Mega plano orçamental foi promulgado por Trump

[Ulisses Pereira]

"Optimism Works Now"

By James J. Cramer
01/06/2004 09:41 AM EST


"Optimism is a hard-won trait. You can't just cast your fate with it. Nor can you allow its sweetness to mask truly repugnant, if not poisonous, investments. But it is better, at times like this, to admit that optimism is infusing my judgment than to say "Look, it's business as usual, there will be some stocks that are up and some that are down and it will be another hard year."

I just can't feel that way.


What colors my optimism? I always have taken my cue from earnings, from profits, from what companies are telling me. Right now, companies are telling me that things are truly better than they thought. They are telling me that estimates, set during times when things were less certain, are just plain too low.

You know what that means? The backdrop, the daily backdrop, will be filled with positives. Analysts, many of whom are sticking by their holds and sells put on during bad times, will have to change their views. I know analysts are discredited. I know the sell side is discredited. But there is a process each morning in this business. There is a rhythm to it. Analysts speak to sales forces. Sales forces makes calls. People do listen. Things do get bought. The process plays out in a zone that is akin to a quarterback having nothing but open receivers. You put points on the board during periods like this. These are periods where the defense simply doesn't have enough guys to cover the seams.

I know people like to quantify things and optimism is hard to quantify. The VIX, the oscillator, the poll of institutional investors, they all show a level of optimism that is not what I am talking about. Those are sentiment measures. I am not talking about sentiment. I am talking about a belief that, well, things are going to work out.


My colleague, Steve Galbraith at Morgan Stanley, has attempted regularly to quantify the statistics behind the backdrop I am discussing here. He has analyzed repeatedly whether analysts' estimates -- the core component of the backdrop -- are too high or too low, knowing that when they are too low you could have an explosion upward. We sure had that last year. I don't want to put words in Steve's mouth, but a reading of his pieces makes me feel less certain than I want to about the current numbers being low.

Maybe, though, that's right. Maybe you need to have even the best guys, like Galbraith, thinking the numbers are already at equilibrium to sustain the rally and have it mount 20% gains, something that I know I have been toying with, and toyed with when I put out my forecast that the next thousand points on the Dow would be up. I certainly don't think 20% is unrealistic.


It's not just the earnings estimates that are driving my optimism, though. Last night on "Kudlow & Cramer," we talked to Commerce Secretary Don Evans. I have tried to be tough on Evans the last few times he was in the chute just because the economy had seemed stalled. He urged me to wait and see what happened.

Well, frankly, I have waited and seen, and you know what, he's right. I think it is time for people to recognize that the policies put in place by the administration to jumpstart this economy and to make investing better are, well, working -- and working fabulously. I don't hear anybody who was critical of the policies saying that now. I don't hear anyone other than my partner, Larry Kudlow, giving the president credit for this economy, and maybe that's just plain wrong. The stuff worked.


A year ago, we all were sure that we were plunging into a Japan-like situation post-bubble. I think that the actions of the administration and the Federal Reserve have taken that scenario off the table. You could not have my outlook for the stock market in 2004 unless you believe that the bump in third quarter gross domestic product actually is sustainable, and I think it is. I fully expect employment to boom beginning in the March-April time frame (that's been my posture for almost nine months now) and maybe then the critics will appreciate that somebody did something right in Washington. I am willing to say it now -- and I didn't vote for Bush and have been an active fundraiser for the Democratic party all my adult life. I have no problems saying it: They got it right in Washington.

Included in getting it right, I believe, will be a decline in the mounting budgets, something that the bond market is telling us already if anybody would bother listening to it.


How will all of this optimism play out? I think it will play out in surprises by marginal players: Kmart making money, for example, or JDS Uniphase delivering a turn in earnings, or Charter delivering. I think it plays out in surprises by solid growers. Think of what happened to Starbucks and Seibel Monday: big upside surprises to expensive stocks that suddenly make them seem, well, not that expensive. I think it plays out in cyclical companies getting estimates to go up 30% or 40%, making their moves seem honest. And I think it plays out in $8 in earnings at GM or even possibly an earnings surprise at a company like a Verizon where the secular headwinds are nasty but business activity might pick up. It also might mean that banks start loaning again, where the real profits lie.

I know that's an awful lot of good to throw at you. But it is how I feel. Remember, I have earned the right to be optimistic. I have fought through the bad times.

And I know when we aren't in them."

(in www.realmoney.com)