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. Recently he blogged on:
- why you need to stick with catalyst stocks that will perform right now, and
- how Tesla has managed to defy both logic and gravity.
Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
Stick with Catalyst Stocks
Posted at 04:06 p.m. EST on Friday, Feb. 14, 2014
We're in a performance-grab moment. That's where we are looking not for stocks that can protect us or that are good hedges against certain events or are bond-market equivalents, although those are working. We're looking for stocks that can outperform an up index.
You get these periodically when so many are caught looking the wrong way and the market switches violently and puts on large percentage-point gains. Suddenly, everyone who was defensive is forced into being offensive, so they pile into stocks that have decent stories and they use intraday weakness to buy. Without the debt ceiling debate and with a steady hand at the Fed and a definite up trend in Europe, coupled with a bottoming of the Baltic Freight Index and a disappearing of the emerging-markets panic, the bears are struggling to find something to hang their hats on.
You can't just say "it's too overbought," even as the same oscillator I follow that hit -5 not that long ago -- the level I always stopped selling at -- is now at +5 the level I stopped buying at. (That's the S&P 500's proprietary oscillator, if you want to obtain it from S&P.)
For the record, I am uncomfortable with this level of buying, but I get it and I know it can get really exaggerated.
All of these changes are manifested in the mid-morning surge, where desperate money managers put money to work lest they, once again, fall back behind the averages. You can see it happening when you look at stocks that go higher without any news flow: stocks like Tech Data (TECD) and Lockheed-Martin (LMT). You can see it when stocks fall and then start rallying the next day, like P&G (PG) or Starwood (HOT), as buyers say, "Wow, a chance to buy something while it is down." Right now, I bet there are people salivating to pick up some Under Armour (UA) the moment it settles. I wouldn't be surprised at all if VF (VFC) or PepsiCo (PEP) catch bids. They are high-quality names that are down too much already.
It's tough to think like this because lots of the stocks that are down actually deserve to be down. I don't know how you glom on to a retailer knowing how February's so bad. Same with the autos, although we own General Motors (GM) for the trust. You might get hit with some negative news if we don't get better weather over the next few weeks. These lost weekends play havoc with the numbers.
Other groups, like managed-care stocks, which were going down because of fears of price wars and because of a lack of new business formation, are now just levitating up.
To me, it is best right now to stick with catalyst stocks, as these halcyon moments don't tend to last too long. Of course, the issue is that we can't figure out what happens that knocks it all down, but at this point I would rather raise cash and not apply it. But then again, we've been doing that recently and it really hurts!
Tesla Defies Both Logic and Gravity
Posted at 1:08 p.m. EST on Monday, Feb. 10, 2014
I never, ever slam Tesla Motors (TSLA). In fact, I totally get the thesis of why you should buy it. The stock is simply one of the best cult stocks ever, backed up by the political power of pretty much every government in the world and shot at by pretty much every hedge fund that likes to get against stocks.
In short, Tesla is too easy. It makes me jealous. You can do all of the homework in the world on an Eaton (ETN) or an American Airlines (AAL) or a Noble Energy (NBL), and if it stumbles, you are the doghouse. If cheap stocks like General Motors (GM) and Apple (AAPL) get a whisper of negativity, it's game over, or at least it feels like it.
And then there's Tesla. On Feb. 10, we heard that China is going to extend subsidies for electric vehicles. Even though Tesla is in no position to mass-produce Chinese cars, it just doesn't matter. The thesis is simply too positive not to buy Tesla. Next thing you know, the stock takes out its high, and you have a technical reason to own Tesla. I am sure that right now, Elon Musk has a half-dozen reasons to propel Tesla further into the stratosphere. There is no negative story now that the fire issue has been cleared up. There's only valuation.
And that, of course, is what makes things so hard. At my hedge fund I had iron-clad rules, and one of them was not to waste time thinking about valuation for a small part of my portfolio. There was always room for a Tesla. Now, running a public portfolio, Stephanie Link and I at least like to have some valuation underpinning, any at all, because it is charitable trust money.
But we can't design one. Yes, we bought Facebook (FB), because we thought it was about to have an earnings breakout. Which it did. We own Google (GOOG), but that's because Google is actually ridiculously cheap on 2015 earnings.
But Tesla? It makes no sense on earnings whatsoever.
Which, alas, makes it even easier to own.
Want to get even less particular? To test-drive a Tesla is to own one. If you like to own the stocks of companies that make products you love, then Tesla is golden. It may be the coolest product I have ever brushed up against.
Again, I know, that's a foolish reason to own a stock. Just because you love it, that doesn't mean it's flawless.
But in this case, the driver experience is a huge positive.
So here's the bottom line: I hate you Tesla! You make the whole process seem so easy that it is almost farcical, which is why the stock remains a cult buy.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long AAPL, ETN, FB, GM, GOOG, NBL and PG.