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Strategies & Market Trends : Roger's 1997 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Cynic 2005 who wrote (6892)	11/12/1997 9:44:00 AM
From: Pancho Villa	Read Replies (1) \| Respond to of 9285

To All: this will be the last time I post something from the street.com. Contrary to what I said in a very early post about o month ago I can say that I do see value on it and subscribed. Cramer seems to ahve a better pulse of the market than experts elsewhere and the research on individual companies I rate #1. So enjoy the last frebee: thestreet.com I am also prividing the link for those who are members and those who would like to subscribe (I already subscribe to WSJ/Barron's the other must!) Wrong! Dispatches from the Front: Cramer Takes a Look at The Future By James J. Cramer 11/12/97 8:15 AM ET Look, I know it's hideous out there. These last two days have been pure torture, with the gosh darn averages hanging in there but many of the faves of this cycle taking it on the chin. I know what you are thinking: how much longer can this pain go on? I don't have the answers. Heck, I could be as wrong as anyone. But let me trace out for you what I think will happen over the next few weeks and give you a read of what might be ahead of us. I'm not in the caveat business and I am not advising you what to do. I am going to give you a sense of what Jeff and I are debating at Cramer Berkowitz, in part to show you how hard this job is and in part to show you how tortured we are. First and foremost, Jeff is a bear. He's on the front lines of research and he doesn't like what he is hearing from his companies. His view gets credence here - check out the piece I did about the disk drives the other day. Jeff knows the drives from his days in the tech department at Goldman Sachs Research, where I plucked him from a milieu of genuine hitters. He has kept me out of them so many times this year that I owe a huge debt to him. He also talks to plenty of companies that feel paralyzed and fearful by the problems in Brazil and in East Asia. You think those stocks go down just because of short-sellers? Heck no, few companies that do big business in either place can be very reassuring because they just don't know. Jeff hears everything that business has stopped in Brazil to outright talk of worldwide recession brought on by these festering global problems. Me, I take it in, make my calls, and do my homework. I come up with a different read. I see selling in equities that have exposure to Brazil and East Asia and Argentina , etc. -- and it is to the point when etcetera is the operative short-hand. But I also see liquidation in companies that are doing quite well and companies that have no exposure whatsoever to these hot spots. We met with Maytag last week, What a great story. They don't sell jack to these teetering economies. Yet, I don't own any. Why? Because there are monster sellers out there and I don't want to take them on. Nobody else does either. That's just my trading sensibility. I care about being buried alive as I establish my position. I see Godzilla-like sellers in a dozen names that are up big for the year. And I see Godzilla-like selling in a dozen names that are down for the year. It doesn't take Mothra to see the pattern. Mutual funds are selling winners and losers to lock in their fiscal years. Both offset each other. I also know, and have said repeatedly, that we have to retest the ugly lows of reversal Tuesday, as we shake out the weak hands who are afraid of giving back their performance for the year. We are doing that, too. The foreign contagion is a bummer, but it is not that big a bummer. The mutual fund selling is far more important. Now, I see some other things Jeff doesn't see. I see rampant put buying in individual names and in indices, something that there wasn't enough of in October. But I don't see the type of dramatic market breaks that would make me think these people will profit from their puts. That sets up an interesting potential scenario. The put holders, many of which expire two Fridays from now as part of November expiration, might be compelled to come in and buy common stock to offset their puts. That would reduce a lot of the downside pressure in the equity market. That might even cause a rally to begin, but I am afraid to anticipate it because we aren't finishing retesting. Either way, if it starts snowballing next week, I will be more aggressive. Alternatively, the upward bias will return to the market the week after, in part because of the Biderman liquidity stuff on the TSC last night, and in part because of the cessation of mutual fund profit-taking that will occur around Thanksgiving. Any short-term calming of the waters overseas -- and I am not looking for it -- would hasten the return of more buoyant markets. In either case, I predict more pain short-term and then a return to an upward tape. The pain may be too great to get involved ahead. So Jeff and I kind of net each other out, which means a lot of ping-pong in the office, and a lot of company meetings and workouts during the day, and a good plate of Barney GreenGrass smoked fish courtesy of our terrific Morgan Stanley brokers for lunch. Slothful? No, but to press it here is plain silly. What's a few days wait worth?? We think it is the difference between performing and outperforming. And that's what our game is all about.