Cramer- "Fed's Cut Sets Up a Rise -- and Fall"
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Cramer- "Fed's Cut Sets Up a Rise -- and Fall"
Cramer continua a desejar que a subida se faça com calma (de preferência consolidando entre os 9 mil e os 9500 pontos durante uns meses) de forma a que o momento actual do mercado se assemelhe a 1991. Caso contrário, diz ele, o mercado ao subir violentamente fará com que isto se torne mais parecido com 1998, o que ´será bastante perigoso. Aqui fica o artigo.
"Fed's Cut Sets Up a Rise -- and Fall"
By James J. Cramer
06/27/2003 10:06 AM EDT
"The law of unintended consequences is driving stocks like Yahoo! and Amazon and Gilead and Icos to the moon.
The law of unintended consequences is allowing companies like Reliant Resources and Charter Communications to refinance and survive, even if you think they shouldn't.
And we have seen all of this before.
In October 1998, the Fed, sensing Long Term Capital's ability to take down the world of finance, poured on the money and cut rates aggressively, as it is doing now.
The result, of course, was that Long Term Capital didn't sink us. But the aggressive moves by the Fed spawned a lack of discipline in the marketplace that brought us 300 IPOs that would go belly-up shortly after they were issued. It created a world where anything went, and when coupled with a complacent SEC and a failure to raise margin rules, produced the Dot-Bomb that we still haven't recovered from.
That's why it was such a stupid move to cut again. That's why it was worth waiting to see if things weren't coming back by themselves, which I think they are. That's why it wasn't worth it to stoke this housing boom any more.
But, no, the Fed is impatient. So we get the unintended consequences of bailing out a lot of operations that probably should have been foreclosed on. We get the lack of discipline in the markets where lots of companies that shouldn't exist or should be shuddered get new life.
Just like in 1998, people saw it coming. Just like in 1998, those who saw it coming and didn't rail against it made good money. Just like in 1998, though, we have set ourselves up for a gigantic fall. And it will happen again now because the unintended consequences are breaking out all over.
Perhaps it is worth it. We don't want General Motors going belly-up, we don't want its pension plan broke. We don't want all the energy merchants to go out of business. But ask yourself: When we get to where we are no doubt going in the stock market because of all of this liquidity, will you be bold enough to pay taxes and take some off the table? Or will you let this year morph into 2000 for you.
As long as you recognize that the game is on steroids now, and that we are, again, diverging from the 1991 road map with a vengeance and embarking on 1998's hyper path, you will be fine. But if you don't recognize that the unintended consequence is massive overvaluation of anything with real growth and soon, a lot of junk coming to market that shouldn't, you will lose whatever you make.
No need to sell until Dow 9500. That looks to be in the bag now that so much money's being forced into the market. From Dow 9500 to Dow 10,000 most likely will produce the most anxious moments as the Fed starts realizing what it did wrong and goes the other way. If we can somehow stretch out that ramp, make it closer to next year, we could actually be OK. But somehow, I just don't think that's going to happen. Why am I fretting about the upside? Because like 1998, it brought a lot of people in who shouldn't have, and like 2000, more people ended up with less money than they started.
That's what's going to happen again; I see it pretty clearly now. Chalk it up to the most powerful law of finance, the law of unintended consequences.
Oh, and one other thing, if you read this piece and think that I am telling you to sell now or go short, you really need to go to an opthamologist and a psychiatrist.
We are going higher, maybe much higher, before we go lower again. "
(in www.realmoney.com)
"Fed's Cut Sets Up a Rise -- and Fall"
By James J. Cramer
06/27/2003 10:06 AM EDT
"The law of unintended consequences is driving stocks like Yahoo! and Amazon and Gilead and Icos to the moon.
The law of unintended consequences is allowing companies like Reliant Resources and Charter Communications to refinance and survive, even if you think they shouldn't.
And we have seen all of this before.
In October 1998, the Fed, sensing Long Term Capital's ability to take down the world of finance, poured on the money and cut rates aggressively, as it is doing now.
The result, of course, was that Long Term Capital didn't sink us. But the aggressive moves by the Fed spawned a lack of discipline in the marketplace that brought us 300 IPOs that would go belly-up shortly after they were issued. It created a world where anything went, and when coupled with a complacent SEC and a failure to raise margin rules, produced the Dot-Bomb that we still haven't recovered from.
That's why it was such a stupid move to cut again. That's why it was worth waiting to see if things weren't coming back by themselves, which I think they are. That's why it wasn't worth it to stoke this housing boom any more.
But, no, the Fed is impatient. So we get the unintended consequences of bailing out a lot of operations that probably should have been foreclosed on. We get the lack of discipline in the markets where lots of companies that shouldn't exist or should be shuddered get new life.
Just like in 1998, people saw it coming. Just like in 1998, those who saw it coming and didn't rail against it made good money. Just like in 1998, though, we have set ourselves up for a gigantic fall. And it will happen again now because the unintended consequences are breaking out all over.
Perhaps it is worth it. We don't want General Motors going belly-up, we don't want its pension plan broke. We don't want all the energy merchants to go out of business. But ask yourself: When we get to where we are no doubt going in the stock market because of all of this liquidity, will you be bold enough to pay taxes and take some off the table? Or will you let this year morph into 2000 for you.
As long as you recognize that the game is on steroids now, and that we are, again, diverging from the 1991 road map with a vengeance and embarking on 1998's hyper path, you will be fine. But if you don't recognize that the unintended consequence is massive overvaluation of anything with real growth and soon, a lot of junk coming to market that shouldn't, you will lose whatever you make.
No need to sell until Dow 9500. That looks to be in the bag now that so much money's being forced into the market. From Dow 9500 to Dow 10,000 most likely will produce the most anxious moments as the Fed starts realizing what it did wrong and goes the other way. If we can somehow stretch out that ramp, make it closer to next year, we could actually be OK. But somehow, I just don't think that's going to happen. Why am I fretting about the upside? Because like 1998, it brought a lot of people in who shouldn't have, and like 2000, more people ended up with less money than they started.
That's what's going to happen again; I see it pretty clearly now. Chalk it up to the most powerful law of finance, the law of unintended consequences.
Oh, and one other thing, if you read this piece and think that I am telling you to sell now or go short, you really need to go to an opthamologist and a psychiatrist.
We are going higher, maybe much higher, before we go lower again. "
(in www.realmoney.com)
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