Author Topic: JIM CRAMER  (Read 111 times)

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JIM CRAMER
« on: August 19, 2017, 03:18:33 PM »





Cramer Remix: Don't trust this market maneuver during a sell-off
"Mad Money" host Jim Cramer explains why investors should be wary of stock buybacks during market-wide pullbacks.
Cramer also points out the group of stocks that can signal an oncoming sell-off.
The "Mad Money" host also tells investors where to look for bargain buys when the market's down.
Abigail Stevenson   | @A_StevensonCNBC
Published 8 Hours Ago  | Updated 7 Hours Ago
CNBC.com
 Cramer Remix: Don't trust this market maneuver during a sell-off   Cramer Remix: Don't trust this market maneuver during a sell-off 
7 Hours Ago | 01:33
One of the most important lessons that Jim Cramer has learned over the years is not to trust all stock buybacks.

"They aren't created equally and they aren't all a place to run to in a selloff. In fact, many buybacks disappear when times get tough and can't be relied upon, as we saw when [oil stocks] came crashing down when oil plunged in 2014," the "Mad Money" host said.

Buybacks are when companies repurchase their own shares in the open market in order to take them out of the equation, thus reducing the number of shares outstanding and boosting the earnings per share.

Often times, buybacks are a way for companies to reward their shareholders with their cash. However, Cramer likes dividends more because of the downside protection and preferred federal taxation status.

Over the years, buybacks have become very popular. Companies spent about $1 trillion more on buying back stock than on paying dividends in the past decade. Unfortunately, Cramer has seen that these buybacks have not given shareholders the value that they expected.

"So, when you see a company with large buybacks and a puny dividend, you should be suspicious rather than bullish," Cramer said.

The Problem With Rotations

A trader works on the floor of the New York Stock Exchange.
Getty Images
A trader works on the floor of the New York Stock Exchange.
Sometimes, all it takes is a scary stock rotation to fuel a rally, Cramer says.

"When money is flowing into stocks, with the mutual funds buying in endless waves and the hedge funds desperate to own stocks rather than shorting them, then you're in the land of the thousand bull dances and you don't have to worry about where the fuel for a rally is going to come from," Cramer said.

When no money is entering the market, that is when powerful moves in stocks and sectors can occur, Cramer said. This happens when investors are reluctant to invest and money is pulled out of the least-exciting groups of stocks, then rotated into sexier names with more lift.

But here is the problem with rotations: without new money flowing in, gains often become zero-sum and can run out of fuel. The leaders will run out of steam with nothing to drive them higher. That is when the worst possible rally can occur a rally in the wrong stocks.

In Cramer's experience, "wrong stocks" are those that signal a slowdown or recession. Areas like food and pharmaceuticals become the new market leaders.

"You never really want to see any of the consumer staples roaring higher in a sustained advance because it means people think the economy's going to either get worse or simply stay in awful shape for a long time to come," Cramer said.

Cramer considers seeing stocks like Altria, PepsiCo or General Mills spark a powerful rally one of the most horrifying things for the stock market. More often than not, it can cause an immense amount of damage, unless there are vast sums of money coming in from the sidelines.

Don't Trust This Market Myth

Mistakes frustration
Alex Grimm | Bongarts | Getty Images
One of the worst myths out there, according to Cramer, is that the market is always rational and makes sense. This is not true.

On any given day, the market can make seemingly random moves for reasons that do not make sense. Sometimes stocks go up when they should have gone down, and sometimes entire sectors move for ridiculous reasons.

"Never assume that just because something happened it has to make sense because the market is always supposed to make sense. That's nonsense," Cramer added.

So, when everything in the market or in a particular sector goes down, instead of assuming that the issue pertains to the fundamentals of the underlying company, Cramer suggests asking yourself if it could have been caused by an out-of-control hedge fund or Wall Street money management then realize that the market's irrationality can be your opportunity to profit.

Cramer's Sell-Off Motto

Broken down car
Bjorn Vinter | Getty Images
Cramer's motto in a downturn is to buy broken stocks, not broken companies. When the market undertakes huge losses, investors have an opportunity to buy good companies with stocks that have taken an unfair beating because of the market, he said.

There is a huge difference between a broken company and a broken stock, and being able to thrive in a sell-off requires knowing the difference.

That is why Cramer said the first thing to do amid a market-wide sell-off is look at the companies that caused it.

"If you're looking at a company that is part of the reason for a correction, you're looking at a broken company. Those are directly in the blast zone and certain to be obliterated," the "Mad Money" host said.

How to Find Money Magnets in a Pullback


Alex Bartel | Science Photo Library | Getty Images
His first approach is to look for stocks that have pulled back from their highs during the sell-off. The new-high list is always a great place to start looking. Stocks on that list also tend to be expensive, which is why a big decline may present an opportunity.

Specifically, Cramer looks for stocks that were knocked off the new-high list and are trading a couple of percentage points down from their 52-week high. Those will be the "money magnets" of the market.

However, the "Mad Money" host warned that not all of them will be worth buying. Some may come off the list because they are damaged goods, so doing your homework is still important.

The second kind of stock that Cramer looks for during a major sell-off is the type with dividends that become more attractive as their share prices go lower. Just like the 52-week high list is useful for spotting potential buys, a shopping list of stocks to buy if only their dividends were a little higher can also come in handy during a downturn.

But what does a market correction have to do with a dividend or yield?

When a market correction occurs, the price of the stock goes down and the yield goes up. Cramer loves it when a sell-off is so severe that an "accidental high-yielder" is created.

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JIM CRAMER
« on: August 19, 2017, 03:18:33 PM »

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Re: JIM CRAMER
« Reply #1 on: August 19, 2017, 03:33:45 PM »




Cramer: This is the worst mistake you can make in a sell-off
"Mad Money" host Jim Cramer guides investors on how to turn a pullback into an opportunity.
Cramer goes against the widely held belief that homegamers can't invest for themselves.
The "Mad Money" host also reveals one of the worst market myths out there.
Abigail Stevenson   | @A_StevensonCNBC
Published 9 Hours Ago  | Updated 7 Hours Ago
CNBC.com
 The worst mistake in a sell-off   The worst mistake in a sell-off 
8 Hours Ago | 00:54
Jim Cramer has seen what happens behind the scenes in the stock market, and warned of one huge mistake often made by investors during a sell-off.

"The * and commentators say it's too hard, that ordinary people can't invest for themselves and shouldn't even bother trying, but I know from experience that you can do it as long as you're willing to put in the time and effort," the "Mad Money" host said.

Cramer said that one of the worst myths out there is that the market is always rational and makes sense. This is not true.

On any given day, the market can make seemingly random moves for reasons that do not make sense. Sometimes stocks go up when they should have gone down, and sometimes entire sectors move for ridiculous reasons.

"Never assume that just because something happened, it has to make sense because the market is always supposed to make sense. That's nonsense," Cramer added.

It's important to be able to look at some of the market's moves and understand that sometimes, stock moves are just ludicrous. Once investors start cooking up connections that do not exist, they can really get into trouble because they can convince themselves of almost anything, Cramer warned.

The key is to understand the catalysts that make stocks move.

Sometimes, a move has nothing to do with the underlying prospects of the company. When that happens, Cramer recommended taking advantage of that irrationality, not buying into it by chasing stocks or panicking out of them.

"Remember, nobody ever made a dime panicking," Cramer said.

For example, in the case of an inexplicable market-wide pullback, struggling hedge funds may start selling to raise money in order to pay back unhappy clients who are demanding a payout.

Sometimes there is a red-hot deal, like a Facebook or an Alibaba, that is so massive that mutual funds have to sell stocks in order to raise cash to get in on the deal. It may seem crazy, but mutual funds don't keep cash on hand to make these kinds of investments. That means they often do not have enough cash to participate in these big deals unless they sell stocks they own.

Regular investors might see the selling and start to panic, dumping stocks in turn. Ultimately, this will trigger a sell-off, and the media will try and conjure up reasons to explain why otherwise stable stocks fell.

It can happen to commodities, too. Cramer saw it first hand when oil ran up to $147 a barrel in 2008, even as demand for petroleum was relatively weak a recipe for oil to go lower.

Only after the rally did Cramer discover that oil prices jumped because a couple of hedge funds had bet against oil, then had to buy in their shorts at insanely high prices. Sure enough, after that huge run, oil dived back down to $33 a barrel as hedge funds sold it off to raise cash.

"The worst mistake, the most common mistake you can make these days, is to say that because a particular stock or commodity trades at a given level, it therefore deserves to trade there. Often, that is just fiction now," Cramer said.

So, when everything in the market or in a particular sector goes down, instead of assuming that the issue pertains to the fundamentals of the underlying company, Cramer suggests asking yourself if it could have been caused by an out-of-control hedge fund or Wall Street money management, then realize that the market's irrationality can be your opportunity to profit.

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Re: JIM CRAMER
« Reply #2 on: November 10, 2017, 01:27:43 PM »
JIM CRAMER I like reading your blog very much.

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Re: JIM CRAMER
« Reply #2 on: November 10, 2017, 01:27:43 PM »