Jim Cramer: "it’s Doom Itself... Sell Everything. Nothing’s Worki

[Lounge Daddy]

That's not a good sign when the always optimistic Jim Cramer is saying that the market is doomed.
I think he's saying that there is doom everywhere... comeback later after the dust has settled, the bodies have been counted, and the rebuilding is starting to take place. Yikes.

This article is from a News Max Moneynews.com e-mail

[quote]Jim Cramer, the often loud and always bullish host of a popular CNBC show, is now bearish.

Cramer frequently tells his audience that he believes there is always a bull market somewhere, and it’s his goal to help them find it.

“But this time is different; it’s doom itself,” Cramer recently wrote in New York magazine. “In 25 years on Wall Street, I have never seen things this bad.”

Cramer is a former hedge fund manager who delivered a compounded rate of return of 24 percent for 15 years at his firm, Cramer Berkowitz.

His investment advice is always very specific, and he is also clear about what he sees over the short term.

“Sell everything. Nothing’s working,” he writes.

“Revisit when the prices are adjusted for a big recession, soaring inflation, and a crushed consumer. Sell at 12,000 and come back at 10,000. Even better: short it,” said Cramer.

Barclays Capital agrees with Cramer’s assessment of inflation. It is now predicting that headline inflation will spike to 5.5 percent by August, and the Fed will respond by increasing interest rates six times before the end of 2009.

The Consumer Confidence Index is also near all-time lows.

Editor’s Note: Investor Panic Leads to Huge Profit Opportunity for Income Investors

The Conference Board Consumer Research Center recently reported consumers' assessment of present-day conditions continues to grow more negative and suggests the economy remains stuck in low gear.

Looking ahead, consumer outlook is so bleak that the Expectations Index has reached a new all-time low, the group reported.

Cramer cites Wall Street layoffs as a sign of the troubles. More than 40,000 investment bankers and sales people are expected to lose their jobs at Morgan Stanley, Merrill Lynch, UBS, Citigroup, and what was once Bear Stearns.

“We’ve had some tough times: the 1987 stock market crash, the collapse of the once-all-powerful Drexel Burnham Lambert, the immolation of Long Term Capital, the post-9/11 calamity, and the dot-com implosion. Every one of these events rocked the Street, causing pay cuts and layoffs and creating a sense of doom.”

A long-term bull, Cramer admits his bullish bias, “I am an inherent optimist about Wall Street. Every time I’ve seen one business go down, there was always a replacement business right behind it.”

But with investment banking, bonds, equities, and mergers and acquisitions all stumbling at the same time, he concludes, “Try as I might to see where new business can come from, I don’t see it coming anytime soon.”

He’ll be bullish again, after “a big recession,” when inflation is tamed, and the consumer feels better about the economy.[/quote]

[pan!c139]

*tosses the computer out the window*
Well that takes care of that.

[Deb]

I am not worried. I have nothing so I have nothing to lose. Those who are tied to what they own are the ones who will be crying.
Everyone pays for their gluttony sooner or later. The bigger you are, the harder you shall fall.

[Brother Adam]

"Those who are tied to what they own are the ones who will be crying."

Do those things include clothes, heat, food, water, and shelter as well? There are many college educated people where I live seriously worried about moving their family into a car or even onto the street as they lose their jobs left and right. Most of them are not materialists.

[rkwright]

[quote name='Brother Adam' post='1601942' date='Jul 17 2008, 12:45 PM']"Those who are tied to what they own are the ones who will be crying."

Do those things include clothes, heat, food, water, and shelter as well? There are many college educated people where I live seriously worried about moving their family into a car or even onto the street as they lose their jobs left and right. Most of them are not materialists.[/quote]

I'm with you on this... the people that hurt the most are the people who have little. The middle class might have to cut back on spending, maybe skip the family vacation, cut back on eating out... maybe in serious cases move to a smaller home.

But for the lower class, the inflation means that their monthly food budget only goes so far.

[Lounge Daddy]

Hmmm... What little investments I have I may move into foreign funds.

[Lounge Daddy]

I took a look at the Mad Money re-cap for the other day.[url="http://www.thestreet.com/story/10427175/1/cramers-mad-money-recap-for-july-17.html"] Here is a little bit of it.[/url]
[quote]Cramer said some good things are happening in the markets, and investors need to change their strategies to capitalize on them.

According to Cramer, three forces are driving the market higher. First is oil's inability to breach the $150-a-barrel level. Cramer said he's always believed that the rise in oil was due to supply and demand and not speculation.

He said oil is "just too high" at $150 a barrel. He said consumers are finally starting to cut their usage, leading to the decline in oil prices. He predicted oil could fall as far at $110 a barrel before stabilizing.

The second force driving the market is the financials. He said it's now clear that both the Federal Reserve and Securities and Exchange Commission are stepping in to bail out the sector.

With stocks like JP Morgan Chase (JPM - Cramer's Take - Stockpickr) and Comerica (CMA - Cramer's Take - Stockpickr) both reporting good results, Cramer said there may be life in the financials after all. He explained that the banks can use this strength in their stocks to raise capital and stay in business.

Finally, Cramer said the home-build rate of single-family homes is finally slowing, allowing excess supplies to dry up and prices to stabilize. Cramer predicted the bottom in home prices should occur in 2009.

Cramer said for the short term, investors should take profits on the banking stocks, which have moved up too much. He also suggested buying oil and gas stocks because they have gone too low.

Cramer owned up to telling viewers to begin buying the oil stocks last week by saying he was wrong. However, he said investors who bought last week will be OK for the long term.
Sell Block

Cramer added nursing homes, or senior living communities, to his sell-block list, calling them "serial destroyers of value."[/quote]

[LouisvilleFan]

Jim Cramer is one of the most intelligent and emotional guys on Wall Street. Combine the two, and you'll get a lot of good reasons to be very bullish or very bearish. Usually the best time to jump in is when the analysts who are always optimistic finally turn pessimistic.

[ardillacid]

I don't know jack about the market, but wouldn't you want to buy oil and gas when its at its lowest? You know, the whole buy low sell high thing?

[Daniel9]

I am the financial manager for a nonprofit foundation. In my job I am able to see some of the "behind the scenes" things that are going on and it's not pretty. We've come close to some [i]BIG [/i]financial disasters in the past few weeks.

The aspect I would focus on in these times is what's happening to the middle class. The US is becoming a nation of haves and have nots. The rich are [i]so [/i]rich that it would take a financial catastrophe to affect them. The middle class is starting to slide into the lower class bracket...a very unhealthy situation for society and the economy. We need to ask who is profiting from these difficult times, what is the effect of what is happening and how can the situation be addressed so that [i]everyone [/i]benefits from a stronger system.

[Lounge Daddy]

[quote name='Daniel9' post='1603172' date='Jul 19 2008, 01:07 AM']The aspect I would focus on in these times is what's happening to the middle class. The US is becoming a nation of haves and have nots. The rich are [i]so [/i]rich that it would take a financial catastrophe to affect them. The middle class is starting to slide into the lower class bracket...a very unhealthy situation for society and the economy. We need to ask who is profiting from these difficult times, what is the effect of what is happening and how can the situation be addressed so that [i]everyone [/i]benefits from a stronger system.[/quote]
I'm sorry but rhetoric about the so-called "haves & have-nots" and the supposedly vanishing middle class has been going around for over 100 years. The exalted middle class is not only still with us, but stronger and better able to increase their own wealth. The so-called "haves" (I assume you mean the wealthy) are the ones who help others generate wealth for themselves and their families, and they help others generate wealth, and so on. I do not dig class warfare rhetoric and the wealth envy, intentional of not.

And I really like Cramer. He's always the unflappable optimist. Even seeing trouble in every part of every market, he sees that we just pull out and step back--then wait for the clean-up. Naturally, there will be opportunity in the clean-up.

[Daniel9]

[quote name='Lounge Daddy' post='1603960' date='Jul 20 2008, 09:36 AM']I'm sorry but rhetoric about the so-called "haves & have-nots" and the supposedly vanishing middle class has been going around for over 100 years. The exalted middle class is not only still with us, but stronger and better able to increase their own wealth. The so-called "haves" (I assume you mean the wealthy) are the ones who help others generate wealth for themselves and their families, and they help others generate wealth, and so on. I do not dig class warfare rhetoric and the wealth envy, intentional of not.

And I really like Cramer. He's always the unflappable optimist. Even seeing trouble in every part of every market, he sees that we just pull out and step back--then wait for the clean-up. Naturally, there will be opportunity in the clean-up. [/quote]

According to the Census Bureau, households that earn between $25,000 and $75,000 represent approximately the middle half of the income distribution tables. Over the past two decades, the number of households in those brackets decreased by 3.9%, from 48.2% to 44.3%. The number of households with incomes above $75,000 increased over 7%, from 23.2% to 30.4%.

[XIX]

So tewnty years ago:

48.2% between 25K and 75K
23.2% had an income above 75K, which leaves...
28.6% below 25K

Fast forward to today:

44.3% between 25K and 75 K
30.4% above 75K, which leaves...
25.3% below 25K

So more people are about the 25K mark than 20 years ago. If the middle class is shrinking, then so is the lower class. However, I suspect we are just seeing the consequences of inflation (i.e. 75K isn't as much money as it was 20 years ago, so more people make >75K. Same with 25K.)

I'd say those results are normal. Because a dollar today is worth less than a dollar 20 years ago, the range between 25K and 75K has naturally shrunk since then. So it only stands to reason that the # of people in that range will shrink also.
[/math nerd]

[Didacus]

[quote name='Deb' post='1601934' date='Jul 17 2008, 12:35 PM']I am not worried. I have nothing so I have nothing to lose. Those who are tied to what they own are the ones who will be crying.
Everyone pays for their gluttony sooner or later. The bigger you are, the harder you shall fall.[/quote]

I agree, however, my worries turn around my children. I need to make certain they lack none of the essentials and provide them with opportunities. That may become quite a challenge in the years ahead.

[Lounge Daddy]

[quote name='Daniel9' post='1604277' date='Jul 20 2008, 11:11 PM']According to the Census Bureau, households that earn between $25,000 and $75,000 represent approximately the middle half of the income distribution tables. Over the past two decades, the number of households in those brackets decreased by 3.9%, from 48.2% to 44.3%. The number of households with incomes above $75,000 increased over 7%, from 23.2% to 30.4%.

[/quote]

As [url="http://www.amazon.com/End-History-Last-Man/dp/0743284550/ref=pd_bbs_1?ie=UTF8&s=books&qid=1216654806&sr=8-1"]Francis Fukuyama observesin his book[/url] [i]The End of History and the Last Man[/i], the era of conflicting global ideologies is coming to a close and the era of ideological consensus, and implementation is begining--Democracy won and as it speads, so does Capitalism.

What does that mean? It means more wealth and more people free enough to go after it in the world.

Just the other day Goldman Sachs released a report showing that the middle class in the world today is growing, and growing at a very fast rate. The title of the report is "The Expanding Middle: The Exploding World Middle Class and Falling Global Inequality."

[url="http://www.ft.com/cms/s/0/7b7422a2-5274-11dd-9ba7-000077b07658.html"]Financial Times has a recent article[/url] commenting on this report:
[indent]Linked to the current mood, commentators often depict an embattled and shrinking middle class, with sharply rising financial inequality. However, globally, this is simply not true. One of the most startlingly positive phenomena for many generations continues to unfold around the world. We are in the middle of an explosion of the world’s middle class.

As two of my colleagues, Dominic Wilson and Raluca Dragusanu, showed in a paper Goldman Sachs published last week (The Expanding Middle: The Exploding World Middle Class and Falling Global Inequality), about 70m people a year globally are entering this wealth group, as defined by those on incomes of between $6,000 and $30,000 (€3,800-€19,000, £3,900-£15,000), in purchasing power parity terms.

The phenomenon may continue for the next 20 years, with this global middle accelerating to 90m a year by 2030. If this happens, an astonishing 2bn people will have joined the ranks of the middle class. This demonstrates that, contrary to widespread opinion, global inequality is declining significantly, not increasing.[/indent]

But that may be all well and fine for the rest of the world, you may be thinking. What about us here in the United States?

[quote name='XIX' post='1604415' date='Jul 21 2008, 10:29 AM']So more people are about the 25K mark than 20 years ago. If the middle class is shrinking, then so is the lower class.
[/math nerd][/quote]

Exactly! While the world over is seeing more and more people rising from the so-called lower class and joing the middle income brackets, wealthier countries like the United States is actually seeing more and more movement out of the middle and into the higher income brackets. So, it can be argued that the middle class is indeed shrinking in the United States. But they are not going down... they are going up!

One economist that just recently wrote about this a labor economist named Stephen Rose. The Washinton Post just carried an article about him titled "An Upside for the Middle Class: Lost Amid the Stresses Are Gains in Standard of Living."

Among the interesting recent numbers: There are fewer people in the middle class (defined as households earning between $30,000 and $100,000 annually) than there were three decades ago. The percentage of people earning less than $30,000 a year has remained unchanged. Thus, there are more people today finding it easier to move into upper income brackets. In fact, the percentage of Americans who earn more than $100,000 a year has doubled; from 12 percent in 1979 to 24 percent now!

This is incredible news. And hardly the gloomy picture that some pain when making claims of "a (perpetually) vanishing middle class and more people joining the ranks of the poor." These numbers are especially amazing when we look at our economy in context of what we have pulled through and survived over the past 30 years. Just recently our economy has been through a barrage of blows, but it remains unsinkable and moving forward--and the economy will remain unsinkable as long as the market remains a free market.

Some times I think that the reason bad news seems to get the press coverage is because the bad is truly the exception. Believe it or not, things are always looking up.

By the way, lest some one think that I an sighting sources from purely right-wing and conservative skewed sources... Mr. Rose is not only a labor economist; he [url="http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=114&subsecID=144&contentID=253831"]writes for the Progressive Policy Institute[/url], is a member of The Third Way, which is a progressive (meaning liberal) think tank, and is also[url="http://www.dlc.org/ndol_ci.cfm?kaid=127&subid=171&contentid=253982"] a contributer for the Democratic Leadership Council[/url].