To start a fire, but not to destroy the market by doing so. That’s the goal right now. It’s not as easy as in Jack London’s famous short story (“Too Build a Fire”) where in the end the survivors profit rather than freeze to death in their sleep. At the beginning of this decade, we saw the rise of Robinhood (HOOD) and the distribution of investments from the serious to the fleeting. These days, Robinhood looks like a gigantic bonfire of youth money. The concept of gamification was real and the investor exodus was loud – culminating in the ridiculous self-immolation of GameStop (GME), AMC Entertainment (AMC) and meme actions. Those who fought this trend ditched Twitter, hired bodyguards and tried to hide from the angry mob trying to drive up stocks by saving sellers. No tinder from these clowns. Then there was the much larger than expected surge in crypto. The people who bought it somehow buried their brains in something they didn’t understand. As a result, they invaded their brains and outsourced them to others who claimed to know more than they did. You’ve had to stand against a phalanx of vociferous, self-promoting scoundrels and their fintech allies in government and venture capital – all of whom should feel shame, but the shame eludes them. They will not accept their intellectual disgrace and will continue to claim that it was about blockchain and DeFi (decentralized finance). They want to explain to you why they got it right and you got it wrong, even though they lost everything and you were safe keeping your money at JPMorgan. I wish I had a scale of pride, something like a gigantic thermometer that could measure those arrogant promoters and give them the hook when they claim they’re smarter than you to believe in something with a better use case like an untraceable ransom. But that time is running out. It will be through a fight, of course, as we see its exponents defending themselves with specious arguments that seem so selfish and downright false that even neutral minds are rebuffed and rebel. The money furnace that was Robinhood is slowly burning against the napalm of crypto. The interests that have championed crypto cannot go quietly because they will empty the coffers of their crypto banks and cause waves of bankruptcies; the $34 billion we know was destroyed by Sam Bankman-Fried – the disgraced former boss of failed crypto exchange FTX – has pretty much backed it all up. We continue to be stung by the so-called due diligence done by so many who should have known better, with only a few institutions writing their investments down to nothing, along with their explanations, or lack thereof. Here’s the thing: if everything goes away – the crypto and all the institutions that support it – the money that’s left over won’t help drive stock prices higher. It was once a magnet for a few trillion dollars. Now I wonder if there is $400 billion in the whole building. The whole thing reminds me of a line from the movie “Beau Geste”, where two of the main characters are attacked: “You will do your duty better dead than you ever did alive. The bigger guns are probably liquidating as they talk, the cunning cads. They will tell us that we are fools for not believing in blockchain as if it is somehow instrumental for anything other than lies and gaffes. What I mean is that Robinhood’s crypto scam and dollar conflagration can’t produce enough money to support stocks. There isn’t enough left in those embers to do anything but marvel at all there was and how little bankruptcy it resulted. No matter how many hearings, we will never know the full guilt of the members of Congress and the Securities and Exchange Commission who opposed Chairman Gary Gensler. He came to CNBC specifically to warn us about invented coins and institutions that give you too high a return compared to cash at a real bank. Interested cryptocurrency players have criticized the SEC. They want to school Gensler and let him know that he can only go so far before he encounters all of the well-endowed entities and their secret paid followers. The horror! The horror! So where will the money come from? Unlike the chimerical trillions that have disappeared into the crypto air, the fuel will come from four stocks that have a combined $6 trillion to give away: Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL) and Amazon (AMZN). There is simply too much money in these names to take us any higher, or at least how far we can go after the next Federal Reserve meeting this week. But I think some of that investor money will be funneled into the stocks of the companies that have the most voracious buyouts. These are the companies that don’t have enough stock available to handle all the money that will be pouring in. Money from these four stocks will be taken out, kicking and screaming, until valuations turn earthbound – better than the Meta Platforms (META) and more like the S&P as they prove deadly. Only then can the rally truly begin. Can these valuations be played out? This is happening as you read this. Of course, there’s another enemy ahead and it’s a powerful one: the 4.5% yield on 2-year Treasuries is shockingly abundant in a market where anything beyond 4% in equities is likely tied to falling oil. However, we cling to oil, betting they can keep their prices well above the market when Russia can’t produce its infinite supplies and China becomes ravenous to reopen. I think we will win. We will keep Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL) and Amazon, even though we have increased them. Their downward spiral, however, will be painful. If we hadn’t sold any, it would be late in the game. But I suspect there’s more pain to come. Why take it? Because these businesses still have value, although it will only appear after the sale is complete and we don’t know when that will happen. It’s now too dangerous to leave, although Apple might see $120 and Microsoft down 10 points. Amazon and Alphabet are controlling their own destiny through downsizing. The good news? The sell-off could end after the Fed meeting. The bad news: if that’s the case, there won’t be enough rocket fuel. The big four need to lose a trillion minimum to get things higher. I think it will happen over time. Which would mean a brutal week until the transfer starts to happen. Hold on to what you have, but prepare to be stock driven with the biggest buybacks. This is where the accumulation will matter the most. (See here for a full list of Jim Cramer’s Charitable Trust stocks.) As a CNBC Investing Club subscriber with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, AS WELL AS OUR DISCLAIMER. NO OBLIGATION OR FIDUCIARY DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
Satya Nadella, CEO of Microsoft Corp., at the company’s Ignite Spotlight event in Seoul, South Korea on Tuesday, Nov. 15, 2022. Nadella delivered a keynote speech at an event hosted by Korean Unity of the society.
Seong Joon Cho | Bloomberg | Getty Images
To start a fire, but not to destroy the market by doing so.
That’s the goal right now. It’s not as easy as in Jack London’s famous short story (“Too Build a Fire”) where in the end the survivors profit rather than freeze to death in their sleep.
At the start of this decade, we saw the rise of Robin Hood (HOOD) and the distribution of investments from serious to ephemeral. These days, Robinhood looks like a gigantic bonfire of youth money. The concept of gamification was real and the exodus of investors was loud – culminating in the ridiculous self-immolation of GameStop (GEM), AMC Entertainment (AMC) and meme stocks. Those who fought this trend ditched Twitter, hired bodyguards and tried to hide from the angry mob trying to drive up stocks by saving sellers. No tinder from these clowns.
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