I'm Getting Fed Up

By James J. Cramer

You can't game the Fed. For weeks on end I heard talking head after talking head spouting that the Federal Reserve Board was about to embark on a string of tightenings to cool down the economy. The Fed watchers had it all figured out. Fed Chairman Alan Greenspan had repeatedly leaked that the rollicking days of a strong economy were over. He was going to put the brakes on the longest peacetime advance with a series of rapid-fire interest-rate hikes that would send the stock market into a tizzy.

And wouldn't you know it, Greenspan was doing nothing of the sort. He was actually creating a month-long, super-duper buying opportunity. After all that hand-wringing, accompanied by a rocky sell-off of so many stock favorites, we get a wee little quarter-point hike and a flat statement saying the Fed is no longer biased toward tightening. Greenspan gave you a total green light to get long stocks.

The short-term takeaway is that those who were too bearish because they feared the mighty Fed got faked out again. Sure, the Fed must stomp on the brakes periodically. But remember, the Fed always favors prosperity long term--how could it not? By removing the bias, Greenspan has removed the speed bumps, and if you waited until the all clear was sounded, you missed a true romp in the averages.

Yet there is a longer-term takeaway that is much more important for you to understand. So much of the do-it-yourself financial revolution that has gripped this country is incredibly positive. The combination of cheap commissions and readily available information has empowered individuals to take better care of their finances, in many cases, than a broker or adviser ever could.

Now the problem is overload--too much data, too many reports, too many experts looking for "tendencies" as if they were football coaches and the Federal Reserve an NFL team. For weeks, it seems, the nation was on "Fed watch," as commentator after commentator opined on the Fed's desire to cool things down. (For the record, this talking head told you to take a vacation from the market this week so you would not have to think about Greenspan & Co.)

The Fed Chairman used to walk to his meetings virtually unnoticed, just another Washington bureaucrat. Last week there were a dozen cameras and reporters dogging his every step. If you followed these sometimes frightening prognosticators, you might have been turned from an investor to a trader, spooking out of high-quality stocks because you feared a Fed action that in another era wouldn't have meant a hill of beans to you. Some of these know-it-alls had you believing that the stock market was the Fed's enemy.

Yet in the end the Fed is a place where secrets are kept. In the end nobody knew what it would do. If you sold stocks because you were so wired to the financial world that you feared a Fed action that did not occur, you cost yourself a bundle. The lesson, of course, is that if you have done your homework about your equities and you know what stocks you like and want to own, you can't sweat the Fed's every move.

If you do, you may be worrying too much about your stocks. This week showed that that can be just as financially punishing as not.

Cramer manages a hedge fund and writes for thestreet.com This column should not be construed as advice to buy or sell stocks