There are three things that have always "fed the bulls" when the market has been at all-time highs: low inflation, which, in turn, causes lower interest rates and better earnings, Jim Cramer said on his
"RealMoney" radio show Wednesday.
"If there is low inflation, there is a terrific backdrop for the market to go higher," he said.
When we get low inflation that means interest rates, "the primary competitors to stocks," will go down, Cramer said. In addition, we get better earnings and a situation where people will pay more for those earnings.
Market players look at a stock's future earnings estimates to determine what that stock is worth, he explained, and "every time earnings estimates are too low, the market has a terrific run."
"We have that here," Cramer said. "We are still going higher."
House on Fire
Although people keep hearing how the prices of their homes are going down, Cramer said he believes the housing market is working and that people are going to see a bottom and a turn in the sector in six to nine months.
On Tuesday night,
President and CEO Stuart Miller was a guest on Cramer's "Mad Money" TV show.
Miller, whom Cramer called one of "the single best people when it comes to long-term view of the housing industry," is cutting debt at Lennar, building fewer homes and getting its balance sheet in order, he said.
"Today, new-home sales are up much bigger than we thought they would be in August," Cramer said.
This means the inventories of homes are finally being worked off because the companies are not building more homes, and mortgage prices are low, he said. Meanwhile, most analysts are downgrading when they should be upgrading.
Most of these downgrades happened in the month of August, the first good month this sector has seen in a while, Cramer said.
"Don't sell these stocks," he advised. "The bears are wrong."
Three years ago,
was "this ridiculously poorly run company that traded at $12." Today it is a $39 stock that pays a $1 dividend, Cramer said.
The lesson: Although sometime people might feel like leaving the game, they can make money by "keeping their eyes open," he said.
Three years ago, the fast food company had "dirty" restaurants, "a clouded future" and food that was not so good, Cramer said. But now, McDonald's brings us great salads, cleaner restaurants and better menus.
"The management turned the company around," he said. "Rather remarkable, but it can be done ... even with increased competition from places like
He said the next turnaround could be
, which Cramer owns for his charitable trust,
Action Alerts PLUS.
"You need to keep your eyes on all of these, because when they turn, they never look back," Cramer said.
Cramer said you should not leave
is also not done going up.
should be "your next play," he added, and when
comes out with its next same-store sales, people are going to be "shocked."
"It's not too late to get in Starbucks," Cramer said.
is the best in its industry, growing at 20%," Jim Cramer told a caller.
"I support your ownership of it," he said to the caller.
Responding to his next caller, Cramer said he would ring the register on
right here. The company has put itself up for sale which caused the stock to jump, but if it gets no buyers, there is a chance it will go down, he said.
Cramer told the caller to take Yankee Candle off the table and congratulate himself on the profit he's made.
He told another caller he would not sell
H&E Equipment Services
because once the
cuts interest rates, the stock is going to go higher.
Plus, the company has good fundamentals and the stock is "way too low" to be sold here, he said.
When a listener inquired about
Bank of America
, Cramer said it's a "terrific" stock and advised the caller to stick with it.
The problem with
is the generic competition facing its drug Plavix, Cramer told another caller.
Although the company's estimates are too high, the upside is that it can be taken over, he said. However, "it's never a good idea to speculate on takeovers where the fundamentals are declining," which is the case with Bristol-Myers, Cramer said.
At the time of publication, Cramer was long Sears.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
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