Can Help You Make Money
Titanium usage is on the
rise because the airline industry is substituting it for steel to make
their commercial aircraft lighter and more fuel efficient.
That astute observation
came from Jim Cramer, the host of CNBC’s “Mad Money” stock market advice
TV show, which airs at 6 pm and 9pm every market day.
Many of you who have watched Cramer’s show undoubtedly winced when
I used the phrase “astute observation” in the same sentence with Cramer.
Watching Mad Money is
like a visit to the loony bin. Cramer screams, shouts, grunts and
generally acts like someone who has consumed way too much caffeine. But,
whatever you think about Cramer’s persona, he can help you make money in
the market. Cramer was a hedge fund manager for many years, and he brings
a world of in-the-trenches stock market experience to the table.
But to make best use of
what Cramer has to offer, you must ignore his stock tips and pay attention
to what he says that is really important. Here’s the best news. You can do
that without having to watch him on TV. More on that in a minute, but
first some background.
Most Do Watch For the Tips
Probably most viewers do watch Cramer’s TV show for his stock tips,
which he furnishes in abundance and with great exuberance and clarity.
On each show, Cramer
features one or two themes as diverse as the increasing demand for
titanium mentioned earlier or how to capitalize on changes happening in
Vietnam. Cramer always tells you which stocks he thinks you should buy to
make money on those trends.
For example, to take
advantage of increased titanium demand, Cramer advised buying shares of
Alleghany Technologies, which have gained more than 20 percent, since he
gave that advice more than one-month ago on December 19.
Cramer also answers
e-mail questions about stocks, but the tips really come hot and heavy
during the “lightning round” when Cramer answers viewers’ live call-in
questions about specific stocks. Cramer’s answers are succinct and
For instance, when asked
about restaurant chain Cheesecake Factory, Cramer answered, “I think it is
one of the better restaurant concepts, but not the best, so swap out of
Cheesecake get into Darden.”
Or when a viewer brought
up airline company Jet Blue, Cramer replied, “All airlines are a House of
Pain. Even the good ones. I think you need to sell this.”
Will Tips Make You Money?
How good are Cramer’s tips? He’s had some over-the-top successes.
The last time I looked, viewers that heeded his August 17 admonition to
load up on Apple Computer had enjoyed an 80% return. On the other hand,
those who bought Capstone Turbine when he touted it last September are
down around 35%.
tracks Cramer’s ‘buy’ tips and tabulates the performance of all of the
stocks he has advised buying until he advises selling.
Yourmoneywatch.com, since it started tabulating on July 28, 2005, Cramer’s
‘buy’ rated stocks have averaged a 7% return compared to 5% or so for the
Nasdaq, which is probably the most relevant index. However, the site
calculates the returns starting with each stock’s closing price the day
that Cramer advised buying. Since many of his picks open higher the next
day, the first chance most investors would have to act on his advice, your
actual returns would be lower.
So, while Cramer’s
picks, on average, have beaten the market, the results won’t knock your
Cramer's Real Value
Which brings me back to the
real value of Cramer’s rantings: his descriptions of overriding economic
and market trends, and his explanations of how he picks the best player in
each industry or market segment.
That information is
readily available without having to watch TV.
site that Cramer founded, carries Mad Money Recaps, which are detailed
summaries of each of the Mad Money shows. The Recaps include everything:
Cramer’s industry overviews, answers to viewer questions, and his
interviews with company CEOs.
the Recaps going back to July 2005. You’ll find it worthwhile to review
the themes discussed on each show going back as far as you have time to
read. I also find it valuable to read Cramer’s answers to viewer’s
specific stock questions, even if you’re not interested in those
particular stocks. If you read enough of them, over time, you’ll gain an
understanding of how Cramer picks the best candidates in an industry.
Find the archives by
Money Recap on theStreet.com’s homepage (www.thestreet.com),
which displays the Recap for the most recent show. From there, select the
For the lightening
rounds, the Recap simply lists the stocks that Cramer discussed and
whether he was bullish or bearish on each stock. But you can see his
complete comments on each stock by clicking on the link labeled “for more
of Cramer's insights during the Lightning Round.” near the bottom of each
I find it useful to see
what Cramer has had to say in the past, if anything, about stocks that I
am researching or currently hold. You can do that by looking up the news
for the stock on theStreet.com or on other stock market sites. Look for
headlines with Mad Money in the title.
In the stock market,
nobody gets it right all the time, including Jim Cramer. But Cramer,
despite his rough edges, gives you the know how to make better decisions
on your own.
1/22/06 & 1/29/06