"Street Critique"- Hilary Kramer, Chief Market Strategist at Greentech Research
Wednesday, March 11, 2009PAUL KANGAS: While tonight's "Street Critique" guest enjoyed yesterday's big rally, she says hold on tight, we haven't hit bottom yet. She's Hilary Kramer, chief market strategist at Greentech Research and author of "Ahead of the Curve." And welcome back to NBR, Hilary. Good to see you.
HILARY KRAMER, CHIEF MARKET STRATEGIST, GREENTECH RESEARCH: Paul, thank you for having me.
KANGAS: You were not impressed by yesterday's big rally. Is that partly because of today's feeble follow-through or other reasons?
KRAMER: There was a lot of short covering going on which were those betting against the market which quickly had to reverse their position. And also we were tremendously oversold and today's rally or moderate rally, as we could say, was actually negative at one point. It was just that comments from a chief executive turned it around last minute.
KANGAS: What makes you so bearish intermediate term?
KRAMER: Because we have too much excess in the market still. We need to work through so much in terms of inventory that's out there -- homes, products, materials. And we have unemployment that continues to be a major problem. The more people who are unemployed and wealth has been destroyed the less people are going to purchase, the less companies are going to grow.
KANGAS: Do all of these negative factors have to come together and improve at the same time or what would convince you a recovery and a market bottom has arrived?
KRAMER: Of course we all know the stock market will recover long, long before the actual economy does and it gets better for all of us as individuals. But what we want to see is follow-through on this rally. And I hate to say it, but sustainability is proven by a self-fulfilling prophecy of continued rallying.
KANGAS: There are some blue chips that are just at unbelievably low prices historically. Are you doing any bargain hunting at all?
KRAMER: I'm buying, but I'm a trader. So what I'm doing, Paul, is I'm jumping in there in companies that are really premium brands that are going to be there for a long term and I'm taking a few cents or a quarter from them and turning around and selling them and that's something that people like to day trade, week trade. There's opportunities. Otherwise you have to be careful.
KANGAS: What are a couple of those things you're trading?
KRAMER: I'm buying companies like Starbucks, Harley Davidson. I even bought Citigroup at about $1.30. In that case the worst that can happen is it goes to 0 and I lose $1.30. So there are those opportunities but I'm not going to hang on for the long run because we are going to see another leg down.
KANGAS: So you do own those issues you've mentioned but you're not recommending them for others. Why is that?
KRAMER: Because this is a market where it's really a trader's market. It's a treacherous market. Every investor out there has to be so careful and understand that there's very fast money and that there's still large net sellers that are going to be selling like institutions and pension funds because they have to fund operations and that will bring the stock market down again at some point.
KANGAS: You've been saying for nine months cash is king and you haven't changed, correct.
KRAMER: Paul, that's absolutely right. Nine months ago last spring I started talking about how important it was to be in cash, to be on the side lines, what was going to happen and I still hold that that's the case even if we see 20 percent upside from here (INAUDIBLE) bottom.
KANGAS: Hilary, I'm afraid we're run out of time but thanks for being with us again. KRAMER: Thank you, Paul.
KANGAS: My guest, Hilary Kramer of Greentech Research.
