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Mocking Discipline, Measuring Froth: Jim Cramer's Best Blogs

My conclusion? I can't suddenly embrace froth when I see it, not when the government's on the eve of shutting down and Washington's been the proximate cause of all of the big selloffs we have had in the last few years. That means I have to just trim and wait. I trust I won't end up screaming, "That's it! I can't take it anymore! Go buy anything you want!" But I have to tell you, for me, September, which is supposed to be a mighty tough month, has only been tough for those who have been too negative. This market's not favoring the disciplined now, and as someone who thinks discipline is the key to successful long-term investing, I am staying cautious, hoping and betting that we will get a better opportunity to buy the stocks I want so much but just can't chase because that's just not my style.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, had no positions in the stocks mentioned.

These Stocks Are Flying Too High

Posted at 11:49 p.m. EDT on Friday, Sept. 12

There are a lot of ways to measure froth. Many would say that you gauge it by looking at the action in the stocks of highflying companies that don't have highflying earnings per share.

They look at the action, say, in Tesla Motors (TSLA) and Netflix (NFLX) and declare it insanely and unsustainably bullish, given that Tesla has rallied 386% and Netflix has galloped 225% since the year began. I get that. While there are many good things happening at Tesla, including strong sales for its new cars, and Netflix has had tremendous success in original content such as "House of Cards" and "Arrested Development," I don't blame a soul for wanting to take profits in either name, as these are cult stocks, and cult stocks don't have a lot of rhyme or reason to them. They are just loved. My hat is off to the Morgan Stanley analyst who nailed Netflix and downgraded it today. What a call.

To me, a better sign of froth is when regular stocks react to regular upgrades. For example, today Walgreen gets added to the Conviction Buy list over at Goldman Sachs, and the stock pops an astounding 2 points. On an upgrade! Or how about Kroger (KR - Get Report)? I have been saying it would have an upside surprise when it reported today. That's exactly what it did, and I figured the stock could have a nice gain. But it immediately flew up a dollar as if the quarter were incredible, which it wasn't. it was just plain old good.

Or how about the action in Dominion Resources (D - Get Report) when it just got approval to build an export terminal for natural gas at its Cove Point facility? This was a totally expected event, something that you would have heard repeatedly when we interviewed CEO Thomas Farrell many times on "Mad Money." But the stock immediately traded up 3 points on the news. This is a utility, for heaven's sake. The company is also going to form a master limited partnership with some good Marcellus shale assets, and that's some positive news, but the idea that it should be up 3 on that is also fanciful. The stock settled down later, but the enthusiasm just got way ahead of the story.

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