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Beware the whispers on Wall Street, Jim Cramer cautioned viewers of his "Mad Money" TV show on Thursday. He said that while whispers and rumors have become an integral part of Wall Street, lately they've just been dead wrong.
Case in point,
, a stock that Cramer owns for his charitable trust,
Action Alerts PLUS. The stock is totally hated by analysts, said Cramer, with only four out of 12 rating it a buy. Yet the company that supposedly was to screw up the quarter instead doubled Wall Street's estimates.
Black & Decker
. This company too was supposed to disappoint and even slash its dividend according to the rumors. The only problem: It didn't.
Cramer said other companies have fallen victim to the whispers, too.
, another Action Alerts PLUS name, appeared to have suffered a big loss, but upon closer examination, that loss came from a one-time restructuring charge, and the company actually made money.
Cramer said it's almost always better to invest against the whispers and rumors, and these examples make that very clear.
Don't Disrespect the Earners
"Are the markets totally crazy," asked Cramer? Why is it the consistent earners are now hated on Wall Street, he continued. Cramer looked at two Ohio-based stocks to find out the answer.
Cramer looked at aerospace parts supplier
and consumer products giant
Procter & Gamble
. Cramer said Parker Hannifin missed estimates when it reported last week, yet this stock continues to trend higher, while fellow Ohioan Procter & Gamble, is expected to report great results next week, but that stock is weakening.
Cramer said the answer to this conundrum is simple, and it has nothing to do with the stocks themselves. He explained that the big-money managers are moving their money, en masse, from the conservative stocks into those that can provide growth from here on out. This sector rotation, he said, will punish any stock that can't provide growth while rewarding those that even have the potential for growth.
In the case of Parker Hannifin, Cramer said the markets are expecting a rebound in aerospace next year. Given the capital-intensive nature of Hannifin, this expected pickup in business will be huge for its bottom line. Procter & Gamble, on the other hand, has little hopes of growing beyond the slow and steady pace it's known for.
The markets favor monumental earnings growth, said Cramer, and that's Parker Hannifin.
In the Thursday "Sell Block" Segment, Cramer deferred to his colleague Doug Kass at
, who says it's time to sell.
Back in March, Kass was one of the few, if not the only, person who called the bottom in the markets, said Cramer. And now that "hot hand" is predicting that the markets are overbought, and ripe for a 5%-6% pullback. According to Kass, many stocks, 82% in the S&P 500 to be precise, are now higher than their 50-day moving averages, leaving them vulnerable.
Cramer said while he's not totally convinced a sizable pullback is looming, he said that it's never a bad idea to take profits and play it safe. He said it's important to understand opposing opinions, especially from those who have been right, as Kass has been.
Cramer told viewers it's OK to sidestep a pullback by selling some stocks. "Buy and hold," he said, is never an acceptable way to invest.
In the Lightning Round, Cramer was bullish on
Cramer was bearish on
Principal Financial Group
Honor and Service
In a rare book review, Cramer spoke with Donovan Campbell, author of the new book
, a tale of his two tours of duty in Iraq and a third in Afghanistan. Campbell has since left the Marines for a job at
, where he now leads 160 employees.
Campbell said that after graduating from Princeton, he considered jobs on Wall Street but instead chose to serve a bigger cause. Since leaving the military, Campbell said he looked for a company that understood the value of great leadership, and that company was Pepsi.
When asked about how both environments compare, Campbell said that at the end of the day, it's not about money or equipment, it's about using a creative mind to adapt to the situations at hand. This principle, he said, applies to both worlds.
Campbell closed by saying that he wrote
as a tribute to his men, whom he failed to recognize enough while serving.
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At the time of publication, Cramer was long Caterpillar, ConocoPhillips, Pepsi and Qualcomm.
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