Cramer: Name of the Game

N E W   Y O R K, Dec. 11 -- — Opportunity is the only school to graduate from if you want to be good in this game.

Friday’s opportunity was classic. Here we were caught being short a little Extreme, thinking it shouldn’t have been up $12 or $13 or whatever the day traders took it up to at the close, and I was feeling hung. Darn it all, thought there would be some profit-taking at the bell. Never got it.

I’m Just Thinking

Next thing you know Clare Shipman’s making me 25 gs with some report about how Vice President Al Gore’s going to president. That’s right, at 4:01 some clown is offering Extreme down $5 off the Florida news. Now, remember how I think. The people taking up Extreme, 1) don’t know Extreme, and 2) don’t care who is president. Me, I just think the stock is up too much. So we bid down five to bring the short in and we get whacked. Bad trade goes into the good trade category. Why do it? Because of the opportunity.

Far too often I see people talk about emotions like “complacency” with regard to political or geopolitical stuff and I want to shake my head. This is a game about earnings vs. Greenspan, and if Greenspan joins the earnings team, it’s up and away.

As Long As …

Why is it so black and white? Because as long as people don’t need the money, meaning as long as Greenspan doesn’t allow the slowdown to drift into recession, then demand for securities stays high. Stocks go up because there are more buyers than sellers. There will be more buyers than sellers as long as people have capital that they don’t need to live on. But if they need it, then the selling begins. Time and again I have to exhort you, don’t overthink this game. It’s not a hard game. As long as there’s plentiful job growth and low inflation, we’ll have stocks that will go higher.

Period.

James J. Cramer is manager of a hedge fund and