Monitoring the 'Mad Money' Madness
I've been mulling over investor complacency for some time now, and Doug Kass' concerns last month heightened my interest in this area.
In case you missed it, Kass penned a piece comparing Jim Cramer to 1980's investment guru Joe Granville: "It is the immediate, frantic and unquestioning manner in which investors/traders respond to [Cramer's] ideas (not the ideas themselves) that is reaching silly proportions, and that has me unnerved, causing me to question whether the response to "Mad Money" is a microcosm of a market that has driven fear and doubt away and is ready for a fall," Kass wrote.
You can read Cramer's response here, but I wanted to see if Kass was correct. I was not disappointed in my hunt for signs of speculative excess.
First Sign: Blind Stock Purchases
|NMTI vs. NMT
|Source: Ticker Sense|
Mesozoic MomentsI have long counseled against overweighting anecdotal evidence vs. actual data. The value of anecdotal evidence is that it should put you on notice to start paying close attention to the quantitative (see above). That said, consider prices of Cramer's "Mad Money" paraphernalia on eBay (EBAY). Now, the trading of these items are not what's the issue. What raises a red flag now are some of the eye-opening prices that these otherwise modest giveaway items are fetching:
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