NEW YORK (TheStreet) -- Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- the importance of discipline; and
- three high fliers.
Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
This Market Mocks Discipline
Posted at 2:18 p.m. EDT on Friday, Sept. 13
I found myself stymied this morning on "Squawk on the Street." David Faber, Carl Quintanilla and I were all talking about what's about to happen in Washington -- that we could be looking at another federal government shutdown. Judging by the rhetoric that's precisely what is going to happen. We'll be staring right down the barrel of another federal fiasco fewer than three weeks from now.
I then turned to Carl and said that when that occurs we are going down because there's no way this stock market can handle that kind of pressure from Washington. We're going to hear about social security checks not going out and possible U.S. government debt downgrades and these will all weigh on the stock market.
So he asked me a logical question: do you just sell now?
I thought about it for a second and said, "you know, I have been advising people to so some selling but, candidly, I've been wrong."
Then David asked what will I be thinking as we get closer. I told him here's how it works. I will say do some selling right into the event and the market will keep going higher and I will then say, that's it, I can't stand it, just go buy something and that will mark the top.
Of course I was being facetious. Sure, the market's stronger than I expected. But it is also frothier than expected and I don't like froth. Take Ulta Salon
If you don't believe me, check out the runs in Lumber Liquidators
Candidly, I just don't like this kind of activity. I don't like it when stocks go up 18 points on some better-than-expected news. But we have been having exaggerated moves to the upside for days now.
Perhaps the whole coloration of the stock market has changed. Perhaps skepticism is being suspended, not unlike the way it was in the 1980s and the 1990s. But, to me, this is a little too much. Still, as I completed the discussion with Carl and David, it became clear to me that these same worries that I articulated today could have been made any time in the last few weeks. It left me boxed in. My discipline says you can't chase. But the market's mocking discipline now on a full-time basis.
My conclusion? I can't suddenly embrace froth when I see it, not when the government's on the eve of shutting down and Washington's been the proximate cause of all of the big selloffs we have had in the last few years. That means I have to just trim and wait. I trust I won't end up screaming, "That's it! I can't take it anymore! Go buy anything you want!" But I have to tell you, for me, September, which is supposed to be a mighty tough month, has only been tough for those who have been too negative. This market's not favoring the disciplined now, and as someone who thinks discipline is the key to successful long-term investing, I am staying cautious, hoping and betting that we will get a better opportunity to buy the stocks I want so much but just can't chase because that's just not my style.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, had no positions in the stocks mentioned.
These Stocks Are Flying Too High
Posted at 11:49 p.m. EDT on Friday, Sept. 12
There are a lot of ways to measure froth. Many would say that you gauge it by looking at the action in the stocks of highflying companies that don't have highflying earnings per share.
They look at the action, say, in Tesla Motors
To me, a better sign of froth is when regular stocks react to regular upgrades. For example, today Walgreen gets added to the Conviction Buy list over at Goldman Sachs, and the stock pops an astounding 2 points. On an upgrade! Or how about Kroger
Or how about the action in Dominion Resources
Or how about the action in Cheniere Energy
How about Yahoo!
Let's not forget Facebook
Now, I am not saying that stocks shouldn't be going up on legitimate good news. There's nothing frothy about Qualcomm
But the idea that Wall Street research can have this positive power is something that signals either a reversion to the bull markets of the 1980s and 1990s, long-lasting runs that were led by bullish Wall Street, or a sign that the market has just gotten way ahead of itself and it just plain too frothy for me.
I am thinking right now that it's the latter. Maybe, perhaps, I will be willing to flip back into 1980s and 1990s mode and just admit that caution has become a big mistake, but right now I would prefer not to add money to the stock market and instead pull back a bit and wait for a better, less frothy entry point. Somehow I think I will get that chance.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long FB.
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