The Oracle Speaks!

For a second last week, just for a second, my wife tempted me to return to my trading turret, where I used to be master of my own stock universe, swinging securities around and booking big profits. For just a moment I thought about pulling a Jordan, donning my old good-luck Gap shirt and returning to the hedge-fund game that I’d retired from last year. I had become one of those stressed-out dads who couldn’t take it anymore, who wanted to spend more time going to my kids’ plays and soccer games, so I quit.

But there we were last Saturday, trying – and failing – to get a decent parking spot within a half-mile of the Short Hills mall, when my wife made me remember how much fun this market could be when you get it right … if everyone else gets it wrong.

“Remember 1991?” she asked when we finally gave up and decided to shop in our hometown of Summit, New Jersey, where parking wasn’t impossible. “It’s gonna play out just like it did then, you know.”

Ahh, do I remember 1991! That’s when Karen, my wife of thirteen years now, was known on Wall Street as the Trading Goddess for her unbelievable call to sell the market ahead of the 1987 crash. Back then, she worked side by side with me as 50 percent owner of Cramer L.P.

From the moment the market collapsed in 1990, right after Iraq invaded Kuwait, my wife had turned extremely negative. She had been shorting, or betting against, every stock, but particularly financials and retail stocks. Although she declared herself a technician, meaning that she looked at charts and divined from previous patterns what would happen next, she was actually more driven by fundamental events that anyone could see – data as plain as the nose on her face. Her negative view of the banks stemmed from the collapse and subsequent boarding-up of every savings and loan in our little neighborhood in Brooklyn. And her negative view of the Dayton Hudsons and the Mays and the Best Buys came from her frequent trips to empty malls.

Her negative view suited me fine; I hated those stocks. As the Dow collapsed from 3,000 to 2,300, I grew more and more negative, too, worried that the country would never pull out of its tailspin. I thought we had a recession and an inflation problem, a banking system that was teetering, and a budget deficit that was out of control.

Karen didn’t give a hoot about the theoretical underpinnings of what drove the market to different levels. She cared about what made people buy and sell stocks. She viewed the market viscerally. If you could tell her what made people feel better or worse, what lifted or lowered people’s moods, she’d tell you where the market was going. She read the feelings of the buyers, and if those feelings were positive, she could anticipate how far they could take the market, and it could be much farther than any conventional divining methods – like brokerage recommendations – could suggest.

Unlike me, Karen had worked at big-money firms. She knew that big money was human. It was a pent-up beast that, if let loose by a series of positive events, would buy everything in sight. The beast didn’t care where stocks had been or how high they had moved; the beast just wanted to buy. We stuck to our bearish bet right through the end of December, finishing our year well into the black because of it.

I kept insisting that the fundamentals were still deteriorating and we should stay short, stay negative, particularly on the retailers. But Karen would hear none of it. She made us cover all of our shorts in the last weeks of the year. And then she insisted, when I wanted to reinitiate them on negative data points, on playing endless rounds of blackjack and gin. When I urged her to buy puts on the market, she ignored me, picking up the phone instead to order from catalogues for the holiday season.

Finally, when she could take my badgering no more, she booked us for a couple of weeks at a hotel in St. John’s, pausing, as she made the reservations, to ask me when the United States would attack Iraq. I told her the war would start around January 15. So she put us on a return flight back to New York on the 14th.

That would leave us plenty of time for buying, she said.

“Why would we want to buy?,” I asked, totally exasperated with her cavalier dismissal of the gloom surrounding all of the markets in the world. “Because,” she said, “I’m confident that we will win the war, and with a minimum of casualties and a maximum of panache. That will change everything.” I reminded her how steep the recession was going to be, how unemployment was soaring, and that the banking system was teetering on a total wipeout.

She didn’t even bother to answer. She also didn’t seem to care that all of her precious charts were screaming downturn. That, too, she said, would change with the war.

When we got back, the bombing had begun. She leveraged us up huge, borrowing a giant amount of money to buy everything in sight. I sat dumbfounded. Sure enough, within a few weeks, the consumers came back with a vengeance, feeling better about themselves than they had in years. It didn’t hurt that oil prices had plummeted and stayed low or that the banks were able to use the Fed’s lower rates to rebuild their balance sheets. The market started its historic rally (which coincided with the country’s longest peacetime expansion), and we made hundreds of millions of dollars for our partners at Cramer L.P.

I thought about all that last week, when Karen, who has been completely out of the game since 1994, asked me how much the market had rallied since the September tragedy. I told her it was up 20 percent, and she said, “I’m surprised the market’s not rallying more.” More? I told her that it had been up pretty much every day since the bottom on September 21.

“Makes sense,” she said calmly. “Probably goes higher.”

Higher? That stopped me. Then I realized, Of course, it’s ‘91 all over again! We have that same combustible combination of lowered interest rates, tons of sidelined cash, and a wartime catalyst that could bring a tremendous surge of confidence.

For a moment, just a moment, I thought: Wouldn’t it be great to be back at that hedge fund, pulling the trigger on hundreds of millions of dollars to make a killing when everyone is still so bearish on stocks?

But only if the Trading Goddess came back, too. When I broached the idea right after her prediction, she didn’t even let me finish my sentence. “Don’t even think about it,” she said. “Not for all of the money in the world.”
Check out’s “10 Questions” feature this week. Bill Nygren, manager of the Oakmark Fund, is on the hot seat. Available free of charge at

James J. Cramer is co-founder of TheStreet. com. At the time of publication, he owned stock in Best Buy. He often buys and sells securities that are the subject of his columns and articles, both before and after they are published, and the positions that he takes may change at any time.

The Oracle Speaks!