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Wednesday,
April 8, 2009
(Cont'd from
above)...
Jim (cont'd):
How about Centex, a
Texas homebuilder,
they blinked… this
strong willed
company gave up…
just capitulated
right into the arms
of Pulte Homes…
which we are
absolutely thrilled
about… the result…
less capacity, fewer
homes being built,
less supply coming
on… insuring my one
time completely and
totally ridiculous…
massively ridiculous
call… that all the
real estate people
in the audience will
love… that the
bottom in housing is
indeed coming this
summer.
Do you know what is
happening… it is
called capitalism…
and it looks like it
is springing up all
over the place… take
a look at Bed Bath &
Beyond… up $6.17
today… why because
Linens & Things, its
principle
competitor, didn’t
just blink… it had
its eyes poked out…
again capitalism at
work… just like we
saw with the
collapse of Best
Buy’s principal
competitor Circuit
City… which has that
stock on the move
higher again…
yesterday we saw
Brinker, you know it
as Chili’s,
pre-announced a
better than expected
number on top of
Darden, home of Red
Lobster and Cramer
fave Olive Garden,
where my name still
means nothing and I
still have to wait a
half hour no matter
what I do… that is
okay, I am alright
with that… because
many chains with too
much debt are
folding up their
doors… giving you
fewer choices to eat
and drink at… even
one time Cramer fave
Ruby Tuesday,
excellent salad bar,
got in the act with
good numbers today.
But can you take
advantage of this…
you should be able
to… but not if you
are making mistakes…
not if you are being
driven out of the
game by those
mistakes…not if you
are clubbing
yourself worse than
Clubber laid into
Rocky… in that first
key match up, the
one where Clubber,
played more than
adequately by Cramer
fave Mr. T,
predicted pain…. and
I am predicting pain
if you are playing…
so on this very
special night I am
going to help you
overcome the 10
plaques… the 10
plaques that inflict
all retail
investors… every
kind of self
inflicted pestilence
that keeps you from
making money… I can
prevent you from
hurting your
portfolio… because
as a grizzled 64
year old veteran of
the markets… okay,
today I reveal that
I am actually 54...
as well as the
dynamite exodus from
Egypt… a couple of
eons ago… I know
where you go wrong…
I have made all of
the mistakes that
you are likely to
make… and I have
learned from them…
so let my pain be
your gain.
So what exactly are
these 10 plaques…
First, there is the
plaque of digging in
your heels when the
facts have changed….
this one is worse
than a plaque of
locusts… sometimes
you are going to be
wrong, when that
happens it is
natural to insist
that you are right…
that the topic is
somehow open for
debate… sometimes
the issues just
close and you have
to be willing to be
flexible and move
on… all of the bears
who say that they
huge rally in March
was a mistake… well,
they have no idea
how bad things will
get… they are
victims of this
plaque… they missed
a 20% move… hey,
that is the
equivalent of a bull
market in one month…
Second plaque,
thinking that you
should always be
fully invested…
meaning your whole
portfolio should be
in stocks with
nothing in cash… I
can’t tell you how
much money this
plaque has caused
people to lose… it
is okay to be in
cash… in fact, you
should always have
some cash on the
sidelines… there are
times, like when I
went on “The Today”
show on October 6th
with the Dow above
10,000 and told you
to sell, sell, sell…
when you should have
almost everything in
cash… the idea that
you have to be in
stocks all of the
time is a skurge.
Plaque number three,
buying into stock
snobbery… that is
the now wide spread
believe that it is
impossible to beat
the market… an
individual investor
should give up..
.they should only
invest in index
funds that try to
mimic the market…
this is the
conventional wisdom
spouted by pundits
galore, and tenured
academics… who by
the way do not know
the difference
between buy and sell
orders… and have
never managed money
in their lives… talk
about another whole
group that is going
to love me after
tonight… I am living
proof that you can
consistently beat
the market… but I
can tell you it is
impossible if you
give up before you
even begin.
Fourth plaque that
affects you home
gamers… you let
despair blind you to
opportunity… at the
beginning of March
when we were at Dow
6,500... hardly
anyone thought
things could get
better… the despair
was so palpable… but
that is precisely
why it was the
perfect chance to be
opportunistic… and
to buy some
undamaged
merchandise… and why
we say there was
limited downside, so
you should ignore
the perma-bear
professors who say
that we should lose
a 1000 more points
pronto… perma-bear
professors join Mary
Ann… Gilligan’s
Island.
Alright, the fifth
plaque… it is one
that blows a lot of
people out of the
market… it is not
being prepared for
your losses… so you
give up when they
inevitably happen…
that is right,
losing money is
inevitable… but it
is not a reason to
give up or feel
discouraged… you
have to steel
yourself so it does
not rattle you…
consider them the
boils… one of the
most benign of the
ten plaques.
Number six, another
rain of frogs… it is
the desire to let
your gains rot…
nobody wants to sell
a winner but you are
being greedy… if you
don’t take profits
when you have them,
you may not have any
profits at all…
bulls make money,
bears make money,
hogs get
slaughtered.
The seventh plaque
is a bad one… you
want to sell your
stock at the exact
top and buy them at
the exact bottom…
that is never going
to happen… I call
that arrogance…
arrogance to believe
that you can… that
is why I tell you to
buy in increments,
that way if you buy
a stock and it goes
down, which I think
it will mostly do,
in this market if
you don’t get it
right… you can just
buy more instead of
tearing out all of
your hair and crying
yourself to sleep on
the dirty linoleum
floor as the locusts
pick out your eyes
and you drink cheap
scotch.
Number eight, that
is when you allow
yourself to be
seduced by stocks
that are extensively
cheap… either single
digit stocks or
stocks with very
little price to
earnings multiples…
and you think, how
much downside can
there be… stocks
don’t trade below
$10 for no reason…
you downside can
always be 100%.
The ninth self
inflicted plaque is
being to credulous…
excepting everything
you hear from your
broker or from money
managers or CEO’s on
TV at face value… it
seems easier to let
someone else tell
you what to do these
days… but these
people have agendas…
and you are better
off doing your own
homework… now this
plaque has
victimized yours
truly, and I admit
it… because you must
own your mistakes if
you are going to
learn from them… and
sometimes, you have
to shame yourself…
Wachovia Bank
post-it.
Finally, the worst
plaque, the one that
is equivalent of
killing your first
portfolio… and not
even a Lambshank
could save you… the
plaque of buy and
hold… and ideology
that is this shows
eternal nemesis… the
notion that you can
just buy a few good
looking stocks and
you can hold onto
them forever… and
somehow you will
make money… this is
total hogwash… but
lots of people,
extensively guys who
are experts and 100%
of the provocerian/intellectensia
tell you it is
right… in order to
keep you in your
stock chains… it is
a tempting
philosophy because
it lets you be lazy…
but this is not a
lazy man’s game…
investing is only
for those who are
willing to do
homework… just ask
the people who
bought and held
Lehman Brothers.
Here is the bottom
line…
▼ ▼
▼ ▼
▼
 The Bottom Line!:
If you want to take
advantage of the
outbreak in
capitalism in the
economy that is
allowing the winners
now to go higher…
you have to avoid
the 10 plaques… the
10 plaques of retail
investing… if you
can avoid inflicting
them on yourself…
you will have a much
easier time trying
to make money… and
certainly not losing
it... Avoiding
Cramer’s 10 plaques
of investing could
help your portfolio
go higher...
Alright, remember to
avoid the 10 deadly
investor plaques…
how about this…
Mazaltov for a 1000
Mad Money shows.
[verbatim recap]
▼ ▼
▼ ▼
▼
Jim went on after
this segment to take
questions from
callers, and
responded with his
comments...
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Q:
Last week, I was
able to get
Celgene Corporation (CELG*)
at $38, and thank
you I got that from
the action alert.
And now I am
interested in
Gilead Sciences Inc.
(GILD*), and I
wondered what price
would be good to get
that?
Jim:
I think you could
buy Gilead today…
you know, there was
an article in the
Journal today I
thought Gilead would
be up.. the Journal
article said that
AIDS awareness is
going to be
something that the
President is going
to pursue… if you
know, unfortunately
if you are HIV
positive, there is a
Gilead treatment… I
thought that it
would send the stock
up… the bio-tech
stocks today were
weak… I think
Gilead, now it is up
2 points from where
they just had that
terrific
announcement about
the heart failure
drug that no one
else has, for last
resort… so maybe you
think the stock is 2
and therefore has to
rest… I would pull
the trigger right
here… I like Gilead
at $47.
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Q:
You have recommended
some private
education stocks
recently, and with
unemployment rising
and with people have
lost their jobs are
going out and
learning new skills.
Since there haven’t
been too many IPO’s
in 2008 and 2009,
what do you think of
Rosetta Stone going
public next week?
Jim:
No, I don’t want
you… now look, we
used to say at my
old hedge fund, the
pump is primed… they
are going to make
that deal work… they
are going to make
that deal work
because there has
been so few IPO’s
that they are going
to price it at a
price that I think
you should try to
get in… on the
offering price…
don’t pay, you know
there are two
prices… there is the
offering price where
you can get in as
part of the deal…
and then there is
where the stock
opens up… if you pay
where the stock
opens, I don’t like
it… because I don’t
think you will make
money… and remember,
that group after
Apollo Group Inc. (APOL)
reported its
quarter, it has been
all down hill… we
recommended to sell
Apollo about 18%
ago… we recommended
to sell Strayer
Education roughly
about 20% ago… the
only one that we
still like is
American Public Education
Inc. (APEI),
we are taking some
profits there
because we are being
too greedy… but if
you can get in on
the deal, I approve
of it.
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[verbatim recap]
[end of segment]
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