Jim Cramer's 'Mad Money' Recap: What Really Moves Markets

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.


NEW YORK (TheStreet) -- It's an incredibly confusing time to be an investor, Jim Cramer told his "Mad Money" TV show viewers. With such a flood of facts and data flowing from companies, analysts and government sources, it's increasingly difficult to figure out what matters and what doesn't, said Cramer. That's why his new book, Get Rich Carefully, aims to separate the over-hyped and unimportant from what really moves the markets.

The first tip from Cramer's book is on unemployment data. Every week the Labor Department releases jobless claims, but this number can largely be ignored, said Cramer. Also ignore a similar metric released by payroll processing giant Automatic Data Processing (ADP).

So what really does move the markets? Cramer said the non-farm payroll numbers do. He said this number has historically had lasting effects on the markets. Bad reports send the markets lower, while good ones make bull markets soar. Bad reports followed by more bad reports multiple these effects.

Cramer said his bottom line to investors when investing on non-farm payroll day is to wait until 10 a.m. ET, after the shorts have covered their positions. Only then will the market take a breather, giving individual investors a chance to get a good price.

Forget the Fed Minutes

What's the most over-hyped market non-event out there? Cramer told viewers that without question it's the monthly release of the month-old Federal Reserve minutes. Cramer said while these minutes appear to be the Holy Grail of investment decision making, in reality these data points mean nothing at all to stocks.

By the time they hit the Street, these Fed minutes are over a month old, Cramer reminded viewers, and circumstances can change significantly over 30 days. That was certainly the case in early August 2007, the onset of what would become the Great Recession and the panic that almost took down our entire financial system.

But to listen to the Federal Reserve minutes from the month prior, everything appeared to be fine and the economy was humming along, Cramer noted. Meanwhile, the first casualty of the crisis, Bear Stearns, was only days away from collapse.

This dichotomy led to Cramer's infamous "they know nothing" rant on CNBC on that Aug. 17. The Fed desperately needed to cut interest rates, he contended, but remained totally asleep at the wheel.

Cramer said he received confirmation his suspicions were correct months later when the next round on minutes were released. In those notes, Cramer's rant was not only mentioned but laughed at -- proving his point.

Cramer said his bottom line is to ignore the Federal Reserve minutes because there's nothing actionable and the data are simply too old to matter.

Forget the 13Fs

The financial media is held hostage by the 24/7 new cycle just like everyone else, Cramer told viewers, which means investors are bombarded by irrelevant facts almost daily. Another type of irrelevant noise investors should avoid are the Security and Exchange Commission's required 13F filings, which arrive monthly.

Cramer explained that every month big investment firms and hedge funds are required to report their positions and holdings, an event that has created a cottage industry of "who's buying what" and "who's dumping who" reporting. Who wouldn't want to follow along with such giants as George Soros or Carl Icahn? Surely, they must've done a ton of homework on these stocks before making their moves.

But in reality, these 13F filings are also a month old, said Cramer, and no one has any idea why these firms bought or sold what they did. Maybe an analyst left the firm or perhaps they were taking profits. Maybe a trade proved to be wrong or perhaps the fund just needed to raise cash.

Basing your own investment decisions on what some big shot did a month ago is just a bad idea, even if you're following a giant like Warren Buffett, said Cramer.

Cramer said the only exception to this rule has been Nelson Peltz, the activist investor from Trian Partners. Only Peltz has proven that following along with his investments is a sure-fire way to make money.

Forget the Contract Wins

Cramer's next tip for investors: Don't get hung up on big contract wins for engineering and construction firms or technology companies. He said capturing a big multi-year contract doesn't often move the earnings needle.

Sure, the headlines about these big deals, of one company stealing business from another, sound sexy -- but in the end, they never seem to matter. This has been the case with offshore drillers such as Transocean (RIG), engineering firms like Fluor (FLR) and even tech giants like SAP (SAP) and Oracle (ORCL). In every case, buying on big contract wins never seems to be the right move.

However, at the same time, Cramer said, big contract losses often are reasons to sell because they usually result in estimates being cut and share prices falling.

When a Bargain's Not a Bargain

Cramer's last lesson for investors: All stocks are not created equal. He said the notion that one stock is inexpensive relative to its peers is never a good strategy because some companies simply deserve to be worth less than others.

Cramer said this is a mistake he made with Cisco (CSCO). When shares fell to a price-to-earnings ratio lower than the S&P 500 average he felt that surely they must be a buy. But in reality Cisco's growth rate was slowing and shares had only just begun their slow slide lower.

Always be on the lookout for bargains, Cramer concluded, but know that not all bargains are worth buying. Sometimes cheap can get a lot cheaper down the line.

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here.

-- Written by Scott Rutt in Washington, D.C.

To email Scott about this article, click here: Scott Rutt

Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC

At the time of publication, Cramer's Action Alerts PLUS had no position in stocks mentioned.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC Universal or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, TheStreet.com or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor TheStreet.com, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on TheStreet.com. The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in TheStreet.com, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.

More from Jim Cramer

Jim Cramer on Tapestry: Accessories Are the Hottest Area of Retail

Jim Cramer on Tapestry: Accessories Are the Hottest Area of Retail

Jim Cramer on Tuesday's Market Gains: Let's Not Get Carried Away

Jim Cramer on Tuesday's Market Gains: Let's Not Get Carried Away

Jim Cramer on Home Depot, Tapestry, Nordstrom and Square

Jim Cramer on Home Depot, Tapestry, Nordstrom and Square

Jim Cramer Breaks Down the Volatility in Home Depot Shares

Jim Cramer Breaks Down the Volatility in Home Depot Shares

Amgen: Cramer Discusses the AAP Portfolio's New Edition

Amgen: Cramer Discusses the AAP Portfolio's New Edition