The Great Gatsby Market, According to Cramer

As a member of the middle class, I can say unequivocally that it is getting harder and harder to keep up with this treadmill called working for a living.  That is, someone is at the controls making the treadmill (money printing) go faster and faster, and the harder I work, the further I fall behind.  And so it goes in the land of the currently free.

It’s hard not to feel squeezed.  In January, Uncle Sam took a 2% bite out of our paycheck.  Around that same time gas prices started to climb, and have now for 32 days straight to a national average of $3.72 a gallon.

The cost of food continues to climb, as does trips to the doctor and prescription refills and kids clothing and our power bill and the water bill.  The list goes on and on.

About the only thing not going up is our income.  Can’t blame our employers.  After all, they have to worry about Obamacare and sequestration and the fiscal cliff, that interestingly no one wants to talk about now, but was in hysterics over just two months ago.

Everything seems upside down.

Jim Cramer:  “The is the ‘Great Gatsby’ Market”

I usually find myself arguing with Cramer, but it’s hard to argue this one.  It seems crazy that the Dow has crossed 14,000 again in the face of all this negative news.  Or maybe it doesn’t, when you consider what the 14,000 represents.  It’s like a big bag of my kids’ monopoly money scattered across the board.  But hey, when the banker has unlimited supply, and is willing to hand it out, it seems dumb not to play, right?

So we, the average consumer, watch our savings continue to erode thanks to inflation and feel an anxiety deep in the pit of our stomachs that we should be invested in the market.  Despite everything in our head telling us to stay on the sidelines, we can’t ignore that gut feeling.  We invest.  We get wiped out.  Rinse and repeat.

Maybe this time it’s different.  After all, nothing seems logical any more.  Just last week a Walmart report was leaked indicating sales there are the worst they’ve been in seven years.  During the Great Recession of 2008, Walmart and Dollar Tree did pretty well, since they were the only place people could afford to shop.  If we are to believe last week’s reports, people don’t even have money to shop there.  Sure, Walmart took the news on the chin, as did a few others in the retail space, but after a long holiday weekend the Dow is roaring again.

Michael Kors or Dollar Tree?

In a nasty economy, where do you think the big money is placing their bets.  If you said Dollar Tree you’d be wrong; logical, but wrong.  No, apparently high-end luxury retail is the place to be, because you know, when I can’t afford to fill my truck up the first stop I make is Nordstrom, or I hop on the Michael Kors website and order a $125 Polo Knit shirt.  Sure.

But Cramer wasn’t referring to people like me, or you.  Most people shopping at these high-end retailers didn’t feel the 2% decrease in their pay, because many don’t pay payroll taxes.  Sure, they pay their fair share of capital gains taxes, and taxes on investment income, but they are used to that annual hit (although it will likely steadily increase over the years).  They also don’t feel the increase in gas prices, because it represents a very minute, fractional increase to their overall spending.  So for now they can afford to keep buying Luis Vuitton purses and expensive suits.

Don’t get me wrong, I don’t begrudge the wealthy.  I’m glad money is being spent somewhere.  It’s when the wealthy stop spending their money that we really have to worry.

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