Cramer and Trump: Both Right About QE3 and Stocks

NEW YORK ( TheStreet) -- Late last week on his Mad Money television show, TheStreet's Jim Cramer threw his support behind Federal Reserve Chairman Ben Bernanke's decision to provide further economic stimulus.

Channeling Bruce Springsteen, Cramer argued, "You can't start a fire without a spark." I had no idea Cramer and I share an adoration of Springsteen. I will shamelessly milk that for all it's worth because, ultimately, Cramer is my best chance of meeting Bruce backstage.

That aside, I agree with Jim's sentiment.

Also on CNBC, Maria Bartiromo interviewed Donald Trump. Trump dissed QE3, arguing that it creates "phony numbers" in the stock and mortgage markets.

Then, in a funny little bit that proved Trump has way too much money, he told Maria that this unfortunate fact benefits guys like him. He says he watches CNBC, notes the stocks that get mentioned and buys some of them. Now, we know one of the heavy hitters responsible for the CNBC effect.

At first blush, I treated Cramer and Trump's comments as distinct from one another.

From a substantive standpoint, Cramer was far more convincing. He spent 10 minutes persuasively laying out his case like only he can. Agree or disagree with his take, there's no question Cramer's argument made Trump's look thin.

Trump used plenty of synonyms for "phony," but never provided any rationale for why QE3 is a bad thing. In his world, it triggers artificial stock prices, artificial mortgage rates and a windfall in capital gains (unrealized, realized, I'm not sure) for people with money to put in the market.

Instead of taking the typical dichotomous approach -- Cramer is right and Trump is wrong -- it's probably more useful to consider the message Trump sent. While I am not sure if Cramer agrees with it, I reckon it would bring he and the Donald closer together.

As I read Trump, he's saying QE stinks for the country, the economy and people who do not have considerable amounts of money like he does. Unlike so many complainers, though, Trump does not externalize.

Sure, he thinks the Fed is inept, but he does not exhibit the same characteristics himself. Instead, he looks within and says, "How can I benefit from this situation?" He chooses to go for the ride, taking advantage of a stock market he considers propped up by smoke and mirrors.

That's one thing that separates the successful from the not-quite-so-successful and the unsuccessful. The successful person acts, to some extent, like Trump did. The unsuccessful one allows his or her disgust with a situation to bring on paralysis.

The best daytraders will tell you that, in addition to having a statistical edge, one of the biggest factors in making money is knowing and reacting properly to their own emotion as well as the emotion of other market participants.

What's driving the market or a stock at a particular time? And how can I separate how I feel about it from how I should act, unemotionally, in response? Simply put, how can I be one of the people who profits from the circumstances and forces beyond my control deal?

While you and I might not be able to invest as much capital as Trump can, we still have the capacity, as individual investors, to do likewise. Set aside your feeling that the economy is a ticking time bomb manipulated by a foolhardy Federal Reserve and ride the wave.

I have been learning this lesson for years. For some of us, it's difficult to assume the proper mindset.

Consider how I handled Netflix ( NFLX).

History shows I nailed the narrative throughout 2011. Leading up to Netflix's implosions, however, we witnessed craziness. Momentum brought the stock past $300.

As I watched the rally, I reacted the same way so many investors do when they see the Fed, in the words of critics, worsen our economic situation. I reacted with anger and outrage. NFLX had no business rising because I was right. I was convinced of it.

As somebody who has seen momentum stock stories play out countless times, I should have known better. While I didn't lose much money on the way up, I lost some, buying NFLX puts at several points in the 200s.

I should have done what I am advocating now. Stop whining about the house of cards I knew Netflix was and take what the market, as irrational as it was, gave me. Get long and get out before the party is over. I could have weaved the ultimately accurate bearish tale while making money long; there's nothing wrong with that. ( AMZN) is a more recent, ongoing example.

The AMZN bears cannot stop telling the world how much smarter they are than Jeff Bezos. But what does that prove?

Max out an AMZN chart. You'll see that, outside of getting caught in macro-driven downdrafts, the stock rarely goes down. There's roughly a dozen years of history behind AMZN going up, pretty much constantly, despite bearish overhang from the peanut gallery.

Whether you think the Federal Reserve acts responsibly or not, embrace bull markets when they're handed to you. Ultimately, if you're right and the sky ends up falling, you will have used the preceding rally to build a war chest to take you through lean economic times and/or a bear market.

At the time of publication, the author held no positions in any of the stocks mentioned in this article.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Rocco Pendola is a private investor with nearly 20 years experience in various forms of media, ranging from radio to print. His work has appeared in academic journals as well as dozens of online and offline publications. He uses his broad experience to help inform his coverage of the stock market, primarily in the technology, Internet and new media spaces. He has taken a long-term approach to investing, focusing on dividend-paying stocks, since he opened his first account as a teenager. Pendola, 37, is based in Santa Monica, Calif., where he lives with his wife and child.