2 takes by James J. Cramer on all the margin calls:
I always find James J. Cramer's Funky Thide of Sings powerful, dramatic and sometimes over the top and revealing, he is really there in the action, guys and gals. Although, I am typing from the most remote spot on Earth, I can feel the desperation.
I expect Cramer to go journalistic nuts soon. The market is his life and his life is being ripped. Cramer will reveal the end to the madness soon and find the base, the lowest of the low (AMZN 25?) and tell you when it is safe and even fun to join the party. I believe it will be more burning and looting until the end of the month, then FED SPEAK then a gradual slow build and liftoff in November. It's paper, metals, trucks, lawn ornaments, pollution free chemical smoke stacks, cash and Wal-Mart at least to the end of the month. Earnings plays worked well so far this week also.
Aloha
The Brutality of Margin Selling
By James J. Cramer
6/14/99 10:51 AM ET
thestreet.com
If people are still margined, and you think that today amounts to some
sort of crescendo selloff for the DOT, you might as well wait until the
margin calls go out and the clerks start the forced selling.
When I was a broker at Goldman Sachs (GS:NYSE), I would learn
which of my clients had margin calls right about now. I would then
contact them and urge that money be wired in so we would not be
forced to sell their stocks to raise capital.
If the money could not get in by wire by 1:30 p.m., I would plead with
the all-powerful margin clerks to spare my clients. By 2 p.m. my
entreaties would be crushed, and the forced selling would commence.
That's the pattern all over the Street. Margin clerks come in with sickles
and slash whoever can't come up with collateral. And the result is a
shake-out of people who did not want to sell but had to. Margin selling
is brutal and knows nothing of momentum or value or profit. It is the
pruning shear that allows a better market to grow back. But boy, are
those DOT trees ugly after the scything.
Stay tuned. Feels big today. Stay tuned.
Random musings: When these safety stocks like Becton Dickinson
(BDX:NYSE) blow up, I always imagine that conversation with John
Book (Harrison Ford) in Witness, when Kelly McGillis says, "I thought
you said we would be safe in Becton [Philadelphia]." And Book says,
"Well, I was wrong!"
TAKE 2 Cold, Bloodless and All-Powerful
By James J. Cramer
6/14/99 4:40 PM ET
Neither Stephen King nor Thomas Harris has ever seen something as
horrible as a forced sell of a Net stock. In fact, I have this vision of King
and Harris getting color for the villains of their next novels by hanging
over the shoulders of these clerks as they issued margin call after margin
call to brokers this afternoon.
Cold, bloodless and all-powerful.
Yes, the losses on the TheStreet.com Internet Sector index only gained
steam as brokers cashiered their clients' stocks to raise cash to meet the
calls. The selling goes unabated until the calls are met, and the clients
themselves are helpless to stop them.
Making things worse of course, was the news that eToys (ETYS:Nasdaq)
had less visibility in its business than when it did its deal. This was not the
day to announce that things aren't what they seemed a few short weeks
ago.
In the meantime, the cyclicals, heavily underowned by individuals,
mocked the losses of those riding the Internet crash -- and down 50%
does seem like a bit of a crash to me -- by moving up all day. The DOT
closes a point off its low, the Morgan Stanley Cyclical Index closes a
point off its high. Soon we will regard the cyclicals as safe because they
WON'T BE SOLD BY HANNIBAL THE MARGIN CLERK!
Imagine that.
Random musings: If you can handle it, I will be doing a Yahoo! chat at 5
p.m. EDT.
James J. Cramer is manager of a hedge fund and co-founder of
TheStreet.com. At time of publication, his fund was long Goldman
Sachs. His fund often buys and sells securities that are the subject of
his columns, both before and after the columns are published, and
the positions that his fund takes may change at any time. Under no
circumstances does the information in this column represent a
recommendation to buy or sell stocks. Cramer's writings provide
insights into the dynamics of money management and are not a
solicitation for transactions. While he cannot provide investment
advice or recommendations, he invites you to comment on his
column at jjcletters@thestreet.com |
