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

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This program last aired June 25, 2014.

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 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.

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

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

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At the time of publication, Cramer's Action Alerts PLUS had a position in ORCL.

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