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Politics : I Will Continue to Continue, to Pretend.... -- Ignore unavailable to you. Want to Upgrade?

To: Sully- who wrote (3492)	7/13/2004 7:08:54 PM
From: abstract	Read Replies (1) \| Respond to of 35834

What's Really Wrong With the Market By James J. Cramer RealMoney Columnist 7/13/2004 9:22 AM EDT Sometimes, when big fulcrum events occur, days like June 30 a few weeks ago, and nothing of consequence happens, you have to step back and ask, "What the heck is wrong with this market?" That's what I have thought about endlessly these last two weeks. And I have reached a sobering conclusion: This market is sick from the top down. That's right, the problem with this market is that we have lost a tremendous amount of faith in our leaders to control the situations that currently determine the risk profile of equities. Look, this market suffers from a radical shrinking in the price we are willing to pay for any earnings save the earnings of oil stocks and a handful of overpriced tech stocks that are the darlings of the mutual funds. You get multiple shrinkage from a number of economic areas, chiefly higher rates and inflation. But you also get it when you have incompetence at the top. I have to go back a decade to find a time when we had multiple shrinkage like this, to the period when President George H.W. Bush cast a pall over the market with his lack of understanding about the way the economy really worked. The first President Bush surrounded himself with people similar to John Snow, the current Treasury secretary, and Don Evans, the current Commerce secretary, uncreative, unthinking people who didn't have the ability to see or articulate what needed to be done to improve things. I have been slow to recognize the bigger issues that are just killing this market in part because I wanted to believe that the current President Bush is smarter than he sounds or looks. I wanted to believe that he could articulate correctly why we went to war in some foreign land where a thousand guys have died and billions have been spent. But he hasn't. He had terrible intelligence and bad homework, stuff I fire people for regularly and always have. The market senses this, and that casts a pall over every day's trading. What we see now in the market is a gradual realization that Bush will be forced out in November and a new man will be president, a man who may not be better for the stock market but one who arguably may not be worse if simply because a gridlocked government is better than the drunken spending and the no-vision team we have in now. Of course, that new government will have its predilections. The health care business will be reined in from excess profit if the new team has its way -- I as much as gave up on one of my drug stocks Action Alerts PLUS because of that Monday. But with the Democrats will come the hope of some intelligence when it comes to broader policies. The other day, I happened to notice that I was spending a Laurence Summers dollar bill, one signed by the former Treasury secretary, and it reminded me how far we have descended in intellect and pure smarts with this team we have now. I actually was waxing nostalgic for the Clinton team! So, we can keep talking about how great the earnings are -- and they are indeed great -- or how low rates are or how good stocks are. I think the truth is quite different: Stocks, except for the exotic few, aren't going to do anything here to speak of, not with this team in the White House. Not with the uncertainty of the election ahead. I know that President George W. Bush has been a good friend of the market when it comes to taxing those of us with lots of money. We've done great these last few years. But it is time to recognize that things aren't working. Time to recognize that the stock market is out of favor because we don't trust it, and that the trust is more a function of the leadership in Washington than it is of anything the companies have to say. It would be so much easier to blame the companies, but as you will see when earnings are reported, they aren't to blame at all. In short, as much as it is "bad for business" for me to admit this, we will do nothing of consequence in this market to speak of, save for the speculative world of Stocks Under $10. It's too bad. But I have been nothing if not honest with you readers for so many years now, I can't start lying to you: This market is sick of the leadership; not of the stocks like General Electric (GE:NYSE - commentary - research) and Microsoft (MSFT:Nasdaq - commentary - research), but of the president and the vice president, and nothing that comes out this week or the next or the week after in earnings will change that. That only changes in November. thestreet.com