Cramer on BloggingStocks: Here comes the death of the bearish funds |
Date: Thursday, October 1, 2009
Author: Jim Cramer on BloggingStocks
TheStreet.com's Jim Cramer says this year will
see the mirror image of last year, when redemptions ended the game for many
managers.
One year ago today, a quarter ended that put hundreds of bullish hedge funds out
of business. Today, a quarter ends that will put hundreds of bearish hedge funds
out of business.
Oh, sure, last year some of the bulls were able to stumble through the fourth
quarter, but October was a horror show and they ended up getting huge redemption
letters and spending the rest of 2008 selling into the strength of the rally to
return capital to investors and lock in losses.
I expect the same thing to happen to the bears starting today with the October redemption letters and wires hitting their assistants and their bookkeepers. They too can try to redeem themselves (rather than be redeemed) by covering their shorts -- really chasing them -- in MBIA (NYSE: MBI) (Cramer's Take) or MGIC (NYSE: MTG) (Cramer's Take) or Citigroup (NYSE: C) (Cramer's Take) and CIT (NYSE: CIT) (Cramer's Take) and dozens of other over-shorted names. They can bet on a crummy employment number on Friday -- on top of a weak claims number Thursday -- to try to salvage something of their Bank of America (NYSE: BAC) (Cramer's Take) and Wells Fargo (NYSE: WFC) (Cramer's Take) shorts, the two hedge fund mainstays. It won't matter much. If you were short or sidelined, you don't have a wall of worry to climb -- you are imprisoned by a wall of other peoples' performance.
Oh, sure, there are plenty of bearish cases to be made, but compared to last year they are splitting hairs. Are we still arguing about housing collapsing down 30% as it did, or are we arguing about whether it still can go down 5%-10% or whether it has already started up again? The shadow inventory of homes? I don't know: The actual inventory of homes and new homes is the lowest in ages. Or cars? GM and Chrysler are already gone. So are all of those marginal outfits like AIG (NYSE: AIG) (Cramer's Take) (in its old nongovernment form) or Lehman or Fannie (NYSE: FNM) (Cramer's Take) and Freddie (NYSE: FRE) (Cramer's Take). When we talk Citigroup, we don't talk seizure -- we talk earnings, despite every attempt to fret about whether the FDIC is backing debt or not.
The world is changing for the better, not for the worse, as it was a year ago.
So as we say goodbye to the quarter, we also say goodbye to the bears who refused to see it any other way. They are the other side of the coins of the bulls who did the same last year.
Most times the arguments are theoretical, the positions debatable, as long as you are in the game. Those who made nothing this year will soon lose their ante in the great arguments of the day. And they'll go back to firms to be salespeople or analysts and start all over again.
At the time of publication, Cramer had no positions in the stocks mentioned. Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long Bank of America and Wells Fargo.