You can tell how awful a market is simply by trying to find how many ideas might work. When you can’t find any except the stocks you have — and even then, some are suspect — you know things aren’t so hot. Things are not so hot. From the time I first started picking stocks professionally in 1981 — doesn’t seem that long ago to me, but probably sounds ancient to you — I always looked for ideas per sector, one after another. I never wrote off a single sector, from utilities to oil and gas to real estate; the goal was always looking for valuation disconnects. Tech was an afterthought back then. We had the five mainframe computer companies competing against IBM known as BUNCH: Burroughs, UNIVAC, NCR, Control Data, and Honeywell . And that really was it. Each one seemed to be a breakout candidate, but only after they left tech. At one point, I owned 4% of Control Data, but that was because it was becoming a payroll company and was no longer part of the scrum. My real fortes — if you can have more than one — were retailers and banks, and there were always a couple of them worth buying regardless of the Federal Reserve, inflation or any other negative. It’s a rather recent development to shun a whole sector because of the possibility of a rate hike, even as the late Marty Zweig, one of the most brilliant market minds, coined the phrases “don’t fight the Fed” and “don’t fight the tape.” So why not give up? Why get the charts out? Why look at the out-of-favor sectors versus the lonely stocks that are working now? Why? Because of something my ex-wife and hedge-fund partner Karen taught me that you need to be taught and the traders on TV need to be taught: “don’t look at the screen, what’s that going to teach you?” Karen was a brilliant trader, known to pretty much everyone in the business as unrelentingly tough and rigorous. To me, she was an overseer of remarkable prescience who loved the charts as a hobby. When she caught me staring at the screen, as so many lazy thinkers are wont to do, she knew I was being worthless and was proud to tell me that. She was right. This brings me to where I am right now. When you can’t come up with any investing ideas, that doesn’t mean there isn’t any. It means you aren’t thinking hard enough. It means you are not being rigorous. What should I be looking at? That depends on the scenario you see. If I look at my screen, I see a tape that screams sell. The Fed hiked rates for the first time in three years last month and we could see more tightening by year-end. We have a president who tries to interject himself into the markets in an erratic, ungameable way, as if he’s still in the ratings game from “The Apprentice” and surprises boost the Nielsen ratings. We have a debt market that has finally figured out that there is too much government borrowing — and, on top of that, is tired of endless data center bonds and their distortion of everything finance. It’s a market that has a midterm election coming up on Nov. 3. Historically, midterm years see weaker returns, but better times await the following year , especially if there is gridlock from a divided Congress. But it is a market that’s so negative in tone and in empirical data — at point last week, 40% of stocks in the S & P 500 were in bear market territory — that you can’t imagine a scenario of anything to buy beyond memory-chip makers like Club name Micron . And maybe artificial intelligence accelerator makers like Nvidia . It’s a market that runs on oil and, lately, diesel, and interest rates are even more dependent on the price of those two things than on bond supply. It’s a market that has eyes for the president’s plan for Iran, as if he had one. We have to ask ourselves what can change. First, if the president wants to have any hope of winning either the House of Representatives or the Senate, the war has to end soon. The president is good at alternate realities, so he can declare victory at any moment and just threaten dramatic military action if the Iranians deter oil tankers. That would mean oil, which is being pumped full out in the world and can’t be reined in that quickly, would fill tankers everywhere and the only way to not upset the supply market would be to dump it anywhere. You have to imagine, right now, that oil prices could be cut in half after one phone call. In a world where that happens, the huge number of bearish stocks would flip instantly. What’s hated the most that still has growth would become the most craved of stocks, and here I am thinking of Club names FedEx and FedEx Freight . They would be purchased with such reckless abandon that your biggest fear would be a three-day rally that took stocks up 40%. Transports are the most vulnerable to the upside. The Dow Jones Transportation Average , which consists of 20 stocks ranging from railroads to airlines, ended Friday more than 19% below its 52-week high, meaning it’s near bear market territory. You could even go ancillary and buy Boeing now that The Wall Street Journal has nothing bad to say about the company. Boeing averted a potential strike from its white-collar union when the union on Thursday agreed to the planemaker’s four-year contract proposal. Earlier in the week, Boeing also won a huge Navy fighter contract . Then it capped off the week with another victory Friday afternoon, with the Federal Aviation Administration saying a recently discovered software glitch wasn’t a flight-safety issue . I said last week I didn’t want to act on Boeing until we heard from the FAA on the software matter, which had surfaced last weekend in The Journal. I think that is how you need to be thinking, not simply staring at the screen. What else would you buy in a world where oil prices collapse? You would have to own the banks because of the pent-up demand for M & A and IPOs, not the least of which would be Anthropic, which has reportedly tapped Goldman to co-lead the deal. Hence why you must keep owning Goldman and buying it on the number cut that awaits us. I still have an affinity for Wells Fargo simply because CEO Charlie Scharf is competitive and trying to reinvent a bank, something that can’t really be done unless you have a national footprint and you smell blood from the weakness of others. You would also want to own Home Depot for heaven’s sakes because the Fed would be on hold and lower bond yields on the long end of the curve would bring mortgage rates down. If you could find a more hated stock, let me know. It’s down over 20% since Aug. 7, as yields marched relentlessly higher. I don’t have a real kinship with the homebuilders; there are still too many of them. But I do like the idea of the Best Buy and Stanley Black & Decker concept. Returning to those stocks is a real leap of faith, but Best Buy has been moving up nicely. Of course, in this oil-collapse scenario, the “Magnificent Seven” would roar back because we would get a massive index fund inflow, and that means you have buyers of all of the usuals. You wouldn’t fear a double-top in Nvidia and you’d know Microsoft would get to $600 a share in a heartbeat, which is about 16% above Friday’s close. Do I think that this could happen? Another Karen maxim from our hedge-fund days: you aren’t being paid for being right, you are being paid for going to be right. The answer is that you have to be ready for the upcoming moment because you know some resolution will occur and you know that the rally — in a bear or bull market — will be so sharp and so quick that you can’t afford to be waiting to buy the stocks mentioned. It will be way too late to do so. That means we are going to have to be holding our nose and buying some real hated stocks this week. The dregs of the dregs. Not only that, we will have to do it again the week after. And we have to look for new companies that would do incredibly well in an oil collapse. The best analogue would be June 2014 to January 2015, when WTI crude went from roughly $108 a barrel to $44, a 59% decline in seven months. The winner was Southwest Airlines , which, at that time, was considered to be the best run of the airlines. That would make United Airlines a champ. I am going to use Boeing just because I don’t have an appetite for more aerospace. Then FedEx, which we covered. And then the consumer discretionary stocks. We bought some TJX Companies below here on Sept. 17 . I would say buy Target, but it’s already run a bunch. Best Buy would be the best. But we will go with more Home Depot, as painful as that is. We stare at our screens, we buy nothing. We think about the future, well, now you know what we will buy. (Jim Cramer’s Charitable Trust is long FDX, FDXF, TJX, HD, GS and WFC. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’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 ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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