Jim Cramer's Best Blogs

NEW YORK ( TheStreet) -- Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he discussed:
  • what the market impact will be from a failure to avert the fiscal cliff; and
  • three stocks you shouldn't even consider buying.

Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.


This Isn't Like TARP

Posted at 7:46 a.m. EDT on Friday, Dec. 21

We're stuck with bad templates: TARP votes one and two and the Grand Bargain No Bargain moments of 2011.

These two Washington-orchestrated calamities caused the stock market to plummet each time, which then helped get a deal done.

Anyone who remembers the chaos after the failure of TARP to be passed knows that a 7% drop can occur when Congress chooses not to save the republic's banks.

The failure to raise the debt ceiling or come up with anything responsible led to a 19% fall until we got something that worked then, but isn't working now. We were paralyzed by the possible ratings agency downgrades and when we got one we thought, somehow, it was the end of the Earth.

It wasn't.

Bonds did the opposite of what we thought and staged a remarkable rally. In that sense the selloff was about nothing.

I think that these two analogies, which are being trotted out quickly this morning after the failure of Plan B, simply don't work.

First, the hated TARP came at a time when there was a run on the banks. You could argue that your ATM might not even have worked if that didn't pass. That one was huge.

Second, the debt ceiling deal turned out not to matter, at least when it came to the ratings agencies. It was, alas, almost much ado about nothing. This time around it would not shock me if the president just raised it himself and accepted a court challenge. Bills need to be paid, that's the law. One law -- that the Congress has to approve a debt ceiling raise -- conflicts with another. The payments that the federal government must pay on time.

Now I am reading that this failure of Boehner's Plan B is the equivalent of both. You can almost take an average of the two and arrive at what we are supposed to be done, call it 12%. And yes, those are precisely the numbers I am being told we will fall.

Now there are several things at work here. First, I don't know anyone who really thought the GOP would ever vote for a tax increase, period. Grover Norquist has made most Republicans sign a pledge. They will, according to Norquist, be challenged in the primary by Tea Party members. The pledge will not be broken.

I have thought, ever since I came back from Washington not that long ago, that it was clear this meant there could be no deal. We had hopes there would be another Grand Bargain driven this time by the president's big win, but these Republicans won regardless of the president. He means nothing to them. Nothing at all.

So, now we go over the cliff. I believe once Americans have seen their truncated paychecks -- both the people who are paid weekly and the ones paid monthly -- talks would begin in earnest to make some sort of deal to cut taxes with the Republicans actually leading that fight, urged on by Norquist. So Boehner's gambit was always a charade.

So, why should we sell off big on a charade? The Super Bowl plan is in effect. My take, the odds always favored no deal. We aren't going to get a deal. We fall of the cliff.

What gets repealed? The whole 7.5% gain since the November lows?

Nah, I think the gain from when there seemed to be a deal last week, call it about 2%-3%.

We always overdo it intraday, so it could be more. But the idea that "suddenly" there's no chance of a deal is pretty ludicrous.

The GOP will not vote to raise taxes, just to cut them. And I actually expect that to happen because Norquist will urge them to do so.

If it doesn't? Well, we won't know that for another month. And that's how it will go.


Some Stocks Are Just Too Dangerous

Posted at 6:37 p.m. EDT on Thursday, Dec. 20

I've got not one, not two but three cautionary tales about what happens when you wander into battlegrounds, obvious battlegrounds that can be avoided.

In fact, today's action provides a battlefield manual of where not to go, where the interstitial machine gunfire is so overwhelming that you know you are going to eat lead. We've got three companies, Mellanox Technologies ( MLNX), Allscripts Healthcare Solutions ( MDRX) and Herbalife ( HLF), all vying for worst battlefields out there.

Let's start with Mellanox Technologies. Here's one I put in the "sell block" a few months back, after it caught a gigantic gain. The Israeli semiconductor company had had a monster run. Next thing I know, the chief financial officer retired, and I thought it had just moved up too much, so I just said "enough already." Sure enough, Mellanox reported soon after, and it didn't have the best guidance, so I told people here to dump it. I said that while you can never get out at the top, I thought that once the stock was broken, it would stay broken.

And that's just what happened.

There are some obvious lessons here. When a CFO departs, even if the move is orderly, it is worth it to ring the register particularly, after a colossal run. Then once a red-hot stock reports a weak quarter, it doesn't pay to hang around, as the momentum people will sell relentlessly.

That's what is happening in today's action.

Then there's Allscripts Healthcare solutions, another hammered stock today. Allscripts, another "sell block" name, had faltered badly and lost out to Cerner ( CERN) for a lot of business. I had urged people to bolt from it, but the CEO of Allscripts, Glen Tullman, tried to sell the company. I say over and over again that you can't speculate on a takeover if the fundamentals are in decline as they were with Allscripts, because who wants to buy a faltering business?

Apparently no one; Tullman was fired last night.

Finally there's Herbalife. What can I say that hasn't been said about Herbalife by the principal, Michael Johnson, and the antagonist, Bill Ackman? I will tell you what: If Johnson doesn't file a tortious interference action against Ackman, maybe he's just doing a whole lot of passionate talking and nothing more. Ackman's goal seems to be to expose Herbalife as a pyramid scheme, to warn people not to work for it. Given how recruiting potential salespeople is integral to the business, you can argue that Ackman is trying to take the business down with his comments. Johnson has got a study that shows that his company produces merchandise that is largely consumed by people who are outside his distribution network, and that means, per se, that Ackman is wrong, at least if you believe in the merits of the study.

But I am not discussing the merits of Ackman's arguments or Herbalife's counterarguments. I am simply saying that those who have asked me what level I would buy Herbalife don't get me. I am not going to go over the top and face a hail of Spandau machine gun bullets. Let someone else be a hero.

These stories are all cautionary tales of the hard way to make money. When in doubt, stay away from takeover stories with faltering fundamentals and stories that have vociferous players on television telling you that the stock is going to zero.

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

More from Investing

Market Can't Handle the Wild Ride: Cramer's 'Mad Money' Recap (Thursday 5/24/18)

Market Can't Handle the Wild Ride: Cramer's 'Mad Money' Recap (Thursday 5/24/18)

Musk's Tweets About Unions Draw Fire From United Auto Workers

Musk's Tweets About Unions Draw Fire From United Auto Workers

Replay: Jim Cramer on North Korea, Oil Prices, Apple and Carnival Corporation

Replay: Jim Cramer on North Korea, Oil Prices, Apple and Carnival Corporation

Gap Drops After Hours on Disappointing Earnings, Weak Same-Store Sales

Gap Drops After Hours on Disappointing Earnings, Weak Same-Store Sales

Canopy Growth: First Cannabis Firm on the NYSE Fails to Generate Buzz

Canopy Growth: First Cannabis Firm on the NYSE Fails to Generate Buzz