Monday, April 6, 2009
(Cont'd from above)...

Jim (cont'd):   

The price of my positive outlook… a very hate mail heavy weekend… I got tons and tons of it every hour… why… because the bears were all over me saying just you wait Cramer, just you wait… you have no idea just how bad things really are… I used to answer the hate mail… I used to think that I could convince people that I was right, that I knew what I was doing… but you know what, it ain’t worth it… I have realized instead that I just take it as a badge of honor… it means that people are really digging in their heals… that they are unwilling to change stripes… that they are alas, committing a cardinal sin… they are hoping… and nothing worse than hoping…  In Sane Investing In An Insane World, I say leave it at the stadium… that is where hope works.

They are hoping that the market will crater… either because they are short sellers… very likely given the pain with which they write… or they need prices lower so they can get on board… why do I think this… because I have been blasted into reality over and over again whenever I dig in my heals on either side… you are always angry when you get run over… and you are always willing to take it out on the people who are on the other side… the fact that I am open about it… the fact that I actually read my emails, that I actually talk to people… has helped me learn stories and learn how to make money… but it has also been an exercise in pain… and when the emails are most hurtful is when I know that I am right… my hate mail is one of the most reliable indicators of where the market is going… in existence, believe it or not… at this moment I have a huge number of people who tell, and have told me from the bottom, that I had no idea of what I am talking about… when I said the down side was minimal so I said that you had to start buying at Dow 6500.

These people claim that I am crazy… that I am crazy to say that my colleague who writes with me at RealMoney, part of TheStreet.com, where I am chairman… Doug Kass… crazy to praise him… crazy to say that he got it right… when in fact that it is just way to early to say that… that the results aren’t in… Doug called the bottom 1,500 Dow points ago… in RealMoney, the paid version of TheStreet.com… and from where I am sitting… I don’t know, looks like a pretty darn good call.. but my hate e-mailers don’t seem to see it that way… to me this is the equivalent of saying, wait a second, wait a second, there is still a good chance that Villaova comes back and beats UNC, and the idea that you think it is over is ridiculous, just wait until those Villaova Wildcats start hitting those 3 pointers… you see at a certain point it is over… a 20% move is a lifetime in this business… and only the worst and most emotional investors and traders don’t understand that… the year has been made for people who bought at the bottom after avoiding the sell off… the year has been made for the nimble.

The fact is undeniable… and yet the bears refuse to admit it… life support… what is the lesson here… in the immortal words of the late great economist John Maynard Keynes, when the facts change I change my mind… what do you do sir?… the facts have changed… we have rallied enormously off of the bottom… things have gotten better… that happened… if you were a shorter just sitting on the sidelines, you either got crushed or you missed it respectively… these people are the people who are clogging up my inmail box with their outraged diet tribes about how bad things are going to get… at this point, if you are a bear you need to be thinking wait a second, maybe game over… not coming up with excuses or reasons for why you hate me or why you think things are going to go your way… they went the other way… it happened, get over it, learn from it, go forward… all of the people sending me this junk should stop the hate mail and figure out hey listen how did I screw up so I don’t do it next time.

You need to be flexible here and realize that things can change and did change… that March was better than February that was better than January… you need to recognize it is really easy for every single company to say, hey guys things are going to get better with all of the stimulus… something that will allow stocks to keep going higher… even if they all tell us that their previous quarters, the ones that they are just reporting now, are worse than expected… you have to understand that while people can’t seem the turn, it might be happening anyway… and I think that it is happening… it doesn’t mean that we are going to go straight up… never, never happens… but it does mean that all of those investors who have stayed negative, or are staying negative, they are doing it on the wrong principle… I think that it is principle spelled "-pal", not "-ple"… it is money, not fury… it is about who profits like dollars… not profits like Nouriel Roubini, who to be honest, reminds me of the professor of Gilligan’s Island, not the professor from NYU… he should have quit while he was ahead… but he is not doing the investing equivalent of betting on Villanova.

Save digging in your heels for when you are playing tug-o-war… this is a business of being flexible… the hate mailers are not being flexible… they are just being angry… my advice… stop betting on Nova… they didn’t make the finals… oh, and here is another news flash, don’t bet any money on the UCONN Huskies either… are not there.

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The Bottom Line!:     When the facts change… you either change your mind or you go into denial… denial is easier… but it is a river of red ink and Egypt… don’t drown in it… switch sides on the next shallow downturn… and get on the right bank... It’s important to be flexible and change when the market changes...   Alright, Dow down 42... I say what a day… and I say that when the facts change stop betting on Nova… I changed my mind… this rally has legs.

[verbatim recap]

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Jim went on after this segment to take questions from callers, and responded with his comments...

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Q:    If conventional wisdom is that small caps lead out of a recession, but because this recession was precipitated in part by the financial crisis, is small caps going to have the financial availability to lead again? Or are large caps going to have the advantage here?

Jim:    I think large caps this time and the reason that I say that is because there was a worldwide recession, and a lot of these companies are doing better because of their international business in other places… for instance, on Friday we say Brazil had the single best March in automobile sales in years and years and years… we are seeing a turn in China… if you have companies that are levered to Brazil and China, they are going to do better than companies that are levered to America.

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Q:    Trying to profit on some of the possible wind boom. Especially with Obama pushing for renewable energy sources. What do you think, any suggestions for any US companies? Other than GE?

Jim:    I got to tell you, I don’t believe in the wind boom because it is going to have to be so heavily subsidized… there was a fantastic article this weekend that I was reading about where even in New Jersey where we are supposed to be so pro wind farm… can’t get the permits, can’t get it to be done… I think that it is a hopeless hope… and I am not going to recommend that anyone buy anything, as a matter of fact I would tell you that if you looked at the most recent stories about Trinity, which build wind towers… you would come around to my view, and realize there is no money to be made… let’s throw in solar while we are at it.

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[verbatim recap]

[end of segment]

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