Cramer: Trading rumors doesn't work
Jim Cramer | firstname.lastname@example.org
This is not the way people can invest. It doesn't work. It is useless. No one knows anything, and
maybe nobody should do anything on the basis of any of this.
Everything has a catch. Nothing is about what really matters, which is growth.
I am trying so hard like everyone else to figure out what could be happening. When I hear that there could be Euro-wide FDIC-type insurance, I get excited, because that's what would keep money in the banks of countries that are having problems paying their bills.
But no sooner do we get that, if we get that--and we have no idea who would be issuing it or backing it or who would pay for it--we know that the next issue will come up, Italian 10-years or some new country worry we haven't even thought of, and people will just sell things down again.
Here's the issue: Without actual concrete measures to initiate growth, these countries can't pay their sovereign debt. They need higher tax receipts, and nothing that is talked about will give these countries that.
I, for one, believe that the real flaw in this thinking is the notion that everything has to go down if these countries go down. But the moment you say that, you are then taking on Lehman times 10, which is what I keep hearing is the operative term for what can happen.
The bottom line is that no matter what is accomplished, it will never be enough for those who view the world as one big stock with a bad balance sheet that trades right now out of Europe.
I urge you to not think like this. I urge you to be aware that everything is a rumor and that the most important things to have are some cash for when the rumors are dashed and a healthy mix of dividend payers that don't need a lot of credit and which withstood our crisis of 2008. And I urge you to stop thinking that Europe's chaos will be as bad for the U.S. as our own chaos was.
We can't play rumors. We can play odds. The longer things go on, the longer that there is a likelihood that more programs can be in place that will cushion the blows.
In either case, please take into account that many of the companies that I like do not need credit that would be affected by Europe to make their numbers but could rely on old programs the Fed put on if they need to be revived.
And stop trading every rumor and have confidence in your stocks either way. Or just sell them, because you won't be able to handle the next selloff that comes when the good rumors don't pan out and the bad rumors come true.