“Contas equilibradas não significa superávite”

[Ulisses Pereira]

"Markups May Be at Fault for Unreal Action"

By James J. Cramer
12/18/2003 11:38 AM EST


"None of this is supposed to happen. You are not supposed to get a 10-year that looks like it is going below 4% and get a rally in the Smokestack Seven. It is totally unrigorous to see Treasuries soar while there's buying of Phelps Dodge (PD:NYSE - commentary - research). You aren't supposed to have Caterpillar (CAT:NYSE - commentary - research) and Deere (DE:NYSE - commentary - research) hitting new highs at the same time that interest rates are threatening to take out their lows. None of this is supposed to be!

I don't know if many of you who are not in the hedge fund game understand the pain of all of this. If you were brought up, as I was, to measure the strength of all markets and try to make some sense out of them, you are totally bewildered. You keep being led astray. You can reconcile the Smokestack Seven by keying in on the weak dollar -- they all benefit from that -- but the weak dollar doesn't jibe with the 10-year Treasury. You can argue that the 10-year is dancing to the beat of low inflation and productivity gains, but how does that jibe with the price increases we are getting at all of the Smokestack Seven players?


So, I fall back on what got me to where I am in this game. The trick might be the shenanigans of nonrigorous portfolio managers frantically marking up the Smokestack Seven, something I predicted would happen earlier this fall. In fact, the paucity of smokestack plays allows this to happen. These companies don't issue stock, they retire stock. They don't issue options, they are paid in cash at these places. There simply isn't enough supply.

But if you are in the hedge fund game, you are getting triple schizophrenia right now: Colgate (CL:NYSE - commentary - research) down $3, Treasuries zooming and the oils and smokestacks screaming. It's just totally nutty, something that demands an overdose of Risperdal just to stay remotely sane.

Moments like these drove me crazy at my old hedge fund. I would have to speak to real people who had made real big money -- my partners -- and explain to them why something that I would have said can't happen -- strong Treasuries, strong cyclicals -- was happening and why I was shutting my eyes and buying stuff that normally I would have been shorting in this scenario.

But then again, I always was flexible in the name of survival. "

(in www.realmoney.com)