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 blogged on:
- Getting through the next week, and
- The vital nature of research.
Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
'Hope' Is a Dirty Word in Investing
Posted at 7:00 p.m. EST on Friday., Sept. 12, 2014
We don't know what percentage of stock was sold today because of Alibaba, but I can tell you that I personally know fund managers who sold billions of dollars of stock just to prove that they have the cash and will pay for 10% of this deal. Everyone wants 10%. It might as well be 1999.
This deal will do three things to the market:
- It will cause an immense amount of selling in everything high-growth.
- It will cause every top-caller and their brother to speak about how you have to get out now.
- It will lead to talk of the overheating of everything and how blind the Fed is to what it is doing, something that will happen both before and after the Fed meeting next week.
Given that inflation is on retreat everywhere and Europe's teetering on the brink of recession (which will cause countries there to start issuing immense amounts of debt), given that we are going to be in another war that needs funding, and given that the Democrats hate the Republicans as much as ever, this is not an ideal setup.
Bulls have to hope that rates don't spike. They need to see oil stabilize to believe that world growth isn't plummeting. They have to hope that the Fed will be prudent. And they have to hope that the bond vigilantes aren't out with magnum force.
"Hope" is a dirty word in investing. I think the goal is simply to get through next week without getting your face ripped off by events, but stranger things have happened.
Random Musings: Thanks to friend and colleague Matt Horween for helping put together the above litany.
Always Do Your Homework
Posted at 6:26 a.m. EST on Thursday, Sept. 11, 2014
"Hi, Jim, what happened to Mobileye (MBLY) ? I bought it and then it got downgraded. What is your opinion of it now?"
This is the kind tweet that I see all too often these days and it worries me very much, because it shows a basic level of ignorance in the investing process. Why is that? Well, let me break this tweet down into pieces, so you understand why these questions are signs, real signs, not of weaknesses at the company but of people as investors.
First, a word on Twitter (TWTR) . I check my feed every day. I try to answer as many as I can without devoting my day to it. Some people are just being real nice and I favor them. Others are asking exactly what I just answered the night before on Mad Money or in Real Money for The Street. That's annoying, because we work really hard on both, and 140 words just don't do them justice after we have tried to be very thoughtful about them.
Still others are, frankly, dumbfounding, and I am going to include this questioner because it shows how clueless someone can be about both my work and investing in general.
The first sentence, "what happened to Mobileye," implies something major might have occurred. For heaven's sakes, the stock was down a buck in yesterday's session after doubling in pretty much a straight line. So my answer is: stocks tend to have people sell them after huge runs, because it's prudent to lock in gains. That's the case with Mobileye's stock. There were more sellers than buyers at higher levels, and the stock had to get knocked down to find more of them.
Now, I have liked Mobileye since the day it came public. I have reiterated that maybe twenty times since then. So I have to ask myself: does this guy do anything other than look at me on Twitter? Because if that's the case, what's the point? I spend hundreds of hours analyzing companies in-depth and I explain why I like them, and the Twitter format just doesn't capture any of the work, let alone the nuance of it. I always say, why not check the places on the web where my views are known, say CNBC.com or The Street. Why not read me? Why not watch me? If you are asking me about Mobileye after all of these recommendations, then you probably think of Twitter as my primary way of communicating with investors. I am sorry, but it can't be. Nothing in one hundred and forty characters minus your name can really be helpful in this situation.
Second, if you had done any homework on what I have felt about Mobileye, you would know that I think the company has the best software for car navigation, the kind that all of the car companies including Tesla (TSLA) are going for, and the collision avoidance characteristics are amazing. How do I know this? I went to the website. It has everything. Please go there.
The third line "I bought it and it got downgraded," is basically saying "did I do it wrong because I am now down on the stock." Believe me, if you understand the process of investing and meld it with the core beliefs of the show or my writing, that you do homework and then buy and keep doing homework rather than hold it thoughtlessly, then you shouldn't worry about the downgrade. This is the kind of question you ask when you have no conviction and have done no homework and basically just bought the stock because it's going higher.
The actual downgrade was made because, while the analyst thinks the company's terrific, he is cognizant that the stock just doubled in no time flat and has gone up too far too fast. That's just a plain commonsense observation. That's why I tell people that before they pull the trigger on a high flier like Mobileye they should not buy all at once and, rather, be planning on stages to buy if it goes down, something that's pretty much bound to happen soon because stocks, even stocks as good as Mobileye, don't go straight up forever. I think, though, that this gentleman's getting ready to kick it out because of the downgrade, without even knowing what the downgrade's about. Ouch!
Here's the moral of the whole story: if you follow me in the primary places where I opine, you would know exactly what I think of Mobileye. If you did the homework before you pulled the trigger, you would know exactly what you think of Mobileye, regardless of the research. But if you just bought it because it was going higher, then you have no idea what to do, and, alas, you are, indeed, on your own, which is why I always say if you can't take the time and you don't have the inclination, just go buy an index fund. No homework. No fretting about analysts and no hopeful tweets that you will get a buy, sell or hold answer because, alas, you and I both deserve better.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long TWTR.