Cramer: Bizarro Market Is Killing...

Bizarro Market Is Killing the Grizzled Veteran

By Jim Cramer, RealMoney.com | 29 October 2007

Lots of things make no sense to people and it is killing them, particularly those who have been in this business for years and years.

First is oil. We don't expect any commodity to double and not matter, either to itself— the use of oil not being cut back at all— or to the economy. The idea that we are at $96 and no new oil has come out of the ground to meet the demand is mind-boggling, particularly among those who remember the spigot being turned on and the price going to $10 not that long ago. That means the international drillers, the ones with all of the leverage to worldwide deep oil in far away places, not the ones with North American gas exposure, make out like bandits. They had been cyclical businesses until now.

Second, we can't believe that all of these technologies like solar and ethanol, which were totally prohibitive and needed subsidies, are suddenly cheaper than oil. So those stocks do nothing but go up and up and up.

Third, we have become convinced that infra plays are going to go up and then go down in a crushing style. But because of the vast new need for power, they are no longer [[predictably: normxxx]] 'cyclical'.

Same with fertilizer companies. They used to be able to put them in six to 18 months. They are no longer able to do that and they can't meet the demand. They are oil service companies now.

Then there is China. We know it can't and should not go up. But we can't leave it without underperforming. China is driving competitive hedge fund managers nuts because it is producing big wins for those who are ignorant of the past.

And finally there is arbitrage: people shorting VMWare (VMW - Cramer's Take - Stockpickr) and going long EMC (EMC - Cramer's Take - Stockpickr). They can't make money even though it is an obvious trade. They are being killed! Same with Sunpower (SPWR - Cramer's Take - Stockpickr) vs. Cypress Semi (CY - Cramer's Take - Stockpickr), its parent. All of these differentials are driving the pros batty and making tons for amateurs.

[ Normxxx Here:  Well, the markets are probably more often 'irrational'— at least along some one dimension— than they are 'rational'.  ]

It isn't over, either.

Frustrating for those who know the past. Easy for those who don't. Sure that will change, but not yet, not yet.

At the time of publication, Cramer had no positions in stocks mentioned.

Normxxx    
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