Cramer: "Take a Defensive Stance Now"
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Cramer: "Take a Defensive Stance Now"
"Take a Defensive Stance Now"
By Jim Cramer
RealMoney.com Columnist
11/12/2007 6:58 PM EST
"We've just crossed into no man's land with this dramatic selloff of what has been working: agriculture, oil, minerals and defense -- although the latter held up well.
We are now square into 1990, where only a few stocks hold up and things go very awry. It is a time to be defensive and be glad you caught as much as you did, but recognize that we will not go up without emergency Fed relief because there simply is too much stress in the system.
Are we in a bear market? I have long ago recognized the worthlessness of those labels. You say "bear market" and maybe you miss the next six points in Coke (KO - commentary - Cramer's Take - Rating) that could be had or the next five in Merck (MRK - commentary - Cramer's Take - Rating). We may have a nice leg up in dividend-oriented stocks. We can catch bounces in commodity stocks, and we might just want to start buying some beat-up stocks with solid rest-of-world exposure.
Cop-out?
Don't ask me if it is a cop-out. I, like you, feel the pain and want to be in capital-preservation mode with an eye toward opportunity. That's how I played the bear market of 1990, and I am going about it the same way. That's all I know to do.
I suspect that many of you are wondering and want to ask me, "What happened to Apple (AAPL - commentary - Cramer's Take - Rating), Jim? You loved Apple." I told people to sell half of Apple; if they did, they did great. They can either sell the rest here or buy more lower, but they can't buy more here if they still have some.
I run a portfolio, a charitable trust called Action Alerts PLUS, and I sold some of every stock that recently ran. Every one. While I am not rolling in it, I have outperformed the S&P nicely with this strategy and I am not eager to put money to work yet.
I would rather miss the rebound.
All that said, on days like today I am acutely aware that every single element of caution I have said, every "ring the register," every "don't be greedy", every "take your profits," every "go buy a sweater", has beencompletely ignored by those who now want to know what they should do with stocks they bought because of me.
Here's what I have to say: You didn't listen to me then. You won't listen to me now. So what the heck's the point? I don't like most stocks. I think that the market is terrible. I think that you can pick at a stock down 10 like Freeport-McMoRan (FCX - commentary - Cramer's Take - Rating), but don't expect it is done because it went to the $60s in the last selloff. And if you own it, as I do for my charitable trust, I am not that anxious to buy back the stock I sold 16 points ago, but I am certainly interested in picking some up if I owned none.
Here's another point I want to make. We were not in a treacherous market when the Fed cut a half point and indicated it would be worried about recession. We got into a treacherous market when the Fed made it clear it was most likely done. That was it. Its comments did nothing other than cause the financials to break down. You just got still one more chance to sell them into today's rally. Did you do it? If you held on to them you might get a chance tomorrow.
I have been involved in dozens of selloffs in my years of trading, and I have been in a lot of years, and I have been public a very long time. I am telling you that this is among the worst markets I remember, up there with the bear of 2000-02, of 1998 and 1990. I respected those bears and was not quick to redeploy capital.
I don't think you should be either. Measured buys with big spreads between. Sells into strength.
Until I say differently, that is, if you want to know what I would do here. And I would sell stuff that you have big gains in if you haven't taken them on the off chance that they will disappear. If you do not have at least 10% cash here I believe you are making a big mistake. Twenty percent might just be ideal, unless you don't mind taking a beating on the way to a better place months from now when the Fed realizes the error of its ways.
At the time of publication, Cramer was long Freeport-McMoRan. "
(in www.realmoney.com)
By Jim Cramer
RealMoney.com Columnist
11/12/2007 6:58 PM EST
"We've just crossed into no man's land with this dramatic selloff of what has been working: agriculture, oil, minerals and defense -- although the latter held up well.
We are now square into 1990, where only a few stocks hold up and things go very awry. It is a time to be defensive and be glad you caught as much as you did, but recognize that we will not go up without emergency Fed relief because there simply is too much stress in the system.
Are we in a bear market? I have long ago recognized the worthlessness of those labels. You say "bear market" and maybe you miss the next six points in Coke (KO - commentary - Cramer's Take - Rating) that could be had or the next five in Merck (MRK - commentary - Cramer's Take - Rating). We may have a nice leg up in dividend-oriented stocks. We can catch bounces in commodity stocks, and we might just want to start buying some beat-up stocks with solid rest-of-world exposure.
Cop-out?
Don't ask me if it is a cop-out. I, like you, feel the pain and want to be in capital-preservation mode with an eye toward opportunity. That's how I played the bear market of 1990, and I am going about it the same way. That's all I know to do.
I suspect that many of you are wondering and want to ask me, "What happened to Apple (AAPL - commentary - Cramer's Take - Rating), Jim? You loved Apple." I told people to sell half of Apple; if they did, they did great. They can either sell the rest here or buy more lower, but they can't buy more here if they still have some.
I run a portfolio, a charitable trust called Action Alerts PLUS, and I sold some of every stock that recently ran. Every one. While I am not rolling in it, I have outperformed the S&P nicely with this strategy and I am not eager to put money to work yet.
I would rather miss the rebound.
All that said, on days like today I am acutely aware that every single element of caution I have said, every "ring the register," every "don't be greedy", every "take your profits," every "go buy a sweater", has beencompletely ignored by those who now want to know what they should do with stocks they bought because of me.
Here's what I have to say: You didn't listen to me then. You won't listen to me now. So what the heck's the point? I don't like most stocks. I think that the market is terrible. I think that you can pick at a stock down 10 like Freeport-McMoRan (FCX - commentary - Cramer's Take - Rating), but don't expect it is done because it went to the $60s in the last selloff. And if you own it, as I do for my charitable trust, I am not that anxious to buy back the stock I sold 16 points ago, but I am certainly interested in picking some up if I owned none.
Here's another point I want to make. We were not in a treacherous market when the Fed cut a half point and indicated it would be worried about recession. We got into a treacherous market when the Fed made it clear it was most likely done. That was it. Its comments did nothing other than cause the financials to break down. You just got still one more chance to sell them into today's rally. Did you do it? If you held on to them you might get a chance tomorrow.
I have been involved in dozens of selloffs in my years of trading, and I have been in a lot of years, and I have been public a very long time. I am telling you that this is among the worst markets I remember, up there with the bear of 2000-02, of 1998 and 1990. I respected those bears and was not quick to redeploy capital.
I don't think you should be either. Measured buys with big spreads between. Sells into strength.
Until I say differently, that is, if you want to know what I would do here. And I would sell stuff that you have big gains in if you haven't taken them on the off chance that they will disappear. If you do not have at least 10% cash here I believe you are making a big mistake. Twenty percent might just be ideal, unless you don't mind taking a beating on the way to a better place months from now when the Fed realizes the error of its ways.
At the time of publication, Cramer was long Freeport-McMoRan. "
(in www.realmoney.com)
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