On a special episode of his "Mad Money" TV show, Jim Cramer celebrated CNBC's 20th anniversary by giving viewers some of his most important lessons he learned in the markets. He said that experience matters on Wall Street, and nothing is more important than learning from history.
Prophetic Credit Markets"One lesson always rings true," Cramer told viewers. Stocks, he said, always follow bonds. Cramer said the stock market is just a minor league team compared to the credit markets, which reign supreme.
Just Like UsCramer's said the next lesson he learned was all about the big money, and how big money reacts to changing fundamentals. He said that when you cut right to it, big hedge fund and mutual fund managers are humans just like the rest of us. He said they get scared and get exuberant, just like the rest of us.
Believing in Growth"Some stocks are like generals, leading the markets higher," said Cramer. In the 1980's, it was Pfizer ( PFE), in the 1990's it was Yahoo! ( YHOO), and in recent years, it's been all about Google ( GOOG), he said. Stocks like Google have what every fund manger wants: growth, he said. And that's why Cramer's recommended the stock since its IPO in August of 2004, and again as the stock rocketed higher past $200, $300, $400, $500 and $600 a share. When a stock has growth, pure growth, and even accelerating growth, the big money mangers just have to own it, he said. And even those conventional wisdom kept saying the stock couldn't possibly go any higher, it just kept on roaring. Cramer said while its always best to buy low and sell high, he said that sometimes investors need to just believe in the growth, and buy high and sell even higher. He said that obviously as the recession hit in 2007, even the highest of fliers need to come down, but by believing the market generals, investors could have followed Google all the way to $740 a share.