Cramer/thestreet.com bullish on Russia
Market Features: Wrong! Cramer on Japan and Russia: Too Late to Sell
thestreet.com
By James J. Cramer
7/14/98 7:16 AM ET
Two intractable situations, Japan and Russia, overnight
have changes for the better. Russia gets the big loan it is
looking for. Japan gets the
possibility of real change.
Should we a) totally ignore
these situations as too difficult
to fathom; b) decide that nothing has happened at all and
stay away?; c) diss both as frauds and stay short them?;
or d) cover the short and maybe go long, or, yes, I hate to
see these two words together, but "average down" if we
are already long?
The answer, for those who really believe that progress
never occurs and would still be shipping anthracite coal
via the Delaware & Hudson Canal if they had the choice,
is d. You simply can't ignore this positive news as if it did
not happen. That would be as stupid as ignoring negative
news when you are long a stock. That's Wrong!
Okay, you are still not convinced? When I used to trade
with my wife and I got discouraged after watching a
position go down and down and down, I would say,
"Whew, we gotta get this thing off the sheets. It is
malignant. It is killing me."
She would then dutifully hit up the chart. She would stare
at it. And then she would render an inalterable verdict: "It
is too late to sell. You can buy or you can stand, but you
can't fold." That statement meant cloture. It meant that
you had two alternatives. You could keep your mouth shut
and stick with the position, or you could buy. No other
option made sense.
That's where Japan and Russia are. They are too late to
sell. And if you owned them and had the foresight to stay
away as they cascaded down, now would be the time
when my wife would say, you owe yourself another
chance to make it right. You can buy some right here.
If you had no position at all? You'd start right now. I don't
want to recommend any funds, open, closed or mutual,
and I don't want to recommend individual stocks -- that is
not my thing -- but with the changes in Japan and Russia,
changes that are for the better, you have to make a move.
When Mexico bottomed a few years ago, I penned a
similar piece for New York magazine. At the time, the
U.S. had worked out an aid plan for Mexico, a bailout. I
recall attacking the Journal's coverage for being too
bearish (I had called one of their reporters a man/bear but
my editor cut it out because it sounded too suggestive!!!!)
and predicted that the Rubin plan would work. I know this
seems hard to believe three years later, but almost
nobody believed Mexico would ever pull out of its tailspin,
bailout or not. The put interest in Telmex at the bottom
was as high as it ever got.
I covered my Telmex short, and brought in my banking
shorts, but did I go long? Nah, I figured it was good
enough not to be short anymore. I was wise, but I didn't
want to be too wise. I left a lot of pesos on the table.
This time I see the same potential bottom in East Asia.
Like in 1995, I am not sure how to play it. I don't know if it
should be with phone companies, with banks, or with
indices. But I know it is right. So I am buying closed-end
funds selling below net asset value, a list Barron's prints
every single weekend. I would go there for names. That's
where the best values are. And if I owned any emerging
growth funds, I would put more money in them now. Even
the dogs, the Templeton/Mobius blowhards who didn't
get you out and regard everything as an opportunity. You
know the guys I am talking about. The ones who killed
you. Even they can't hurt you now, I'm betting.
Because it is too late to sell. You can either stick or take.
You can't fold. I'm taking.
*****
Random musings: I still get excited by the hum of
earnings season. Fax after fax arrives and you have all of
35 seconds to figure out whether the tax rate changed, or
the inventories are too high, or the loan losses increased
beyond hope. It is a great game of wits, where you are
pitted against everyone and a false move costs you big.
To me, it's like a giant game of flinch. It is our business at
its most exciting. Last year I missed this week on
vacation and I swore I would never take it off again. It's like
an island of excitement in the middle of a long languid
sea. You gotta love this game.
Has Jim got you eager to find a mutual fund that invests in
East Asia? Check out this recent story on mutual funds
investing in Asia and Japan.
James J. Cramer is manager of a hedge fund and
co-chairman of TheStreet.com. 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 by sending a letter
to TheStreet.com at letters@thestreet.com. |
