Building a fire – but not destroying the market by doing so. That’s the goal right now. It’s not as easy as in the famous Jack London short story (“Too Build a Fire”) where the survivors end up profiting instead of freezing to death in their sleep. In the early part of this decade, we saw the rise of Robinhood (HOOD) and the distribution of investments from the serious to the volatile. These days, Robinhood looks like one giant bonfire of young people̵[ads1]7;s money. The concept of gamification was real and the exodus of investors was raucous—culminating in the ridiculous self-immolation of GameStop ( GME ), AMC Entertainment ( AMC ), and meme stocks. Those who fought this trend left Twitter, hired bodyguards and tried to hide from the angry mob that tried to boost the stock by bailing out the sellers. No tinder from these clowns. Then there was the much bigger than expected foray into crypto. The people who bought it imprisoned their brains to something they didn’t understand. As a result, they overran their brains and outsourced them to others who claimed to know more than they did. You had to oppose a phalanx of loudmouthed, self-promoting crooks and their fintech allies in government and venture capital – all of whom should feel shame, but shame eludes them. They will not accept their intellectual shame, and instead continue to argue that it was all about blockchain and DeFi (decentralized finance). They will explain to you why they got it right and you got it wrong, even though they lost everything and you were safe keeping your cash with JPMorgan. I wish I had a hubris scale, something like a giant thermometer that could measure these arrogant promoters and give them the hook when they claim they are smarter than you for believing something with a best-use case like untraceable ransom. But this era is running out. It’s going to be a struggle, of course, as we see its representatives defend themselves with ludicrous arguments that sound so selfish and downright false that even neutral minds are repulsed and revolted. The money furnace that was Robinhood is burning dry against the napalm of crypto. The interests that defended crypto cannot go quietly because they will empty the coffers of their crypto banks and cause waves of bankruptcies; the $34 billion we know destroyed by Sam Bankman-Fried – the disgraced former head of failed crypto exchange FTX – backed pretty much everything. We are constantly being undermined by the alleged due diligence carried out by so many who should have known better, with only a couple of institutions writing their investments to nothing, along with their explanations or lack thereof. Here’s the problem: If everything disappears — crypto and all the institutions that support it — the money left behind won’t help push stock prices higher. It was once a couple trillion dollar magnet. Now I wonder if it’s 400 billion dollars for the whole building. It all reminds me of a line from the film “Beau Geste”, when two of the main characters are under attack: “You’ll do your duty better dead than you ever did alive”. The biggest guns most likely liquidate as they speak, the dubious cads. They will tell us we are idiots who don’t believe in blockchain as if it is somehow dispositive of anything other than lies and blunders. My point is this: Crypto scams and the Robinhood dollar blaze cannot produce enough money to lift stocks. There is not enough left in these embers to do anything but marvel at how much it used to be and how little bankruptcy yields. No matter how many hearings, we will never know the full blame behind those in Congress and those at the Securities and Exchange Commission who opposed Chairman Gary Gensler. He came on CNBC specifically to warn us about fictitious coins and institutions that give you exorbitant returns compared to cash in a real bank. Self-serving cryptocurrency players have been critical of the SEC. They want to teach Gensler and let him know that he can only go so far before they face all the well-equipped units and their secret paid backers. The horror! The horror! So where else is the money going to come from? Unlike the chimerical trillions that vanished into thin crypto-air, the fuel will come from four stocks that have a combined $6 trillion to donate: Apple ( AAPL ), Microsoft ( MSFT ), Alphabet ( GOOGL ), and Amazon ( AMZN ). There is simply too much money in these names to take us higher, or at least how high we can go after the Federal Reserve’s next meeting this week. But I think some of the investor money will be transferred to the stocks of companies that have the most voracious buybacks. It is the companies that do not have enough shares available to handle all the money that will flow in. Money in the four stocks will be extracted, kicking and screaming, until the valuations become earthly – better than the Meta Platforms (META) and more like the S. & P as they are revealed to be mortal. Only then can the rally begin in earnest. Can these valuations be played out? It’s happening as you read this. Of course, there’s another enemy to progress, and it’s a powerful one: the 4.5% yield from 2-year Treasuries is outrageously rich in a market where anything north of 4% in stocks is likely tied to falling oil. However, we are clinging to the oils, betting that they can maintain their well above market prices when Russia cannot produce its endless reserves and China becomes ravenous upon reopening. I think we will win. We’ll hold Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), and Amazon , although we’ve trimmed them higher. However, their downward spiral to earth will be painful. If we hadn’t sold someone, it would have been late in the game. But I suspect more pain is to come. Why take it? Because these companies still have value, even if it doesn’t appear until the sale is complete, and we don’t know when that will happen. It’s too dangerous now to leave, although Apple could see $120 and Microsoft a 10-point decline. Amazon and Alphabet control their own destinies through the number of employees. The good news? The sale may end after the Fed meeting. The bad news: If it does, there won’t be enough rocket fuel. The big four need to lose a trillion minimum to drive things higher. I think that will happen in time. Which would mean a brutal week until the transfer begins. Hold on to what you’ve got, but get ready to be lifted by the stocks with the strongest buybacks. This is where the accumulation will have the greatest significance. (See here for a complete list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive an exchange alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a share in his charitable fund’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE INVESTMENT CLUB INFORMATION ABOVE IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. NO OBLIGATION OR OBLIGATION EXISTS OR IS CREATED BY YOUR ACKNOWLEDGMENT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR REWARDS ARE GUARANTEED.
Satya Nadella, CEO of Microsoft Corp., during the company’s Ignite Spotlight event in Seoul, South Korea, Tuesday, Nov. 15, 2022. Nadella delivered a keynote speech at an event hosted by the company’s Korean unit.
SeongJoon Cho | Bloomberg | Getty Images
Building a fire – but not destroying the market by doing so.
That’s the goal right now. It’s not as easy as in the famous Jack London short story (“Too Build a Fire”) where the survivors end up profiting instead of freezing to death in their sleep.
In the early part of this decade we saw the rise of Robin Hood (HOOD) and the distribution of investments from the serious to the volatile. These days, Robinhood looks like one giant bonfire of young people’s money. The concept of gamification was real and the exodus of investors was noisy – culminating in the ridiculous self-immolation of GameStop (GME), AMC Entertainment (AMC) and the meme shares. Those who fought this trend left Twitter, hired bodyguards and tried to hide from the angry mob that tried to boost the stock by bailing out the sellers. No tinder from these clowns.