"What’s important when you’re in that hedge fund mode is to not do anything remotely truthful. Because the truth is so against your view, that it’s important to create a new truth to develop a fiction."

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[–] jersan@lemmy.whynotdrs.org 6 points 1 year ago (1 children)

Transcript:

Aaron Task: Welcome to Wall Street Confidential, I’m Aaron Task, joined again by Jim Cramer. Jim welcome.

Jim Cramer: Good to see you.

Task: Thanks for being here. There’s a lot of economic data out today but I want to talk about something else first. Again today we have the misdirection from the futures as the futures is pointing up market and as of right now sucks it down again. Is this just because it’s the holiday period that we’re seeing this?

Cramer: You know a lot of times when I was short at my hedge fund and I was positioned short, meaning I needed it down, I would create a level of activity beforehand that could drive the futures. It doesn’t take much money. Similarly if, or if I were long and I would want to make things a little bit rosy I would go in and take a bunch of stocks and make sure that they are they’re higher, you know maybe commit 5 million in capital to do it and I could affect it. What you’re seeing now is maybe it probably is bigger market now maybe you need 10 million in capital to knock the stuff down, but it’s a fun game and it’s a lucrative game, and you can move it up and then fade it, that’s all often creates a very negative feel, so let’s say you take a longer term view intraday, and you say, listen I’m going to boost the futures and then when the real sellers come in real market comes in they’re going to knock it down it’s going to create a negative view. That’s a strategy very worth doing, when you’re valued on a day-to-day basis and I would encourage anyone who’s in the hedge fund game to do it because it’s legal, and it is a very quick way to make money, and very satisfying.

Task: Okay. Um well –

Cramer: By the way, no one else in the world would ever admit that, but I couldn’t care.

Task: That’s right and you can say that here.

Cramer: I can’t – I’m not going to say it on TV.

Task: Well, I don’t really know – there’s so many more hedge funds today than when you were managing your hedge fund.

Cramer: Right

Task: Do you think that, does that exacerbate the moves or does it make it tougher –

Cramer: Well, you know, the hedge funds are positioned long-short, okay, not just long, like mutual funds. So it’s really vital these next six days because of your payday, you’ve really got to control the market. You can’t let it lift. When you get a Research In Motion, it’s really important to use a lot of your firepower to knock that down because it’s the fulcrum of the market today. So let’s say I was short – what I would do is I would hit a lot of guys with RIM, now you can’t foment, that’s a violation of –

Task: Ferment?

Cramer: You can’t foment. You can’t create, yourself, an impression that a stock’s down, but you do it anyway because the SEC doesn’t understand it. So, I mean it’s, that’s the only sense that I would say this is illegal, but a hedge fund that’s not up a lot really has to do a lot now to save itself. So, this is different from what I was talking about at the beginning where I would be buying the cues and stuff, this is actually just blatantly illegal, but when you have six days and your company may be in doubt because you’re down, I think it’s really important to foment, if I were one of these guys. Foment an impression that Research In Motion isn’t any good because Research In Motion is the key today.

So you know you would you would hit this guy and that guy when you would see an offering, when you see a guy is bidding, you’d wipe out that guy very quickly, and what I used to do was called, if I wanted to go higher I would take and bid, take and bid, take and bid. And if I wanted it to go lower I’d hit and offer, hit and offer, hit and offer. And I could get a stock like RIM for maybe, that might cost me 15, 20 million ante to knock RIM down, but it would be fabulous because it would beleaguer all the moron longs who are also keen on Research In Motion.

So yeah we’re seeing that, that’s, you know, again, when your company’s in the survival mode, it’s really important to defeat Research In Motion and get the [Bob Pisani]s of the world and people talking about it as if there’s something wrong with RIM then you would call the [Wall Street Journal] and you get the bozo reporter on Research In Motion and you would feed that there’s a, Palm’s got a killer it’s going to give away, these are all the things you must do on a day like today and if you’re not doing it maybe you shouldn’t be in the game.

Task: Okay. Another stock that a lot of people are focused on right now seems to be Apple –

Cramer: Yeah. Apple’s very important to spread the rumor that that both Verizon and ATT have decided they don’t like the phone, that’s a very easy one to do because, it’s also you want to spread the rumor that it’s not going to be ready for Macworld, and this is very easy because the people who write about Apple want that story, and you can claim that it’s credible because you spoke to someone at Apple because Apple isn’t, doesn’t –

Task: Right, they’re not going to comment they’re not going to –

Cramer: So it’s really an ideal short, and I would, again, if I were short Apple, I would be working very hard today to get that, and the way you would do that is you pick up the phone you call six trading desks and say, listen I just got off the phone with my contact at Verizon, he has already said, listen, we’re not, we’re a Lucky G house, we’re a Samsung house, we’re a Motorola house, there’s no room for Apple, they want too much, that we’re not going to let them in, this is not, we’re not going to let them do what they did to music.

And, you know, I think that’s a very effective way to keep a stock down. I might also, by the way, because the stock at 84, 85, with a little bit of capital you go buy some January 80 puts that makes it look like there’s going to be something going on, so maybe you give [JP Morgan] an order to buy a thousand Jan 80 puts, then you go position limit with, you know, you use a hat firm that doesn’t know what the heck it’s doing, maybe you go to UBS for puts, and you just kind of create an image that there’s going to be news next week, and that’s going to frighten everybody, and they all go out and see a large put buyer at UBS, then they call [Bob Pisani], again you have to use those guys, and say listen I’m about, you know, I see a big buyer of puts and I’m told that it’s like, it’s [S.A.C Capital Advisers], you would do that too. And these are all what’s really going on under the market that you don’t see.

Task: Right, and nobody else talked about except you.

Cramer: Right. But, what’s important when you’re in that hedge fund mode is to not do anything remotely truthful. Because the truth is so against your view, that it’s important to create a new truth to develop a fiction. And, the fiction is developed by almost anybody who’s down like two percent to up six percent here. You can’t take any chances, you can’t have the market up any more than it is if you’re up six, because starting Jan two you’ll have all your money come out, so what would you do if you’re in that situation and you feel like you’re desperate, is that you would do these actions.

[–] jersan@lemmy.whynotdrs.org 5 points 1 year ago

Task: So you’re talking about the mechanics of the market –

Cramer: You know that’s actually much more important than fundamentals.

Task: Okay, well, but in terms of the fundamentals even writing about how you’re –

Cramer: Who cares about the fundamentals – Research In Motion just blew out the quarter, but look what people can do. I mean that’s a fabulous thing. The great thing about the market is there’s nothing to do with the actual stocks. Now, look, over maybe two weeks from now the buyers will come to their senses and realize that everything that they heard was a lie, but then again Fannie Mae lied about their earnings for six billion dollars, it’s just fiction and fiction and fiction, and I think it’s important for people to recognize that the way that the market really works is to is to have that nexus of hit the brokerage houses with a series of orders that can push it down, then leak it to the press, and then get it on CNBC that’s also very important, and then you have a kind of a vicious cycle down, and it’s a pretty good game, and it can be played, it can pay for percent or two.

Task: Right, and then you get long before Macworld and the expectation that the iPhone is going to be good.

Cramer: Well yeah because you drove it down.

Task: And then you go back, flip to long side.

Cramer: You totally gotta use the other side. And you know, there’s a case where I would say the January 80 puts can be justified because after I’ve knocked the stock down to 80 I can buy a lot of common, and then you play it right in to Macworld where they’ll probably introduce the phone, and Verizon’s going to take it.

Task: Okay, well maybe the fundamentals don’t matter but let’s talk about the fact that –

Cramer: What Wall Street Confidential is, is not giving you the party line, oh here’s the party line by the way, I spoke to Apple on the phone, I hear the phones are good and Verizon might take it, and as a matter of fact the Research In Motion sellers they, I don’t think they know what they’re talking about.

Task: But you’ve been writing about the cell market, the cell phone market you don’t want to be involved –

Cramer: The problem with the cell phone market, frankly, is that these guys are all killing each other, you know, someone has to take a dive. Motorola and Nokia have to get in a room and just fix price. They’ve been reluctant to do that because of the various justice departments and because they actually –

Task: And it’s illegal, right.

Cramer: Well that hasn’t stopped a lot of other companies. This seems to be a case where they seem to be directly worried about the authorities. It’s almost as if they have a lawyer that matters unlike say the Bristol Meyers lawyers, and you know what eventually happens is the shareholders demand that you get phony lawyers and you sit in the room and it’ll happen soon.

Task: Real quick, the Fed, the numbers out today weaker than expected –

Cramer: Oh so what, the Fed has obviously got to cut, but again, you call the various guys who cover the bonds and you say ignore the bond action, what’s really happening is the Fed is very frightened about, and then you gin up the number that they’re really frightened about. The Fed is actually desperate to try to figure out, you know how quickly they have to cut, without looking like dopes that they raised.

Task: Because they’ve been talking about, they’re worried about inflation all this –

Cramer: You don’t want to raise in May and then cut in January, you’ll look like Mexico for heaven’s sake, I mean this is like a distinguished group of people who went to really good schools.

Task: Right, these are smart guys –

Cramer: Yeah they don’t want to look like dopes.

Task: But when we were talking earlier in the week, you said you think it would be some sort of crisis, possibly Ford being a trigger –

Cramer: Well, you know, Ford went and did all that, you know they pledged all this investment banking to all these guys, so now that they’re very reluctant to say negative things it makes it much tougher for the Ford story to play out. I mean the amount of business that Ford has to do – Ford may be the big client of 2007. So if I were in the corporate finance room, I would say listen to the research guy, I’d say listen, you know, I spoke with Mulely, I actually have the inside, the plan works, so then you go to the research guy and say, oh man what do I do, it’s bonus time, I’m not going to be a total idiot, Spitzer’s going to Albany, let’s get back in the game. I think that’s important.

Task: Is it possible, because a year ago at this time a lot of people were saying GM’s about to go bankrupt and of course the stock is up 50 some odd percent, could Ford be that stock?

Cramer: Well they’re GM. You know, the difference between Ford and GM was that GM’s balance sheet was never really, it turned out it wasn’t that bad. Ford’s balance sheet is pathetic, and you know that because they’re willing to screw over the common for the bond, so that’s kind of, if it weren’t Ford, if this were Qualcomm we’d be saying Qualcomm’s desperate, you know, but, you know, it’s Ford.

Task: But it’s Ford, it’s an American icon and so, right –

Cramer: – you know I drove a Ford, I owned a ford once.

Task: And this is our country. Well this has been Jim Cramer –

Cramer: Again, you know, what I’m trying to go for in the Wall Street Confidential, and I’m not saying you’re sending me – I have to talk about what it’s like at my hedge fund, okay, because, and what other hedge funds do, because the difference is is that if this is an intraday show and you need to know, what I know what’s going on – now, we step back, Research In Motion was a real blowout quarter, it was a really good quarter, and I was quite surprised how strong the margins were, it looks like the other guys have really dropped out. It’s a terrific story. Should it be up six? Yeah I think so, but you know look where we are. It’s Friday, you got five more days to make your quarter, can you really risk having RIM up this much? I don’t think you can.

Task: Okay. And they’re not, and if I’m correct you’re off next week?

Cramer: Yes I am.

Task: Okay, and I am as well so we’ll be back in 2007 –

Cramer: I’m hoping that we get, that we finish the year at 1260 because that’s, at 12,460. Because that’s what I said what the beginning of the year was. Now, yesterday we came in and we were 20 points away from what I predicted, you know I want to nail it.

Task: Do you have a forecast for 2007?

Cramer: Yeah, but I’m not, it comes out, it’s over a series of five days so people have to go to realmoney.com

Task: Check it out, realmoney.com and Jim thanks very much for being here. I’m Aaron Task, stay tuned for more of thestreet.com TV.