same token, a badly beaten down market has a better chance to exhibit point to point gains. This is what happened in 2003, I believe the President was Bush then, no?

I don't know what the market will do, anybody who says they do is guessing. Cramer is a smart and entertaining fellow. He got booted from Fox News in 2000 for touting his company (tscm) when he was told explicitedly not to.

Believe nothing of what you hear and only half of what you see.
 
GM, I actually agree with everything you just said. Thats a first.
shocked.gif
 
Buster, we are so much alike you wouldn't believe it. I just don't bash Bush, he was elected as the better of two poor candidates and came across the worst attack on the U.S. in our history.

I doubt anyone could do a much better job than he is doing. Most of his critics hated him in November of 2000.

JMO

offtopic.gif
McGreevey looks to be in some trouble in NJ, no?
 
quote:

Originally posted by GROUCHO MARX:
First of all, Cramer is a Democrat. His point is biased, not necessarily wrong, but biased just the same. .

Gee doya think?? "But with the Democrats will come the hope of some intelligence
when it comes to broader policies.


Yea when Kerry comes in he will fix everything:

Tax corporations and otherwise make business climate more unfavorable by encouragine litigation in both medical area and business product liability. Of course this will (in Kerry's clouded eyes) help the worker and encourage them to higher more domestic workers instead of outsourcing
rolleyes.gif
--yes he is serious
shocked.gif
Of course he has a plan (as was mentioned) to create 20 billion new jobs and stop outsoucing). Maybe he will bring in the U.N. to fix it.

I think the market though has figured it out: We have a lack of budget constraint, dependence on energy, lack of export business, weak dollar, moronic and crooked politicians on both sides of the isle, etc. , etc. This market has gone nowhere and will continue to hover around low $10K dollars at best.
 
quote:

Originally posted by GROUCHO MARX:
Al, Dubya could use a little help in Pennsylvania this time.

I know..He could put Santorum on the VP ticket and carry the state, probably. But otherwise he's gonna loose Pa- I think. There is an outside chance though that Gov. Rendell (Crookedest Gov. in Pa. history-IMHO ) who is another Gray Davis will drive all but the hard core Bush Haters into the Bush column. We'll see.
 
The urban areas of the state really give Dubya a hard time there, huh?

Maybe the fact that one of the hijacked planes was taken down there will remind the good people of Pa. how serious this business of terrorism will be.
 
Buster wrote:

quote:

My biggest problem I post with too much emotion at times.

Oh, no buster, that's not your biggest problem....your problem is you just post too much, period.
grin.gif


Sorry couldn't resist, nothing personal.....(hehehhe...I could say I'm gaining on you.....)
 
GM, I like your posts/comments. I don't care if you get on my case about me being liberal.
cheers.gif


I only post Liberal thoughts/comments at times bc I do believe in some of their thinking and I also want to balance out the view points, thats all.

It seems we all use the term Liberal/Conservative to loosely.

I'm actually conservative. I believe in small gov., but effective government. I don't believe in gun control. I am a huge supporter of free trade and captialism. I'm hawkish on F.policy. I like to minimize gov. spending/programs. I did criticise the Iraq war, bc I wasnt sure if it was the right war. I'm all for kicking @ss and having a zero tolerance type mentality in F. Policy.


My Liberal views are I'm pro choice. Realize that sometimes taxes can help if applied properly. I also realize that while the U.S. is the cultural, economic and military leader of the world, other economic systems that value other things are great in their own way as well. Not all societies value the materialism as much as we do. Some want higher taxes to pay for healthcare/school etc. It's a preference IMO. I'm also against any strong religion influences.

So I really have some mixed views. I don't look at things as black and white as some of the other posters do IMO. There are shades of gray in all of this.
 
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