Wrong! & why James Cramer & ( L.T.) convinced me NOW is the time for the 'patch to rebound ! - I'm getting out the shopping cart for one last shopping spree...
I'm taking the liberty of posting a great article by JJC for educational purposes - for which he surely can not complain. Please do subscribe to theStreet.com - I enjoy it immensely.Mavis Scanlon does a great job covering the oil sector. I have great respect for Cramer, (even though he has ''dissed'' the patch) but this time he's failng to see an obvious parallel; It is a ''given'' that the primary factor for falling crude prices is not OPEC's over production, but rather the reduced demand from Asia. Hence, a prime indicator that I have been waiting for is the sign of an Asian economic recovery. Most importantly - because I wish to beat the crowd to the party; is the sign of reinvestment in Asia which will precede the economic recovery as history as taught us so effectively. I have been waiting to hear the news of tech stocks alluding to increased Asian demand or signs in substantial Asian reinvestment. We now have the signs. Numerous articles have mentioned the recent flow of funds into Asia and specifically Japan; this and the direct parallel of the oil sector to the bank sector of 1990 as follows in Cramers excellent piece; have convinced me that - now is the time. We have bottomed and in fact we are turning the corner. The pieces are in place. We no longer have to wonder what OPEC is going to do, we have reduced earnings expectations and downward analyst revisions.We had a short window of opportunity with many fund managers doing some ''window dressing'' and dumping oils at the end of the quarter The bad news has been wrung out of these stocks and is fully priced into them currently. EVI's $2+ move was another sign I was waiting for...
************************************************************************* ----''delete banks and insert oil sector'' - same fundamentals apply ! Japan or the Oil Sector ? - I think I'd match return for return with Cramer - Oil Drillers & Service stocks vs. Japan.- side bet Jim ? The parallels between the bank stocks in 1990 and the oil sector today, can not be ignored; Cramer - get ready to do a ''Wrong'' piece on the oil sector...
By James J. Cramer
Editor's note: Jim Cramer is on vacation; this is a bonus column written
earlier this week.
Stroll back with me on memory lane to that time in late fall 1990 when
every bank was going under. There was pure chaos in this country. People
were talking about bailouts that would run to $200 billion -- they did.
People talked about the possibility that no banks in Texas would survive.
One did. People talked about the possibility that major money center banks
would have to merge or fail. They did. Talking heads would come on
television and predict the demise of Citicorp (CCI:NYSE). It almost
happened.
I was trading out of my place in Bucks County in those days, with my wife,
Karen. We were extremely negative on the banks. We used to just sit there
and thumb through our SNL Securities guidebooks and offer short stock on
any bank that had more than 3% bad loans. And we would short them and short
them and short them. Many of them we never had to cover. They disappeared,
some overnight. Others, like Bank of Boston (BKB:NYSE), we covered at $5.
Chemical we covered at 9. A host of New Jersey and New York banks we
covered at $2 and $1 only to see them stop trading days later, declared
insolvent by regulators. We shorted Wells Fargo (WFC:NYSE) for something
like 75 points! Talk about downside.
Then one day I got a call from an options trader. He said hedge funds were
raiding Wachovia Bank (WB:NYSE) in North Carolina. That it had a ton of bad
loans. That Wachovia was the next to go. For the longest time this game was
like shooting fish in the barrel. But I hit up the chart of Wachovia and it
was on its butt. It was already down. Incredibly, though, Wachovia had
almost no bad loans. Heck, this thing didn't even look like a bank. It
looked like a service company.
I called the company to be sure the numbers were right. Sure enough, the
bank came back and told me that it had weathered the storm miraculously
because it just didn't make a lot of risky loans. Wachovia was one of those
banks that only lent you money when you didn't need it.
I remember telling my wife that when the rumor boys were raiding down banks
like Wachovia, it was too late. The babies are going down the whirlpool
with the bathwater. It was my greatest call. We covered all the banks we
were short and we went long Wachovia and Citicorp. And we had a good year.
The banks bottomed the same week that I got the call to short Wachovia.
Why all of this history? Because right now I hear all of the same things
about Japan. Make no mistake about it, Japan is as bad as the corrupt Texas
S&Ls that rolled over so quickly once the heat got turned up. But is it
worse? I am not sure. All I know is that like in 1990, being short any bank
in Japan has been a tremendous play. Easy money. As easy as shorting
Wachovia Bank in 1990.
Which is why, again, I am drawn to Japan. Too many people on one side, too
many people thinking the Japanese can't do anything right, that they are a
bunch of moronic liars and crooks.
No dice. I am looking for my Wachovias and my Citis over there. I haven't
found any. But believe me, nobody in 1990 was thinking that Citicorp would
ever trade to 160 in our lifetime. Citi was dead and buried.
But as long as there is capital from outside that can come in, as there was
with the Saudi Prince, the ballgame is far from over. As long as everyone
is so negative, as Ron Insana said so eloquently this week on CNBC when he
stated my position more articulately than I can, I gotta take the other
side of the trade. Just got to. Because that is how I made huge money in
the past. And how I will make huge money in the future.
**********************************************
Thanks Cramer; you've said the purpose of your articles are to make the individual investor think like a fund manager, or to THINK period. Mission accomplished. I've found my ''Citi's & Wachovia's'' ... they're called EVI,FGII, CDG & FLC... and I too, will make HUGE money in the future ! |
